Is Financial Recovery Really On The Way
There have been plenty of positive signs in the economy over recent weeks and months with regard to the first signs of recovery and the new buzz phrase which everybody seems to be using is “green shoots”.
The average price of a property is starting to increase once again, investments in the stock market are showing increases and loans to small and medium sized businesses as well as secured loans, are beginning to become more available to potential borrowers.
But one group has warned that we should not get too excited about these events marking the end of the current financial down turn.
Financial turnaround and recovery experts, TMA(UK), have said that the country is still a long way from full recovery and that the main reason for the problem is due to the lack of funding for companies through realistically affordable business loans. Although the availability of loans to companies is increasing slightly, banks are generally charging a large margin above base rate for these loans, making them too expensive for companies to be able to repay.
The warning comes as the insolvency figures for the second quarter of this year have been published, which reveal that the number of companies becoming insolvent has increased by around 39.2 per cent over the course of the past twelve months.
Tyrone Courtman of TMA(UK) said “The insolvency figures show that the number of companies closing down is still on the increase, and the reason for that is straightforward, there is just not enough liquidity in the system. Don’t be fooled by apparently encouraging signs in some sectors of the economy, down on the nation’s shop floor we see cash starved businesses continuing to disappear and unless the continuing liquidity crisis is tackled, this recession is going to have a very long tail indeed.”
