(Bloomberg) -- Britain’s upstart financial firms are ill-prepared for an economic downturn or a messy Brexit, according to the Bank of England.
A review of 20 fast-growing businesses by the central bank’s Prudential (LON:PRU) Regulation Authority found that the companies, which believe they can continue growing even in declining markets, could struggle to raise funds when the credit cycle turns, according to a BOE letter summarizing the exam.
Melanie Beaman, director in the PRA’s supervision unit for U.K. deposit-taking firms, said that while the industry is resilient, many firms -- which weren’t identified in the public release -- need to strengthen their ability to assess threats.
Many “have only existed during relatively benign credit conditions and have not experienced a downturn,” Beaman said. “We do not consider it appropriate to assume that significant growth would be available in generally falling markets.”