British Business Bank boss says UK firms will escape default “Armageddon”

UK businesses are avoiding the significant rise in default rates that many feared after last year’s chaotic mini-budget, the British Business Bank chief has said.

Louis Taylor told Bloomberg that firms have escaped a defaults “Armageddon”, with the peak in interest rates and energy prices coming into view.

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The British Business Bank administered the UK’s Covid loan schemes to support businesses during the pandemic. It had warned last September of an economic downturn that would cause a spike in business loan defaults.

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However, the UK is now expected to experience a smaller recession, thanks to lower wholesale energy prices and stabilisation in the markets.

“I wouldn’t say the picture is benign at the moment, but I don’t think it’s going to get materially worse necessarily,” said Taylor in an interview with Bloomberg. “The prospects are improving because unlike three months ago people can see the peak in interest rates, the peak in inflation and the peak in energy prices. Default rates aren’t massively high in our portfolio.”

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Taylor said that he was not seeing a substantial increase in defaults across the state development bank’s portfolio. He added that the bank is “certainly not seeing the Armageddon” that people feared last autumn, after then-Prime Minister Liz Truss delivered her controversial mini-budget which crashed the country’s currency, rattled financial markets and led to the quick demise of her premiership.