According to insolvency trade body R3, 8% of UK businesses are only able to pay the interest on their debts, never reducing the debt itself.

These 146,000 companies are termed ‘zombie businesses’ by R3.

R3 gives four symptoms of what make a business a zombie, namely:

• just being able to pay the interest on debts, but not reduce the debt itself

• in the event of a rise in interest rates, the business will be unable to pay its debt at all

• struggling to pay debts when they fall due

• having to negotiate payment terms with suppliers.

R3 figures also show that of the four broad sectors defined in the survey, the retail sector is the most prone to zombies, with 18% of firms (a total of 31,000) classed as such. This is closely followed by construction, at 16% of business, or 37,000 in total.