BOE Warns on Rising Leverage, AI-Company Vulnerability in Markets

The Bank of England has raised concerns over elevated leverage in equity markets, noting that increases have been "substantial." According to the central bank, AI-related companies constitute an expanding portion of both equity valuations and corporate debt issuance.

This concentration exposes equity and debt markets to disappointment if AI adoption falls short of expectations, the pace of build-out slows, or access to finance tightens. The BOE's assessment points to vulnerabilities in the current market structure.

On a more positive note, UK household and corporate indebtedness remains low by historical standards, and overall debt vulnerability is described as average. The warning focuses primarily on financial sector exposures rather than the broader economy.