Good morning and welcome back to the City AM liveblog.
Are we on the verge of another financial crisis?
It’s quite the eerie question but it was one of many posed to the Governor of the Bank of England Andrew Bailey following the latest financial stability report on Tuesday.
The head of the central Bank was asked whether changes to banks capital requirements was “sowing the seeds” of another 2008-esque crash.
Bailey robustly denied this, in fact calling it the “sensible” thing to do.
But one consistent area the Bank has drawn 2008 comparisons with is the ever-ballooning AI bubble.
In the Financial Policy Committee’s (FPC) latest report, it said “risks to financial stability have increased during 2025”.
“Equity valuations in the US are close to the most stretched they have been since the dot-com bubble, and in the UK since the global financial crisis,” the committee added.
“This heightens the risk of a sharp correction.”
Fears of an AI bubble have ramped up over the last 12 months but the UK market has managed to avoid being swept up too dramatically due to the FTSE 100’s weighting towards ‘traditional’ stocks such as healthcare, banking and oil.
Still, the FPC report indicates the UK was likely to get caught in “spillover” due its standing as an “open economy with a large financial centre.”
“The UK is exposed to global shocks that could transmit through multiple, interconnect channels,” it added.
While Brits may not be staring down a crisis on the domestic front, the global nerves triggered by the likes of AI and private credit are enough to keep the central bank on high alert.
Here’s a round up of some of our top stories yesterday:
Bank of England warns of rising global threat as lenders’ capital rules slashed
Barclays boss: Revolut ‘laid gauntlet down’ with $75bn price tag
OBR chief hits out at ‘misconceptions’ in Treasury briefings
Candy Kittens: ‘We want to be the Unilever of challenger brands’
Businesses left ‘in limbo’ during Budget speculation as bosses feel bruised