4,000 UK financial firms at heightened risk of failure: Regulator

London, Jan 8 : Around 4,000 financial service firms across the UK have been facing low resilience and were at a heightened risk of failure by the end of October 2020 amid the raging Covid-19 pandemic, the country’s financial regulatory body said.

“These are predominantly small and medium-sized firms and approximately 30 percent have the potential to cause harm in failure,” Xinhua news agency quoted the Financial Conduct Authority (FCA) as saying in a report issued on Thursday.

Of the 23,000 companies surveyed by the regulator, 59 per cent of respondents said they expected the pandemic to have a negative impact on their net income, according to the report.

“We are in an unprecedented and rapidly evolving situation… A market downturn driven by the pandemic risks significant numbers of firms failing,” Sheldon Mills, first executive director for consumers and competition at the FCA, was quoted as saying in the report.

Meanwhile, a separate report published on Thursday by the UK Finance, a trade association for the country’s banking and financial services sector, revealed that gross lending to small and medium-sized enterprises (SMEs) in the first three quarters of 2020 surged to more than double the annual total for 2019, reaching 54 billion pounds ($73.6 billion).

“SME financing was particularly in demand in the service industries, which were amongst the hardest hit by the pandemic,” said Stephen Pegge, managing director of commercial finance at the UK Finance.

On Tuesday, the UK government unveiled a 4.6 billion pound grant to support businesses through the latest Covid-19 lockdown restrictions.

The retail, hospitality and leisure businesses are expected to receive one-off grants worth up to 9,000 pounds per property until the Spring, and is expected to benefit more than 600,000 business properties, worth 4 billion pounds in total across the country, according to the Treasury.

Additionally, a further 594 million pounds is available for local authorities and the devolved administrations to support other impacted businesses not eligible for the grants, it added.

Chancellor Rishi Sunak said new strains of coronavirus have posed “a huge challenge” to the country, and the government has to “tighten restrictions further”.

Disclaimer: This story is auto-generated from IANS service.