“The proportion of households with high debt service ratios … has increased and is expected to continue to do so through 2023. But it is projected to remain some way below the historic peak reached in 2007,” the BOE said in its half-yearly Financial Stability Report.

The BOE said households were more affected by higher interest rates than banks, while the corporate sector remained “broadly resilient”.

“Nevertheless, higher financing costs are likely to put pressure on some smaller or highly leveraged firms,” it added.

The BOE added that following the collapse of Silicon Valley Bank, it was working with Britain’s finance ministry to ensure that there were options to smoothly wind up small banks which were exempt from some requirements applying to larger ones.

BOE Governor Andrew Bailey will present the report’s findings in a press conference at 0800 GMT.