Out of recession but too early to celebrate

The UK emerged from recession in the last quarter of 2009 racking up growth of 0.1%, it emerged this morning. Just enough to indicate things are on the up, though only just. The figures, by the way, are estimates. The full data, when it’s in, might reveal a slightly different picture, though there is good reason to remain optimistic.
That said, R3, the professional body for insolvency practitioners, delivered bad news this morning. A poll of its members indicates that corporate insolvencies will continue to rise this year and possible next year too.
The numbers indicates professionals expect around 28,000 business to go belly-up in 2010 against just over 22,000 last year.
The reason? Banks, the main creditors in these difficult times, will come under pressure to redistribute their money to start-ups, and away from struggling companies.That’s a harsh decision. There’s no reason why many businesses in difficulty shouldn’t be worthy of continued help. Many can still be prosperous companies.
R3 members probably polled the way they did because experience tells us that what happens after a recession. But many things in this downturn have bucked expectations. Unemployment never reached the dire levels that economists first predicted and there have been volumes written on why this crisis, though appalling on paper, has not been felt as badly as other downturns out there in the real world. There have been significant efforts to help companies endure. Unlike previous crises. Whose to say that the corporate survival rate won’t be a little better than the professionals expect? Of course, that would ‘t suit business recovery professionals

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