With talk
of the timing of increase in interest rates the Bank of England are ever
mindful of the spectre of the so called “zombie” businesses.
Latest
reports suggest that there are as many as 432,000 companies in the position of
generating only enough cash with which they can service their loans and
continue to trade.
This figure
equates to roughly 1 in 7 companies, a rise of 16% from 3 years ago. It is
estimated by solvency experts that up to 4000 could fail following a modest
0.5% rise in interest rates.
In reality there are many businesses stagnating - being kept alive by the
forbearance of banks, rather than being shut down as they would have been
during previous recessions.
This has prevented the “natural shake-out” which normally accompanies
recession.
Until such times as the UK economy presents itself with a more robust
backdrop it is unlikely that the Bank of England would take the risk of lifting
rates.
No comments:
Post a Comment