Worst economic situation since 2008’s Credit Crunch
The British economy is heading for a recession and the worst economic prospects since the global credit crisis in 2008.
This time it’s not sub-prime mortgages irresponsibly sold by the likes of the Lehman Brothers in New York but a virus thought to have crossed to humans from dead animals in a Chinese market. Although it is unlikely to be as bad as the so-called Spanish flu outbreak in 1919-20 which took up to 50 million lives the coronavirus is killing hundreds (and indeed thousands) of people around the world.
One of its victims is the economy with stocks falling in markets around the globe, companies laying off staff and shops and businesses being closed by Government decree.
Ian Carrotte of ICSM Credit said having seen at least four recessions over the last few years this is the most sudden and unexpected. He said: “There’s a kind of global hysteria about toilet rolls and hygienic cleaning gel but the real problem is business is slowing down as a result of shut downs and travel bans. The issue is that when a business is halted its overheads are not and that quickly produces a cash flow crisis leading to firms ceasing trading.”
He said ICSM Credit members were already raising the alarm as clients began to put the brakes on payment as cash flow dries up. WH Smith has issued a profit warning after the outbreak has hit its shops at airports while Cineworld’s shares have fallen by 40% and travel firms have seen a dramatic drop in customers with airlines the worst affected. The UFI global trade shows have seen over 500 events cancelled costing the industry £23bn in lost trade in the last four weeks with the NEC’s Sign and Digital the latest cancellation.
On the High Street it’s the future of Intu one of theUK’s biggest shopping centres that’s in doubt as it admits it may go under in the next few days. The firm owns Manchester’s Trafford Centre and the Lakeside complex in Essex.
Ian Carrotte said the Government needed to be seen to be taking control and to breath confidence back into the business community with its actions. However he said there was one piece of good news and that was the historic firm Axminster Carpets had been bought out of administration by ACL Carpets and would live to fight another day.
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk