In light of the storm surrounding the ongoing problems in the eurozone, the Bank of England has dropped growth forecasts for the coming year. This is unwelcome news for everyone, including the SME sector, but it’s perhaps not unexpected.
The Bank of England has cut its growth estimates for 2012 from 1.2% down to 0.8%, following negative growth of 0.2% for the first quarter of 2012. Many believe that the ongoing trouble in the eurozone is the primary reason for stuttering growth in the UK.
Sir Mervyn King, governor of the Bank of England, has said that the eurozone is tearing itself apart, and it is unlikely that the UK will go unaffected. There are even contingency plans being drawn up in case of Eurozone break up.
Inflation rates look likely to remain around 2% for the coming year, the Bank has further commented.
He further commented; ‘We have been through a big global financial crisis, the biggest downturn in world output since the 1930s, the biggest banking crisis in this country’s history, the biggest deficit in our peacetime history, and our biggest trading partner, the euro area, is tearing itself apart without and obvious solution.’
Put in these terms, any hopes that the UK could skip along without an impact were probably misfounded, or as King say, ‘wholly unrealistic.’
In these circumstances, it’s even more important for SMEs to prepare for a harsh year when it comes to funding. With bank loans being increasingly locked down and inaccessible, looking to alternative finance measures could become an important step.
Invoice finance and factoring can be key to may businesses who are struggling with the harsh environment of the UK economy. If your business is struggling in light of the ongoing economic stagnation, then releasing cash flow tied up in unpaid invoices could give you the breathing room for growth and recovery.