The Bank of England (BoE) has launched a system-wide stress test examining how the global private equity and private credit sectors would respond to a major financial shock, amid growing regulatory focus on private markets, according to a report by Reuters.
The exploratory scenario will assess risks to the UK economy rather than individual firms, with a final report expected in early 2027. The BoE said private equity-backed companies now employ more than 2 million people in the UK, underscoring the sector’s importance as a source of financing for large British businesses.
Participation in the exercise is voluntary, as the BoE does not directly regulate private equity or credit funds. However, firms taking part account for around one-third of UK leveraged buyout activity, half of private credit in the corporate sector, and 40% of employment within private equity-backed businesses.
Participants include Apollo, Bain Capital, Blackstone, Carlyle, CVC Credit Partners, Goldman Sachs Asset Management, KKR and Permira.
The stress test will focus on large UK corporates and potential wider spillovers to financial markets, excluding venture capital and commercial real estate. BoE officials have warned that high leverage, weak underwriting standards and opaque structures in private credit could amplify future shocks, with Governor Andrew Bailey flagging recent US corporate collapses as possible early warning signs.
