Economy not out of danger yet, small businesses say

By September 10, 2013Finance, News

Over half of all businesses in the North disagree with the Chancellor’s statement that the economy has moved ‘from rescue to recovery’, according to the latest Business Distress Index from R3, the insolvency trade body.

The data show that 56% disagree that the economy is now in recovery mode while just 33% agree. R3’s North West regional chair Jeremy Oddie, who is also a head of recoveries at accountants Mitchell Charlesworth, said: “Despite the positive economic news, many businesses – small businesses in particular – still feel they have some way to go.

“Now is not the time for complacency.One of the most dangerous times for a business is immediately after a recession, when a lack of investment as a result of cutbacks and the stress of servicing growing demand take their toll. While it might look like economic recovery is taking place, it may not feel that way for businesses on the frontline just yet.”

Despite businesses’ caution, the latest Business Distress Index finds the North’s business community in increasingly robust shape. Over two-thirds of businesses (69%) show no signs of distress whatsoever – up from 67% in March this year and 38% in June 2012.

At the same time, 60% of businesses are reporting at least one sign of growth – investing in new equipment, business expansion, increased sales, increased market share, increased profits – compared to 59% in March this year and 80% in June 2012.

Jeremy Oddie adds: “The falling levels of business distress are very encouraging, although we would still like to see further business growth. Growth indicators may be higher than they were earlier this year, but they are actually lower than they were a year ago. If economic growth is to be sustained, we will need to see improvement in the growth indicators in the coming months.”

Results for businesses in the North of England:

Growth Indicators %

Investing in new equipment 35%

Increase in sales volumes 28%

Our business is expanding 26%

We are experiencing increased profits 25%

Our market share has grown recently 15%

None 40%

Distress indicators %

Decreased profits 17%

Reduction in sales volume 17%

Using maximum overdraft 3%

Market share fallen 8%

Redundancies 8%

None 69%

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