Companies will rack up ‘colossal’ £61bn pandemic debts that many won’t repay for years, says leading forecaster
Companies will rack up ‘colossal’ pandemic debts of £61billion that many will not start repaying for years, according to EY Item Club forecasts.
Banks lent businesses almost £35billion between March and December 2020, – almost four times the £9billion handed out in 2019.
They are expected to lend a further £26billion in 2021. But many companies will not begin to make repayments until 2024, and are at risk of going bust if there is a longer than expected economic recovery, EY Item Club warned.
Under pressure: Many companies will not begin to make repayments until 2024, and are at risk of going bust if there is a longer than expected economic recovery
Anna Anthony, UK financial services managing partner at EY, said: ‘By the end of this year, businesses will have borrowed in the region of £60billion net since the start of the pandemic, which is a colossal amount, especially as for many it is just about survival.
‘And the prospect of some, if not many firms, not being able to make the required repayments is concerning for all involved.’
As well as normal bank lending, the Government has also backed Covid-specific financial assistance.