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In the News

Rising interest rates - zombie firms may get wiped out

Geoff Riley

12th July 2023

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A zombie business is a company that is technically alive but is not economically viable. Zombie businesses are typically highly indebted and are only able to survive by borrowing money to service their debts.

Official figures showed 2,552 companies in the UK filed for insolvency in May 2023, 40% more than a year earlier and the highest since 2009.

For example, Cath Kidston, the retailer, which initially collapsed in 2020, was finally put into administration in March 2023. The IP& brand names have been bought by Next.

The era of low interest rates has now come to an end and many businesses are finding it tough to repay debt whilst other costs climb, and cash flows decline.

Please read: UK’s ‘zombie’ firms will be wiped out by interest rates, says insolvency specialist (Guardian)

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Geoff Riley

Geoff Riley FRSA has been teaching Economics for nearly forty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD and Revision conferences in the UK and overseas.

@tutor2uGeoff

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