Zombies are threatening the UK economy
According to a current analysis from the international auditing company KPMG, so called “zombie firms” are causing a major drag on the UK economy. As the study reveals, 8 % of the 21.000 UK companies analysed show “zombie-like symptoms”. But based on the latest data and considering the increased interest rates from the Bank of England, the number of firms under sustained financial strain could even be as high as 14 %. Zombies are companies that are at least ten years old and have had an interest ratio lower than one in the last three years.
The highest concentration of zombie firms can be found in the energy sector (23 %). Other sectors, like the automotive industry, are affected by technological change, trends and innovation, especially from start-ups. Zombie companies pose a very real threat to the economy. KPMG Head of Restructuring, Blair Nimmo, warns that “in the event of a liquidity squeeze, many of these underperforming businesses would fail,” possibly causing contagion. Cambridge Network, Guardian