AI valuations increase the risk of a “sharp correction” in stock markets, the Bank of England warns – Business Life

Good morning and welcome to our ongoing coverage of the economy, financial markets and the global economy.

Risks to the UK’s financial stability have increased in 2025, the Bank of England warns this morning, citing the risk of a stock market crash triggered by highly valued AI companies.

The bank publishes its latest assessment of the UK financial system, warning that global risks threatening the country remain “elevated”. It refers to geopolitical tensions, the fragmentation of trade and financial markets and the pressure on the government bond markets.

These heightened geopolitical tensions increase the likelihood of cyberattacks and other operational disruptions, the bank stresses, also citing the “significant uncertainty surrounding the global macroeconomic outlook.”

And the bank highlights the rise in valuations of artificial intelligence companies this year and says this…