More than 100,000 so-called zombie firms - debt-laden companies surviving only because of ultra-low interest rates - are at risk of failure, a think tank has warned.
According to the Institute for Turnaround (IFT), a 'zombie collapse' is threatening to hit the country once interest rates return to more traditional levels.
"The number of businesses only able to pay off the interest on their debt has escalated to somewhere between 100,000 to 150,000," the IFT said.
"If those organisations employ on average 10 people each, consigning them to oblivion overnight would have a profoundly undesirable effect on unemployment.
"Zombies are a problem that can and should be responsibly managed - these are real businesses that carry the fate of people's livelihoods and wellbeing with them."
Some companies have already been forced to sell off crucial assets to survive, further harming their future viability.
It said capital-flush firms have been engaged in a "corporate 'pick and mix' in each portfolio" amid a large-scale disposal of assets worth billions.
The IFT has published a spoof video of football manager Arsene Wenger explaining what zombies firms are and what happens when quality assets are sold off.
The Bank of England base rate has been at a historic low of 0.5% since March 2009.
Once the base rate climbs again, indebted firms are at risk of seeing their debt burden increase too.
However the IFT also warns that some sectors that exist with oversupply, such as retail, will need to shed more jobs and firms before recovery can be achieved.
"There will be business failures but the enlightened management and investors who move to tackle their challenges stand a much better chance of staying viable and sustainable long after the competition has faded away," it said.
"To return to a productive and growing economy, we need good people working in business models that have a long term future," it added."
And it insisted: "Companies stuck currently in limbo with unaffordable debt, having been starved of investment and lacking, after a punishing recession, the energy and the skills to break out of their inevitable decline, need some TLC - tough loving care."
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