More zombies are stalking the land - but for how long?

One in seven firms now cannot do more than service debts but they may soon go under, suggests recovery specialist

The zombie population of the UK – firms not quite dead but not growing or expanding – has multiplied to an estimated 432,082, according to media reports.

Statements made by Begbies Traynor to the Financial Times indicated that the insolvency practitioner now believes the ratio of dead firms walking in the UK has risen to one in seven – 16 per cent higher than in 2010, and the most the firm has seen in four years of counting.

"They can barely generate enough cash to service interest on their debts and keep creditors at bay," the report said.

Begbie Traynor's numbers are based on the number of firms it has classified as on red alert, extrapolating from their credit scores.

Low interest rates and widespread credit problems have often allowed these firms to maintain a semblance of life in tough times, the insolvency firm indicated.

If interest rates rise in 2014, as some say they will, many current zombies could go under, the report said.

June figures from another insolvency specialist, R3, also suggested that the rate of insolvency has been going down.

The Department of Business, Information and Skills released its latest official insolvency statistics on 2 August, for the second quarter of 2013.

"There were 3,978 compulsory liquidations and creditors' voluntary liquidations in total in England and Wales in the second quarter of 2013 (on a seasonally adjusted basis)," it wrote in its announcement.

"This was an increase of 10.5 per cent on the previous quarter, but 2.1 per cent less than the same quarter a year ago."