British banks are bracing for a greater number of small businesses and households defaulting on debts.
A survey by the Bank of England into money and credit has found the rate of defaults on secured loans increased quarter-on-quarter and is expected to suffer another rise in the three months to June.
Similarly, default rates on unsecured lending, which includes credit cards and other loans, also lifted in the first three months of 2024 and are expected to continue rising into the second quarter.
High interest rates continue to sting small businesses and homeowners, with today's data showing more unable to meet interest payments on loans during the quarter.
Small and medium businesses are set to experience a similar trend, with the rate of its defaulting ticking higher throughout the first six months of the year.
As well as separate data this week showing high numbers of people continuing to struggle with bills, official data has shown that corporate insolvencies hit a 30-year high in England and Wales last year, with more than 25,000 going under, while the latest monthly data found more than 2,000 UK firms went bust in February, nearly a fifth more than the same time last year and higher than in the pandemic.
Some sectors in particular are under pressure, with investors seeing the trouble large debt piles in a high-interest environment can cause through the woes of Thames Water, where its owner last week told bondholders it was defaulting on £400 million of bonds.
Also this week, new research highlighted the rising rate of insolvencies in the retail industry, with 2,200 going into administration in the twelve months to the end of January, against 1,843 a year earlier