Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent assessment her Department has made of (a) levels and trends in household and public sector indebtedness, (b) levels of corporate indebtedness, including debt associated with investment in artificial intelligence, (c) risks arising from asset-price inflation relative to trends in productivity and wages; and what assessment she has made of (i) the potential impact of those trends on the UK's financial stability and (ii)) the adequacy of contingency planning for a financial market downturn.

The Bank of England’s Financial Policy Committee (FPC) is responsible for identifying, monitoring and taking action to remove or reduce systemic risks to the UK financial system.

The FPC’s most recent (December 2025) Financial Stability Report notes that risks to financial stability increased during 2025, with key sources of risk including geopolitical tensions, fragmentation of trade and financial markets, and pressures on sovereign debt markets. The FPC also judged that many risky assets valuations remain stretched, particularly for technology companies focused on Artificial Intelligence (AI), and that this heightens the risk of a sharp correction. The report also notes that indebtedness measures indicate that UK households and corporates remain resilient in aggregate, but that the increasing role of debt financing in the AI sector could increase financial stability risks.

Overall, the FPC judges that the banking system is well capitalised, and strong enough to support households and businesses even in a period of stress.

HM Treasury, alongside the UK financial regulators, closely monitors markets conditions, as well as potential risks to UK financial stability. In the case of any disruption, the UK financial authorities have established mature coordination mechanisms to coordinate an appropriate response; and have a range of powers available to respond.