Judging by the mood amongst credit and finance professionals at an industry Think Tank I attended this week, it’s no surprise the Bank of England reports that the business community’s appetite for borrowing money to invest is “subdued” at present.
Generally speaking, most credit specialists believe that businesses are very concerned about what effect the planned public expenditure cuts and VAT rises will have on their commercial circumstances over the next 6 to 9 months. This caution and worry about the short term economic outlook may well explain the drop off in loan applications from SMEs in particular. Instead of looking to invest in the future, SMEs seem to be more concerned with reducing their existing debt. Businesses that still want bank support to keep themselves alive have long given up on the idea they’ll get anywhere with their applications, so they’ve dropped off the radar too. This type of business may be better off relying on the continuation of the HMRC’s Time to Pay tax deferral service in order to protect themselves against going to the wall.
It is a pity that there is this level of caution around in the economy, just when there were signs the economy was moving in the right direction again. Whether we’ll see a “double dip” recession is still open to question. I don’t think we will see GDP go into negative territory for two successive quarters again in the short term, but what I do see is that business life is not going to be easy for the next year or so.
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK
Begbies Traynor have been appointed administrators of William Anelay Ltd, York, one of Britain’s longest-established construction and heritage restoration companies
Smith & Williamson has been appointed administrators of charity 4Children