Bank of England says equity market leverage has risen significantly since December

The Bank of England's Financial Stability Report, published on 7 July 2026, was reported by Simon Lovegrove at Global Regulation Tomorrow. The Financial Policy Committee found that vulnerabilities in risky asset valuations, sovereign debt and credit markets, including private credit, have persisted and in some cases intensified since the December 2025 report, and it singled out a significant rise in equity market leverage, including hedge fund leverage. Valuations for AI-related companies were described as more stretched, and the committee said AI borrowing has accelerated across public markets, private credit and leveraged and structured finance. The FPC concluded that UK households and businesses remain broadly resilient and that the banking system is well capitalised and liquid. The countercyclical capital buffer stayed at 2 percent. The FPC and the PRA proposed leverage ratio reforms.