Partly Cloudy

Partly Cloudy

max temp: 10°C

min temp: 9°C


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.


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.

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.


Welcome , please leave your message below.

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

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

An Ipswich man has been charged with being in possession of a flare during the derby game with Norwich at Portman Road in August.

A dangerous driver involved in a four-and-a-half mile police chase around Ipswich while drunk and disqualified from driving is facing a possible jail term.

A Kesgrave man accused of attempting to rape a schoolgirl has been cleared by a jury.

Specialist RAF search officers are joining the hunt today for missing airman Corrie McKeague.

Remains of a ship that sank to the seabed off the Suffolk coast around 500 years ago have been categorised as being “at risk” in an updated list of the nation’s heritage treasures published today.

A group of Suffolk schoolchildren stranded for six hours at night on a windswept moorland in heavy rain and fog have been praised for following their expedition training.

The University of Suffolk celebrated the work of its final three honorary graduates at its ceremonies on Thursday.

A motorcyclist was injured after a crash involving a van in Felixstowe on Thursday night.

Campaigners have demanded answers and greater transparency from mental health bosses over a “shocking” rise in unexpected patient deaths in Suffolk and Norfolk.

An abandoned white van is today being investigated by police looking into the disappearance of RAF Honington serviceman Corrie McKeague.

Most read

Most commented


Show Job Lists

Topic pages


Newsletter Sign Up

MyDate24 MyPhotos24