A raft of well-known firms will collapse when Rishi Sunak turns off the financial taps this autumn, a corporate loans guru has warned.
Mia Drennan, founder of loans agency Glas – which has worked with a string of household names including Virgin Atlantic and Thomas Cook – said some large UK companies were ‘zombies’ surviving only thanks to the Chancellor’s financial support schemes.
End of the road?: Some large UK companies were ‘zombies’ surviving only thanks to the Chancellor’s financial support schemes
Insolvencies have stayed low so far during the pandemic due to State-backed loans, tax holidays, grants and the furlough scheme.
Just 3,116 companies registered for insolvency between April and June. While this was the highest level since the start of lockdown last year, it was still down by about a quarter on pre-pandemic levels.
Drennan said: ‘There were a lot of firms out there before the pandemic classed as zombie companies. They were really just ticking over and should have been shut or sold but that never happened because of the pandemic.
‘At some point, all the Government loans and support will come to an end. I suspect there will be a lot of corporate collapses. There has to be. There are a lot of high street white elephants that have to be resold or rebranded.’
Under the furlough scheme, the Government had paid up to 80 per cent of staff wages. This was cut to 70 per cent in July. Today, it falls to 60 per cent. The scheme will close at the end of September.
Glas is a middleman loans arranger which sources funds from third-party investors in return for a flat fee. It manages £100billion worth of assets.
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