New data collected by a recruitment financer has revealed that the most deleterious effects of the global economic downturn are still to come for small and medium sized businesses.
Venture Finance’s yearly Credit Check poll has demonstrated that one quarter of all respondents are operating above their working capital, and that three out of every five accountants (60 per cent) are convinced there will be even worse insolvency numbers for small businesses in the offing. A vast majority, at 80 per cent, reported that more traditional financing avenues have been abandoned by their clients due to lack of faith in the system.
Venture Finance’s managing director, Peter Ewen, remarked upon the findings by saying that most small businesses and recruiters in the UK are still in survival mode as a result of the particularly aggressive recession, and since accountancy firms have been reporting that their clients have no faith in traditional finance, there is a need to educate them in alternative funding sources.
In related news, Capital Economics’ chief European researcher, Jonathan Loynes, recently said that the Office for National Statistics’ report of a second quarter growth of 1.2 percentage points was a one-time occurrence.
In comparison with last year’s second quarter growth, 2010’s figures rose by 1.7 per cent, but Mr Lyons expressed scepticism that the growth rate would continue to increase throughout the coming months, saying that due to another slowdown in the international economy, it is likely that there will be a corresponding cooling off of the UK economy as well. Job creation will likely suffer as well, Mr Loynes said, and predicted further job cuts in the immediate future.
BNP Paribas’ Alan Clarke agreed with Mr Loynes’ findings, saying that there will be a contraction in economic activity relatively soon, especially in light of August’s record low in regards to industrial activities. The UK construction industry showed the most sluggish growth over a half-year period due to a falling off in demand for new homes.
Markit’s chief economist, Chris Williamson, remarked that the service sector is facing struggles in its attempts to extend the momentum from its second quarter growth. Mr Williamson predicted that the sudden spike last quarter marks the high point the economy’s cycle of recovery.
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