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Tuesday, 25 January 2011

GDP figures show contraction of 0.5%

The latest GDP figures for the UK confirm the belief that many have held that we are not out of the economic woods yet and that 2011 will be a tough year.  We have seen a rise in the number of struggling companies contacting us which reflects these latest figures of a 0.5% contraction.  The impact of the December snow did weigh heavily however. 

The picture is mixed in that some regions are struggling more than others and some industries are fareing better.  Scotland in particular is struggling whereas bigger businesses are doing better.  However smaller firms in all industries are feeling the pressure.

About a year ago in the City business people would ask each other whether they were "double dippers" meaning, of course, do you believe that a second recession is likely.  So could that happen?  If we have another quarter of negative growth, Yes.

Richard Lambert of the CBI was berating the Coalition for concentrating too much on deficit reduction and not enough on growth.  Perhaps he saw these figures early...   It is easy to snipe as both of them are dependent on each other and it is politics, as opposed to economics, that determines which side of the coin is favoured. You can't have some growth without deficit reduction and you can't have some deficit reduction without growth.

We shall have to see what happens.  Unfortunately for companies just "seeing what happens " is not really an option.  It is important to have a plan, incase you find yourself in difficulty, and so know your options. 

The longer you leave it the less options you have, especially if the bank or creditors start legal actions such as winding up petitions.

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Many thanks for your comments. If you have a private business problem and you want advice give us a call on 0800 9700 539 or email me at keiths@companyrescue.co.uk. If you are a professional advisor with a troubled client, please suggest they visit www.companyrescue.co.uk or contact me as above.

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