One in ten British firms are now “zombie” companies, walking-dead businesses with unsustainable debts, due to the record low interest rate and banks’ reluctance to write off bad loans.
That's 160,000 firms.
To be clear, this is a clear demonstration of our view that capital (and in particular, the need to turn over capital) is an obstacle to real material growth. Phantom figures on account ledgers are choking the economy. The fallacy that because you didn't eat a potato one week entitles you to two the next (or vice versa) is radically impoverishing us. Of course, as with any system congestion, it is going to get worse, as more and more firms find their cash-flow squeezed.
In the paper this morning, I read that 10% of Spanish debt is now bad debt, but the banks are unwilling to foreclose because it damages their balance book (likewise all those firms that own retail units they are unable to let out).