After years of rock-bottom interest rates, the debts of the UK’s listed companies have soared to a record high of £390.7bn, easily surpassing pre-crisis levels, according to the new annual Link Asset Services UK plc Debt Monitor.
In the vice of the credit crunch, companies had cut their borrowings by a fifth in just two years. But since the low point in 2010/11 net debt has jumped by a staggering £159.6bn. Moreover, most of this increase (£122.6bn) has been in the last three years alone.
The oil sector has seen the fastest growth in net debt, up 459% since 2008/9. In 2017/18, BP and Royal Dutch Shell accounted for an astonishing £1 in every £7 of all UK plc’s net debts. Faced with a collapse in the oil price in 2015, both undertook major restructuring exercises, and took on additional debt to fund their activities and help maintain their dividend pay-outs while profits were at rock bottom.
The consumer goods sector is the UK’s largest borrower, accounting for almost a quarter of UK plc net debts. Tobacco giants Imperial Brands and British American Tobacco account for almost three-quarters of all the debt in the sector.
Housebuilder Persimmon, by contrast, boasts net cash of £1.3bn, the highest net cash position of UK plc.