Let 'zombie' companies collapse to boost growth, says Mervyn King Former Bank of England governor says there is an "enormous" prize if policymakers can encourage tectonic shifts in the economy 12 April 2021 • 6:47pm Heavily indebted “zombie” companies must be allowed to collapse to help usher in a growth-boosting structural shift in Britain’s post-Covid economy, according to former Bank of England Governor Lord King. Policymakers would be rewarded with the “enormous” prize of stronger growth rates and low inflation, Lord King said as he blamed a decade of ultra-low interest rates for encouraging zombie firms to stagger on. The former Governor, who led the Bank through the financial crisis, said the economy needs to have “a significant reallocation of resources” to healthier sectors and firms with the challenge facing officials worsened by Covid.