The Bank of England is stress testing 46 private market participants including Blackstone, Apollo and KKR under a scenario of 7% interest rates, a 35% FTSE crash and a 400bp rise in leveraged loan spreads. The five-year test also models AI-driven disruptions, a 4% UK GDP decline and 7.5% unemployment.
The Bank of England will conduct a five-year stress test of private market participants to assess resilience under a severe global recession scenario. Forty-six firms, including alternative asset managers such as Blackstone, Apollo, Ares and KKR alongside traditional funders, will submit detailed responses to prescribed market shocks.
Year one assumes inflation at 7%, a 35% decline in the FTSE All-Share index, volatility at 40 and leveraged loan spreads widening by 400 basis points. Year two projects a 4% fall in UK GDP, interest rates peaking at 7% and AI-related cost disruptions limiting productivity gains.
In years three through five the test models slow global recovery with UK unemployment at 7.5% and GDP growth at 0.7%. After the first round, participants receive aggregated results and must incorporate insights into revised submissions focused on mitigating identified vulnerabilities.
