Rising interest rates are bad news for homeowners - but they could be a lifesaver for some businesses, according to commercial analysts Plimsoll Publishing.

“Our research shows over a third of UK recruitment agencies companies are in more debt than they have been at any time in their history,” said David Pattison, senior analyst at Plimsoll.

“Rising rates are a useful wake-up call. Many of the companies in question have been enticed by low interest rates and the lure of easy debt secured on rapidly rising property prices, and so have been able to cover up flaws in their business strategies – effectively buying time. There is just enough time left for these firms to look seriously at their balance sheets and change direction."

If companies reduce their level of debt and streamline their business models, they may have a future, according to Plimsoll. But if they ignore the alarm call they risk sleepwalking into danger.

Rising rates should also bring stability to the UK recruitment agencies market, according to Pattison, because they will slow down the pace of acquisition activity. While this is unlikely to affect deals already on the table, companies with some money in the bank will probably leave it there, in the shorter term at least. This may be bad news for smaller firms hoping to sell out to the bigger players, but it’s good news for those fearing a hostile takeover.