The demand for recapitalisation: updated estimates of UK unsustainable debt

This update from TheCityUK Recapitalisation Group (RCG), supported by EY, provides revised estimates for levels of unsustainable debt faced by UK SMEs.

The updated projections are driven by a more positive outlook for the economy – due in part to government stimulus – but the recapitalisation of UK SMEs remains a huge challenge, and drag on the long-term return to economic growth.

The RCG currently estimates the total unsustainable business debt expected by March 2021 will be c.£67-£70bn, with as much as c.£20-£23bn of that expected to stem from government-guaranteed lending schemes. With further headwinds emerging, including the need to repay VAT and other taxes that have been deferred and loan repayment holidays and interest-free periods winding up, SMEs will be hard pressed to pay back what they owe at a time they can least afford to do so.

To read the update, please click the Download PDF button.

The final report of the RCG, published in July 2020, can be found here.