Big Ben, Westminster Bridge on River Thames in London, the UK. English symbol. Lovely puffy clouds, sunny day
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Thousands of financial firms in the UK are at risk of failing due to fallout from the Covid-19 outbreak, according to new data from the UK’s Financial Conduct Authority (FCA).

The FCA published the results of its coronavirus financial resilience survey, which it launched between June and August 2020.

“Our role isn’t to prevent firms failing. But where they do, we work to ensure this happens in an orderly way,” said Sheldon Mills, executive director of consumers and competition at the FCA, in a release. “By getting early visibility of potential financial distress in firms we can intervene faster so that risks are managed and consumers are adequately protected.”

The survey found that approximately 4,000 of the 23,000 firms surveyed are at elevated risk of failure.

While the firms at risk are primarily small and medium-sized, the FCA said about 30% of them have the potential to cause wider harm to the economy if they did fail.

The FCA survey also found that 59% of firms expect the pandemic to have a negative impact on their net income and that the initial lockdowns in response to the pandemic had a significant effect on their liquidity.

In the retail investment sector, 37% of firms said that they had furloughed staff and 15% had received emergency government-backed loans.

At wholesale financial market firms, 16% had furloughed staff in the summer and 11% had received a loan. And, in the investment management sector, 8% of firms had furloughed staff while 3% had received a loan.

The FCA noted that its survey was conducted before the second wave of Covid-19 infections and before vaccines began receiving approval.

As a result, the regulatory intends to “repeat the survey as the situation evolves.”

The survey doesn’t cover the 1,500 largest firms in the UK financial sector as the financial stability of the sector’s large players is overseen by the Bank of England’s Prudential Regulation Authority (PRA).