It contrasts sharply with the increasingly indebted state of national exchequers across Europe, which faces a potentially devastating financial crisis.
Despite a sharp decline in demand from pre-credit crunch levels, Europe’s biggest quoted companies have managed to build their cash reserves by reducing dividend payments, scaling down share buybacks and cutting back on mergers and acquisitions. They have also slashed costs through redundancies and reductions in inventories and investment.
The benefit of this accumulated cash is expected to be felt initially by the companies’ shareholders, before feeding through to the wider economy.
Back in the private sector, UK and European companies are sitting on more cash, as a percentage of total assets, than at any time since at least 2003, according to research by UBS.