A realistic assessment of the state of the UK economy

The Deputy Governor of the Bank of England has provided an assessment of the future prospects of the British economy which reflects the pessimistic mood which is in the ascendancy at the moment. Charlie Bean has stated that while consumers might not feel the pinch in 2012 quite as much as they are doing now, the next few years will involve households getting their debts under control. In other words, consumer spending looks set to be fragile for quite some time.

At Cooper Matthews, we recognise the grim nature of the economic times we are living through. However, it does appear that 2012 may not be as difficult as the last quarter of 2011. It is impossible to tell, but a combination of quantitative easing and credit easing may feed through to the real economy in a positive way. In addition, inflation may well fall slightly. The important thing is to know that amid the current economic instability resignation is not the appropriate attitude for struggling companies.

Companies usually become distressed through no fault of their own. External conditions are often decisive in determining the success or failure of smaller concerns. The Merlin agreement on lending to businesses does not seem to have worked for small companies. Many of these firms have found it harder to obtain credit than they should have. This may have made it harder for them to escape from business debt problems.

The point for distressed firms is that they have to look forward. It can be difficult to do this when things are going poorly. When business debt is mounting, adopting a passive mind-set is not the way to go. It is critical to act incisively before it is too late. A winding up petition can be avoided in many cases. However, this avoidance is often only possible if business debt services are used.

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