Lobby group TheCityUK has warned that up to £36bn in government-backed loans could turn toxic by next year, as companies impacted by the Covid-19 pandemic struggle to pay back the debt.

The Recapitalisation Group, a taskforce led by TheCityUK and accountancy firm EY, found that companies would be left with approximately £100bn of unsustainable loans by the end of March 2021 in an interim update published on 8 June. Of this, nearly a third has been provided by the government's coronavirus business interruption schemes.