Official figures offer no comfort

The number of firms seeking insolvency advice at any given time is always likely to depend on two things. One of these is the quality of management of companies around the country. The other is the state of the economy.

And the balance of the two can often make the difference. In a strong economy, some enterprises may get away with errors that could be very costly in a tight trading environment, when margins are squeezed and the competition for custom is tougher.

Equally, an economic downturn may create conditions where hitherto strong firms fall by the wayside, such as a company that may rely on government contracts being hit by public sector spending cuts.

Whatever category any company may fit into, the prospects for some may be gloomy if the latest government economic data is indicative of a trend.

The Office for National Statistics (ONS) has now issued its second estimate for gross domestic product in the final quarter of 2011 and while this often sees the original figure being revised as more detailed information becomes available, that has not been the case this time. Unless some other news comes to light that throws the calculations out of the window, the UK did indeed see its economy shrink by 0.2 per cent, taking Britain halfway towards recession.

And the ONS has also revealed the provisional figures for business investment in the last three months of 2011.

These revealed a seasonally-adjusted drop in investment of 5.6 per cent or £1.7 billion, to £28.7 billion. This figure was £0.6 billion (two per cent) down on the same period in 2010.

Most of the fall (£1.6 billion) was in non-manufacturing and unlike manufacturing investment, was down on the same period a year earlier.

Of course, it remains to be seen what will happen in the first quarter of 2012, which has, after all, over a month to go. But if the trend at the end of 2011 continues, the future may be very tough for some companies.

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  • The west brom - image
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  • Ortus Secured Finance - image
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