'Zombies' on the brink

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The Institute for Turnaround said a record number of property, retail and manufacturing firms faced collapse in 2012 as many fail to generate sufficient cash to repay their borrowings, creating a vicious circle of job losses.

Chief executive Christine Elliott said: "Zombie companies can't generate cash or attract development capital in their current state and so are in limbo, being neither dead nor quite alive.

"Whilst some banks and private-equity companies claim to have very few in their books, the reality is that unless problems are addressed, we will see the death knell increase for more corporate distress," Elliott added.

London and the South-East is the UK's "zombie" capital, followed by the Midlands and North-West, according to the IFT's research.

The body claims nearly half of all known zombie companies are large enterprises with an annual turnover of more than £25 million.

More than half of turnaround practitioners blamed the rise in zombie companies on the sheer level of debt, although 20% blamed lenders.

Three-quarters of respondents said banks could do more to support businesses by ensuring that companies have viable business plans in place and management able to follow them through.