Soaring borrowing costs heap pressure on indebted UK firms

For companies in need of finance to expand - or just survive - rising interest rates and inflation make a scary combination, especially as recession looms

It was a photo that marked the end of an era. Morrisons boss David Potts, in a black open-necked shirt, standing in a garden at the supermarket group's Bradford headquarters, beside a statue of founder Ken Morrison. Standing chatting to him is the former Tesco supremo Sir Terry Leahy. They were celebrating a landmark deal that last year saw the grocery chain taken off the stock market and into private hands.

Leahy, now an adviser to the buyout giant Clayton Dubilier & Rice (CD&R), had helped it outbid rival US private equity firm Fortress for Morrisons. The deal, which involved loading the business with debt in a sector known for slim margins and cutthroat competition, was a big bet on growth.