More than 20,000 East of England businesses (7%) say they would be unable to repay their debts if interest rates rose even marginally, according to the eastern branch of insolvency and restructuring trade body R3.
The finding indicates a sizeable increase in the number of so-called 'zombie' businesses, those only able to keep trading due to the low cost of borrowing, from the less than 1% of local firms R3 recorded as being in this situation in September 2016.
The research, part of a long-running survey of business distress by R3 and BDRC Continental, also found 18% of firms in the East were just paying interest on their debts, up from 13% last September.
R3 Eastern chairman Mark Upton, a partner at Ensors chartered accountants in Ipswich, said the research showed 'tens of thousands of firms are walking a very tight line'.
He added that rising inflation may lead to a 'double whammy for struggling businesses', possibly increasing the chance of the Bank of England raising interest rates and 'undermining the consumer spending that has driven the economy over the past year'.
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