The British watchdog in Britain has warned that 4,000 small financial businesses are at greater risk of coronavirus failure as the country suffers a third exclusion.
The Financial Conduct Authority said on Thursday that the pandemic was pushing businesses to the brink by weakening their liquidity. The survey among 23,000 businesses was done between June and August before the government expanded its further programs and introduced vaccinations, and the regulator said it would monitor the pressure on companies.
“Our role is not to prevent businesses from failing,” Sheldon Mills, the FCA’s executive director of consumers and competition, said in a statement. “By gaining earlier visibility of potential financial distress in businesses, we can intervene more quickly so that risks are managed and consumers are adequately protected.”
The FCA’s survey does not cover the 1500 largest financial firms regulated by the Bank of England’s Prudential Regulation Authority.
The retail and payment companies face the biggest threat to their profits, the FCA said. About half of the retail lenders had staff and more than a third had loans taken out by the government.
The regulator also said:
- About 44% of insurers and brokers have staff and 19% received a loan, while 37% of small investment companies had staff and 15% took out a loan.
- Between February and June, liquidity increased for businesses in retail investments, retail loans and wholesale financial markets. Intermediaries and brokers, payment companies and investment management companies dropped liquidity
- 59% of respondents said they expect coronavirus to negatively affect their net income
Photo: Empty streets near the quay in Newcastle, United Kingdom, on Wednesday 6 January 2021. British businesses are still suffering from the recent closure, leaving many people in a precarious position as they enter new restrictions with what many believe is insufficient support of the government, a survey showed. Photo credit: Ian Forsyth / Bloomberg.
Copyright 2021 Bloomberg.
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