Bank of England – Supplementary written evidence (PMG0043)
1. We have heard that the growth of private credit may weaken the Bank of England’s control over monetary policy, by moving a significant portion of direct lending out of the purview of the banking sector and into direct lenders. What are your reflections on this development and its impact on the process of money creation by the banks?
By setting the risk-free interest rate that determines all other rates in the economy, monetary policy transmission spreads across the whole economy through a wide set of channels. These include lending, both by the banking sector and non-banks including private credit providers, as well as wider cost of capital channels, changes in asset prices, and aggregate demand.
Certain features of non-bank lending and private credit markets make supply and demand for this form of credit responsive to monetary policy. Private credit providers tend to be strongly connected to the rest of the financial sector. Private loans often have a floating rate which exposes borrowers to changes in interest rates, in particular given borrowers of private credit tend to have high levels of debt and leverage.
We therefore do not think that the growth of private credit materially impacts the strength of transmission of monetary policy.
- Are you able to share data and graphs on the following:
Answers provided to the following questions are based on published data sources and Bank of England calculations.
- The size of private markets and how they have grown since 2005?
Global private markets[1] have grown from $1.5tn in 2005 to $16tn at the end of 2024.[2] In the UK, private market assets under management are estimated to be worth £1.2tn in 2025, over half of all European private market assets under management.[3]
Chart 1: Global private market assets under management. Source: PitchBook.[4]
- How concentrated are private credit and equity markets?
The largest private credit and private equity funds account for a significant proportion of overall private market investment.
According to McKinsey, the top 25 General Partners (sometimes called financial ‘sponsors’ - i.e. the alternative fund managers) accounted for 47% of private equity fundraising in 2023, which is the highest share in a decade.[5]
Focusing on the UK, the British Private Equity & Venture Capital Association (BVCA) states that private equity and venture capital investments in UK companies reached £29.4bn in 2024. The main UK based investors were capital markets and corporate investors (22%), private individuals (21%), and other asset managers (21%), suggesting no significant concentration in the investor base. The majority of capital from UK managers went to: communications, computer and electronics (36%); business products and services (21%); and consumer goods and services (16%). The share of investments in infrastructure was instead recorded as negligible and close to zero.[6]
- Total lending provided by private credit since 2005, as an absolute figure and a proportion of total lending in the economy, and as a proportion of total business lending?
Private credit deals involving UK headquartered companies total close to £400bn since 2005.[7] Data challenges prevent provision of an accurate estimate of this figure as a proportion of total corporate lending and total lending to the economy going back to 2005, which would also need to include all matured debt.
The latest available data suggest that UK non-financial corporates have close to £100bn in existing private credit debt, of which £80bn is estimated as drawn, representing approximately 5% of total corporate lending and around 2% of overall lending in the economy.[8]
- How has private lending to infrastructure changed since 2005, both as a total and broken down by origin of provider (e.g., bank, private credit, life insurance)?
As Chart 2 below shows, capital raised globally by infrastructure debt[9] strategies went from close to zero in the early 2000s to gradually peak in 2023 at $23bn, accounting for almost 10% of private debt capital raised, or around 1% of the estimated issuance of non-financial corporate bonds[10], for that year. While capital raised by infrastructure debt strategies is used here as an indicator of capital lent to infrastructure projects, the amounts may not exactly correspond, as it may be that not all capital is deployed, and some might be allocated through other strategies. The Bank of England lacks comprehensive data on the underlying investors or providers of capital to infrastructure.
Chart 2: Private debt capital raised by strategy. Source: Pitchbook.[11]
- Whether there is data to suggest that private credit/equity retreated from providing credit to the real economy during the Covid pandemic and/or periods of stress?
As shown in Chart 3 below, global private debt fundraising activity (which is ‘capital raised’ in Chart 3) slowed during the Global Financial Crisis while still remaining positive. Since then, it gradually expanded over the following decade, peaking in 2021, with no significant slowdown observed around the Covid-19 pandemic.[12] It should be noted that during this stress period many corporates were supported by banks’ revolving credit facilities as well as the Covid Corporate Financing Facility.[13]
Overall, despite varying growth rates across years, private markets have continued to expand in the last two decades, even during periods such as the Global Financial Crisis and the Covid-19 pandemic.[14]
Chart 3: Private debt fundraising activity. Source: PitchBook.[15]
- The volume of debt raised in the UK public market by UK issuers since 2005?
Chart 4: Issuance of UK companies in UK public markets. Source: LSEG Workspace.
As seen in Chart 4 above, the issuance of UK companies in public UK corporate bond markets increased from around $500bn in 2005 to around $660bn in 2008. It subsequently fell back after 2008 and it has fluctuated since then. However, 2024 and 2025 were the highest years for public UK corporate bond market and loan issuance by public UK companies since 2008.
- The relative growth of the UK’s public markets and the UK’s private markets since 2005?
Data on UK specific private markets does not go back as far as 2005, but assets under management in UK private markets have roughly trebled from 2013 to 2023, with the latest estimate indicating that UK private market assets under management is around £1.2tn.[16] This is considerably faster than growth in UK public markets where, for example, the market value of public UK equities has grown from roughly £2tn in 2013 to £2.4tn at the end of 2023, a c. 20% increase (and we calculate that there has been a c. 76% increase in market value from 2005 to the end of 2024).
Similarly, global private markets have grown from $1.5tn in 2005 to $16tn at the end of 2024 (an expansion of approximately 1000%) whilst the global aggregate market capitalisation of advanced economy public equity markets has grown from $24tn in 2005 to $76tn at the end of 2024 (an approximately 200% increase).
Although private markets have experienced faster growth in relative terms over the past two decades, it should be noted that they started from a significantly lower base compared to public markets and remain smaller than public markets.
- What three recommendations would Nathanaël Benjamin want the Committee to make in its final report?
The Bank of England welcomes the Committee’s inquiry, given the important role it has played in shining a light on what is happening in this otherwise opaque market. It builds on and contributes to work the FPC has already done and will continue to do to promote understanding and risk management in this area. The Bank believes this inquiry, and the report that will be published as a result, will incentivise participants in the ecosystem to better understand and manage the risks involved.
As set out in the Bank’s oral evidence sessions, the proposed private markets System Wide Exploratory Scenario (SWES) is an opportunity for both the Bank and market participants to deepen their understanding of the private markets ecosystem and the financial stability impact of a stress on this system. The Bank has been grateful for the Committee’s support for this exercise so far and welcomes further encouragement for engagement from a broad range of market participants.
24 November 2025
7