There were revelations yesterday that the UK has slipped into a double dip recession, with negative GDP growth for a second consecutive quarter. This is bad news for the small business sector, as economists are now predicting another lost year of growth for the UK economy.
The UK shrank 0.2% in the first three months of 2012, following a 0.3% contraction in the final quarter of 2011. This shows the UK economy is not yet recovering strongly, and is still very much scraping the bottom of the barrel.
However, the recession is nowhere near as deep as previous, serious recessions such as in the 1930s. The picture is more of a shaky economy dipping in and out of shallow recession, and the economic shrinking is nowhere near that experienced in 2008. However, this is still the first double dip recession since the 1970.
Many small business owners, however, were perhaps less surprised by the negative growth. Opinion surveys have shown that many entrepreneurs and SMEs were finding business conditions in the first few months of 2012 as bad as those last year. This is echoed in the near identical growth figures.
Small Business Sector
The stuttering growth of the UK economy shows that growth is not yet guaranteed. It also casts doubt on the UK government’s austerity policies, as well as making life harder for many small businesses.
The negative growth was largely exacerbated by a 3% contraction in the construction industry. Production industries decreased by 0.4%, whereas the services sector which includes retail grew by 0.1%.
For small businesses looking to buck the trend of economic shrinking, looking for funding outside the banks is an important route to financing growth and development plans, as well as freeing up cash flow to allow smooth everday running. Invoice finance, including factoring and invoice discouting, are flexible and secure ways to raise finance, without having to take on more bank debt.
With such a shaky economic picture forming for the UK, Select Factoring have many invoice finance solutions which could benefit a whole range of small and medium businesses.