North West businesses fear ‘double dip’ recession

A QUARTER of all businesses in the North West believe that they will become insolvent if the economy suffers a double dip recession, according to new research.

A survey by the insolvency trade body R3 has discovered that 28% believe that there is a real risk of failure – and many more also say that they have become worn out by their efforts to stay afloat.

The research, which looks at small businesses’ confidence in the economy, found that the hotel and catering sector was the least positive with almost half (47%) of businesses saying that a double dip could result in their company becoming insolvent.

The most positive sector was the manufacturing industry. Less than a fifth (19%) of manufacturing businesses believe that they will suffer if the economy falters.

Matt Dunham, North West regional chair of R3 and a partner at Grant Thornton, said: “These figures confirm our experience from previous recessions – that the early stages of recovery are a difficult time for businesses.
“Many struggling companies drew heavily on their reserves to survive and their resources have now begun to run out.”

When an economy emerges from a recession creditors are also more likely to try to liquidate their assets.

With over 22,000 North West firms in ‘time to pay’ tax arrangements with HMRC, it seems that a large number of businesses need advice on managing their cashflow.”

Mr Dunham added: “It is unsurprising that the services industry feels less positive.

“Although we are technically out of recession, many people don’t feel the worst is over so they are not splashing out on hotels and lunches. Post recession, the manufacturing sector tends to be the first to recover as people slowly start to demand more goods.

“The journey back to recovery is slow and uncertain and we advise any business owner who believes their company may be on the path to insolvency to seek help sooner rather than later.”