Partly Cloudy

Partly Cloudy

max temp: 16°C

min temp: 11°C

Search

East Anglia: One in five firms vulnerable to rise in interest rates, warns R3

06:00 25 June 2014

Frank Brumby, eastern region chairman of R3.

Frank Brumby, eastern region chairman of R3.

Archant

A significant rise in interest rates within the next 18 months could leave more than a fifth of East Anglia’s businesses struggling with their finances, a new report has warned.

shares

The findings of the latest quarterly Business Distress Index from insolvency trade body R3 indicate that 22% of local companies would be in financial difficulty if interest rates were to rise by a full percentage point or more before the end of 2015.

The survey echoes previous warnings from R3 that many businesses remain financially vulnerable despite indications of an economic upturn.

R3’s eastern region chairman, Frank Brumby, a director at Isadore Goldman, said: “Economic recovery is just as tough a time for some businesses to negotiate as a recession, if not tougher. Normally, insolvencies peak after a recession, but we haven’t seen that this time around. Record low interest rates and high levels of creditor forbearance have helped many businesses to continue to trade.

“Whilst this has given rise to a sizeable number of ‘zombie companies’, only able to pay interest on their debts and thus highly vulnerable to interest rate rises, other businesses that might have expected to struggle after 2008 have been given extra time to put their finances in order.”

Although there is growing speculation that the Bank of England will start to increase interest rates before the end of this year, members of its Monetary Policy Committee have signalled that any rise to a more normal level is likely to be gradual.

R3 believes that many of the firms surveyed who say they would not be affected by a rise in interest rates may be expecting their bank to absorb the increase.

Mr Brumby added: “Banks have not applied nearly as much pressure on their business customers regarding basic business lending as they did after the recession in the early ‘90s.

“Also, given how consistent speculation about rate rises has been in the last few months, many businesses will already be planning ahead for such an eventuality.”

: : Small and medium sized firms in East Anglia were burdened with an average of £1.2million of trade debt during the last financial year, according to analysis by online commercial debt recovery law firm Debt Guard Solicitors.

It says this suggests that, despite the economic upturn, the strain on businesses remains severe, although the regional figure is better than the national average of £1.5m.

shares

0 comments

Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files
Comments

Please log in to leave a comment and share your views with other Ipswich Star visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by Ipswich Star staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Not a member yet?

Register to create your own unique Ipswich Star account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

Spooky costumes on the beach at Felixstowe to launch the Halloween walk for EACH

A charity walk will light up Felixstowe’s promenade with its Halloween theme when it takes place next month.

Fire crews were called to Fraser House in Museum Street, Ipswich after a suspected gas leak was reported

A road in Ipswich has been reopened after a suspected gas leak forced the evacuation of a three storey building this morning.

Allison Heathcote and son James Heathcote at Queen Elizabeth Hospital, Birmingham, where she was treated after being shot five times in the Tunisia terror attacks.

A Felixstowe woman who was fighting for her life after the Tunisia beach attack in which her husband was killed has said she can only “vaguely recall” the massacre.

Andrew Renton takes his first public walk at a neuro conference with the help of Headway Physiotherapist Karen Hardy, left, and Acquired Brain Injury Support Worker Chloe Witton, right.

For most of us walking is a luxury too easily taken for granted.

Should Britain do more?

The public reaction to Europe’s migration crisis has been deeply polarised, but should Britain do more to offer homes to Syrian refugees affected by civil war?

Police are appealing for witnesses after the burglary of a disused business premises in Ipswich.

Durrants Rock n Roll auction

Inflatables and stage props go under the hammer in Rock n Roll auction

A Fokker A-series monoplane - basically the prototype for the Fokker E-series Eindecker fighters

It was the moment a technological breakthrough changed the stakes of aerial combat. Mike Peters, Galloway’s resident military historian, explains how Germany gained the upper hand.

Charlie Frost

“If everyone had a dad like him I don’t think there would be half so many problems in the world.”

Police want to trace two men seen in Bell Lane, Kesgrave after a home was burgled there.

Most read

Most commented

Topic pages