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Slow Growth in 2012

2012 is looking to be another sparse year when it comes to economic growth. Figures from 2011 have been far from encouraging. This is not good news for the UK SME sector, as businesses struggle to reinvigorate innovation and recruitment plans, and look to tighten their belts to ease cash flow problems. Limited economic growth is not helped by reduced funding for small businesses from the banks, as they look to reduce their risk and balance their books.

The UK economy looks like it will avoid recession in the first quarter of 2012, but only just. Figures from Q4 in 2011 showed lean growth of just 0.3%, and some experts are forecasting a first quarter of zero growth this year. The economy is only recovering slowly, but some sectors may show better figures than others.

The services sector looks to maintain modest growth. The disappointing growth figures are dragged down by a collapse in construction output, so the reality might not be as bad as the numbers suggest. It still looks to be a tough time for many businesses however.

News of stagnation will not boost business confidence at all. Prospects for the second quarter of 2012 don’t look much better, with the diamond jubilee and attached bank holiday further dragging down output figures. The economy might not see any real growth until the third quarter of 2012.

Businesses need to respond positively to these sluggish growth figures. Small businesses who look to grow in tough times will be looking to innovate, such as going into the export market, and will emerge in a stronger position than those who look to cut their spending back completely.

In order to free up cash flow, invoice finance and factoring solutions can give SMEs access to funds tied up in unpaid invoices. If late payment problems are holding your business back, it could be worth looking into alternative finance in order to free up the funds to invest more in your business.



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