The threat of stagflation

The British economy, like several others, seems to be struggling to consolidate its recovery. Inflation, as measured on the Consumer Prices Index, rose to 4.4 per cent in July. Official unemployment increased by 38,000 for the last quarter, with the claimant count up and vacancies down by 22,000. The Bank of England and the IMF agree that the UK is poised to miss its growth target for 2011. Businesses are thus facing the threat of stagflation, although it is hoped that inflation will fall next year.

At Cooper Matthews we appreciate how difficult trading conditions are at present. We understand that the economy is at best going through a soft patch. At the same time, our work means that we are aware that some parts of the country are being affected worse than others. The sources and proceeds of growth are never shared evenly around the nation.

The progress of a firm is often at the mercy of things which are completely outside its control. While a company can endeavour to become more agile, it cannot affect the conditions in which it has to operate. It might be that the cost of commodities rises in a way which is hard to pass on to consumers who are unwilling or unable to spend like they used to do, for example. Sometimes flexibility is not enough to cope with a particular set of circumstances and serious business debt accumulates.

When a company is in serious financial hardship, it may well require business debt analysis. It is most important that a clear picture of the situation is obtained. The complex nature of a firm’s financial activities means that it is ill-advised to make an assessment without specialist help. Specialist business debt services have the necessary expertise and experience to make a diagnosis and to come up with tailored solutions.

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