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Zombie British Companies

November 19, 2012

In Financial Times: “Zombie companies stalk UK economy” by Michael Stothard and Chris Giles:

One in 10 British businesses are so-called “zombies” being kept alive due to ultra-loose monetary policy and the reluctance of lenders to write-off bad loans, according to new data.


The number of companies only able to pay the interest on their debts but not reduce the debt itself – a common characteristic of “zombie” companies – has risen by 10 per cent to 160,000 in the past four months, according to R3, the insolvency industry trade body.


“More and more companies are catching the zombie disease,” said Lee Manning, president of R3.


Zombie companies cannot invest or innovate, they just sit there slowly losing employees and customers and dragging on the economy,” said Mubashir Mukadam, the European head of KKR Asset Management’s restructuring arm.


the BoE said “zombie” companies were one of the causes of slow growth and their existence was exacerbated by banks preferring to keep them alive rather than write down their outstanding loans.

See also “One in 10 British firms ‘are zombies burdened by debt’” in The Standard by Lucy Tobin, and “Who will rid us of the zombie firms?” by Catrin Griffiths in The Lawyer and “Zombies are taking over Britain” by John Stepek in MoneyWeek and “Are you a 9 to 5 zombie?” by Anna Moore at Daily Mail

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