When the government shut all non-essential retail stores in March many businesses were forced to increase borrowing to simply stay afloat. But are these levels of debt unsustainable? Retail Week looks at whether retail is facing a ticking liquidity time bomb.
Since the UK was plunged into a nationwide lockdown, the retail sector has been scrambling to keep afloat.
With stores shut for nearly three months and homebound shoppers not spending, many retailers have seen sales plummet. To get through this unprecedented time, many were forced to go to new and existing lenders to secure additional credit in order to pay the bills.
As the government pushes to reopen the economy and wean businesses off state funding, some retailers are facing the prospect of having to pay back large loans on top of existing debts – all while footfall levels wallow at a historic low and consumer confidence remains stagnant.
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