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Eurozone: Lengthy Recession Expected

With UK growth figures recently revised down to predict zero growth in 2012, the last thing that small businesses need is more bad news from the Eurozone. Unfortunately, bad news is the name of the game. Figures released in the past week show that the Eurozone is heading for prolonged recession with analysts warning that output could continue to fail right through 2013.

Though Germany posted better than expected growth of 0.3% between April-June, the Euro’s second biggest economy, France, only just scraped zero growth. However, as a whole the Eurozone posted an overall contraction of 0.2% – not what any business will want to hear. The biggest contractions were in Italy (0.7%), Spain (0.4%) and Greece, which posted a massive 6.2% contraction as their economy continues to implode. Though this may not directly impact UK SMEs unless they do business in European exports, it has a big influence on business confidence and also on the wider UK economy.

The overall picture of the Eurozone is that there simply hasn’t been the economic growth necessary to bring the debt crisis to an end. Economic slowdown has spread from the periphery of Euro economies to the very core. There’s a definite north-south divide, with positive growth from Germany and the Netherlands (0.2%), but conditions in the rest of Europe are still deteriorating. Export markets further afield are also starting to cool, signalling there might be continuing downturn in the second half of 2012.

If your business is feeling the impact of an increasingly tough European market, then maximising your cash flow will be key to maintaining healthy turnover. It has been shown that businesses in the struggling European economies are likely to delay paying their suppliers – if this is impacting your business, then turning to invoice finance can be an option. You can unlock the funds tied up in customer debts within a matter of days – this makes sure you can pay staff, bills and even invest back into business growth. Though the Eurozone might be struggling, it doesn’t mean your business is out of growth options.



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