Welcome to my 100th BLOG!
Afraid our dire predictions of December 2007 on https://www.companyrescue.co.uk/directors-guides-insolvency/cost-cutting-guide are now coming home to roost. Hopefully, the people using our website started cutting costs and thinking about managing cashflow daily using our free tool, back then.
So in January 2009 what are our predictions?
Today the British Chamber of Commerce (BCC) stated the decline in the economy was "frightening" news.bbc.co.uk/1/hi/business/7825213.stm
Listen in Germany, Spain, China, Russia, Japan and USA manufacturing collapsed in Q4 of 2008, the largest falls ever recorded in some cases. So this announcement of a fall in trade in the UK is hardly surprising. Indeed some might say many of these trade bodies were too optimistic for too long into this mess, or were they talking things up in a rather forlorn hope that, like Canute, they could stop the tide?
My first prediction is 1.5% drop in GDP in Q4, this will take us firmly into recession when results are announced by ONS on 23rd January. We should expect a fall of 3.5% in GDP this year, 2009. Could this therefore, be the worst recession since the 30's. Actually many of my older colleagues and clients think it already is the worst they have experienced.
Secondly, the credit crisis is choking cashflow for companies, so many are considering reductions in staff and overheads. What is the key worry here? Some say don't cut jobs, as you need to be ready for the upturn, "yeh right". I say save your business and get costs cut now. I predict 1 million will join the benefits queue in 2009.
Thirdly, the banks will have to come clean about the vast losses they are hiding on their balance sheets. Expect to see some of them being bailed out again and being fully nationalised. Or the least worst option, we, the tax payer, take on the toxic assets in a new vehicle and free up the banks capital.
Final prediction. Yesterday's grim new on jobs and company failures will become a flood like it did in 1991 with daily failure/job loss updates on the news at ten. Expect to see journalists drop "credit crunch" and instead start to use "recession" and "depression" from 23rd January onwards.
Grim yes, over doing it? We don't think so.
Our own business has a seen a large jump in enquiry flow. Indeed, many people / companies are already past being rescued, despite not feeling at risk only 12 months ago. The numbers contacting CompanyRescue are still on a firm upward trend. So we agree with BCC at last - it is frightening for businesses out there.
Call turnaround and insolvency practitioners a barometer if you like; our barometer is deep in stormy weather territory and still falling.