3 oddities of the current recession revealed
While the UK recently avoided plunging into a triple-dip recession thanks to a 0.3% lift in GDP in the first quarter of the year, the fear that the economy is always teetering on the brink of collapse –think quantitative easing, tight lending conditions and more – is ever present.
The spectre of recession has been with us since 2007 and in that time the UK has entered into a recession twice (2008-09 and 2010-11), having a crushing impact on the very cornerstones of a healthy economy from employment levels and manufacturing output to house prices and consumer spending.
Here are three oddities of the current recession that may have escaped your focus.
Forget triple-dip it’s the single-dip that hit the economy the hardest
While the focus has been shifted to whether or not the UK will enter a triple-dip recession, it seems that whether GPD slips into negative figures or not, we still haven’t managed to escape the effects of the 2008 to 2009 recession.
During this period the economy contracted for five consecutive quarters, shrinking the economy by a staggering 6.4%. This dramatic drop means that the current economy is still around 3% smaller as a result.
The recession is a good time for new business
It may seem a contradiction in terms but according to some the recession is the perfect time for start ups to test the waters in the world of business.
Earlier this year The Observer reported that Lord Young, the Prime Minister’s advisor on enterprise, argued that new businesses starting in the recession can take advantage of low-wage levels, and as a result increase the financial returns they are able to achieve.
Pulling out of a recession could spark an “insolvency Armageddon”
While it should naturally follow that the better the shape of the UK economy, the better the shape of UK business, it seems that the reverse could be true.
Commenting on Insolvency Service statistics for the third quarter of 2012, which showed a 2.8% fall in insolvencies, compared to the previous quarter, Frank Tschentscher, a partner with law firm Schultze & Braun, argued that the fall in insolvencies could mark a “false dawn” with insolvencies set to “rocket” if the UK really begins to edge towards recovery.
If your business is struggling in the current climate, you may want to seek professional advice on your company administration options.