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Time to Gear Up for Recovery?
The economy is no longer in free fall and a recovery next spring is likely, according to a renowned economic think tank. The Ernst & Young ‘Item Club’ has said that stabilising markets and the easing of credit conditions could mean that the worst of the recession is over.
It’s fair to say that the think tank is cautiously optimistic. Peter Spencer, chief economic adviser to the Item Club, warned that the UK was not out of the woods yet, adding that
“we face another 12 to 18 months of serious grief. Around 900,000 jobs will be lost this year and half a million next”.
This may not sound like a reason for celebration, but this is one of the very few slightly optimistic forecasts made by any serious commentators. This, coupled with other economic data coming out recently, may mean that we can look forward to more benign economic conditions later this year or next.
“So what?” you may be thinking. Well, for anyone running a business, or thinking about doing so, the end of a recession is a very significant time indeed. You could be forgiven for thinking that a company taking on debt is being badly run given all the press coverage generated by the credit crunch and the recession. But it’s not too long ago that it seemed to be considered foolish not to borrow to the hilt and to expand a business at the fastest rate possible.
The reality, of course, is somewhere between the two. But if the end to the recession really is just around the corner and you think your business or business idea may be ideally placed to prosper as the country emerges from recession, now may be the best time to gear up for that recovery.
Companies that are too conservatively run can lose market share during the boom-times. A sensible and balanced approach to business lies in being neither too fearful nor too impatient to expand. Taking on debt when you’re confident in the future of your business and money is cheaper than ever before is am eminently sensible thing to do – as long as you don’t overdo it and you take expert business finance advice, particularly as we come out of recession. It may be exactly what your company needs and it may be exactly the right time to act.