Blog: Interest rate redemption
Leonie Barrie | 19 June 2007
Rising interest rates are bad news for homeowners – but they could be a lifesaver for the UK clothing industry. At least according to commercial analyst Plimsoll Publishing, which describes rising rates are “a useful wake-up call” for companies who are in debt. Its research shows more than a quarter of UK clothing manufacturers are in more debt than they have been at any time in their history, enticed by low interest rates and the lure of easy debt secured on rapidly rising property prices. And this has enabled them to cover up flaws in their business strategies.
Apparently, though, there is just enough time left for these firms to look seriously at their balance sheets and change direction – and if companies reduce their level of debt and streamline their business models, they may have a future, believes Plimsoll. But if they ignore the alarm call they risk sleepwalking into danger.
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