Our new UK plc Debt Monitor provides a unique and comprehensive view of the scale and shape of corporate borrowing since the financial crisis. We measure the level of debt taken on by the UK’s listed companies, the trends over the last 10 years, and how borrowing differs across companies and sectors. 

Nigel Fish, Finance Director at Link Market Services, discusses the results with Jeremy Naylor of IG

From credit crunch to credit binge

debt equity ratio

After years of rock-bottom interest rates, the debts of the UK’s listed companies have risen to a new record. By the end of the 2017/18 financial year net debt had soared to £390.7bn1 (total debts less cash). Since its low point in 2010/11, in the vice of the credit crunch, net debt has jumped by 69%.

  • Most of this increase has been in the last three years, helping fund dividends of £263bn at a time of low profitability for UK plc
  • Reliance on short-term borrowing has reduced: in 2008/9, more than a quarter (26%) of all UK plc debts were due within a year. By 2017/18 that proportion had fallen to just 18%
  • The amount of cash that companies hold has also soared, requiring extremely sophisticated treasury operations.

Fastest growth in the oil sector

debt by sector

The oil sector has seen the fastest growth in net debt, up 459% since 2008/9. In 2017/18, BP and Royal Dutch Shell accounted for an astonishing £1 in every £7 of all UK plc’s net debts. Faced with a collapse in the oil price in 2015, both undertook major restructuring exercises, and took on additional debt to fund their activities and help maintain their dividend payouts while profits were at rock bottom.

  • The consumer goods sector is the UK’s largest borrower, with three-quarters of debt in this sector made up by tobacco giants Imperial Brands and British American Tobacco
  • Consumer staples groups Unilever and Reckitt Benckiser make up the rest of the sector’s debts
  • Only telecoms, and retail and consumer services sectors have lower debts compared to 2008/9. As retail has become more and more competitive, these companies have reengineered their finances to become more defensive.

How much debt is too much?

debt by sector

The debt/equity ratio provides a useful measure of how highly geared a company is, or in other words, how large its debt burden is. 

  • As the credit crunch hit, UK plc collectively had very high debt/equity ratio of 89%, with total debt almost equal in value to the amount of equity on corporate balance sheets
  • Within three years UK plc collective gearing had reduced sharply to just 64%, but after 2011/12, when credit conditions began to improve, companies quickly allowed gearing to rise
  • Since then, shareholder equity has risen more quickly than debt, bringing the debt/equity ratio down to a more comfortable 73%. Smaller and mid-cap companies now have lower gearing than their larger counterparts.
“The economic recovery since the credit crunch has been slow, but very long, and some commentators suggest the cycle may be drawing to a close. Total borrowing may continue to rise as it’s a vital part of the investment financing-mix, but gearing, or the burden of debt is on the wane. Investors may prefer to see UK plc focus on reducing gearing further to provide itself more breathing space in the next global downturn.” Justin Cooper, CEO, Link Market Services

All data was sourced from Factset and the Link Asset Services Dividend Monitor.


Link Asset Services gathered ten years’ selected balance sheet data from Factset on all the companies currently listed on the main market in London. It excluded any company without a ten-year history of data, and all companies in financial sectors (banks, insurers, asset managers etc), except property. In all, 440 companies are included in the study. Together they account for over 96% of the total assets and the total liabilities of UK listed companies.

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