Commenting on today’s publication of the Bank of England’s third quarter ‘Credit Conditions’ report, Fenton Burgin, debt advisory partner at Deloitte, said: “The latest survey highlights the intensified need for corporates to put their house in order.  Banks reported a marked rise in the demand for capital for balance sheet restructuring.  The net balance of banks reporting stronger demand has jumped from -7% to +19.2%.” 

Referring to recent analysis from Deloitte, Burgin continues: “The scarcity and expense of credit could see UK businesses paying an additional £13bn a year just to meet the cost of increased interest payments – an equivalent of 1% of GDP.  When markets were flush with liquidity and there was plentiful cheap corporate debt, some businesses, particularly in the private equity arena, took on unprecedented levels.  Following the onset of the credit crunch over the past twelve months, however, the cost of maintaining this debt has risen substantially.  In this challenging environment businesses need to manage their balance sheets and liabilities very carefully just to keep their heads above water.”

ends

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In this press release references to Deloitte are references to Deloitte & Touche LLP, which is among the country's leading professional services firms.

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