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"It
can only get better".....? Some reflections.
By Jeremy Priestley, Managing Partner,
P & A Sheffield.
As we enter a new period of political administration it's interesting
to reflect on the impact on business of the previous one.
'Prudence' with her windfall gains, strong pound and low interest rates,
aided by some alleged creative accounting, has managed to balance the
books we are told. The economy strengthened by serious investment in
the UK infrastructure, with pledges of more to come! Mr Average-Man-in-the
Street has not had it so good since the MacMillan days - or so we are
led to believe.
So why are company and business failures not reducing? It's as busy
now for business rescue practices as it was 5 years ago! Is it because?
- the global market and a strong pound have had a serious impact on
our businesses,
- or, has the spirit of enterprise, that historically gave us a strong
manufacturing base and a world market, lost its way as the aspirations
of entrepreneurs are dampened by regulation, bureaucracy and political
correctness,
- or is it the speed of change in this IT led global economy, coupled
with an unwillingness or inability to adapt to change,
- or is it because it's easier to import than manufacture and export,
- or is it because of a strong focus in our lives on leisure rather
than work - with plenty of available plastic to fund gaps,
Whatever the reasons, the economy is very brittle - too many businesses
are failing because of management weaknesses in shifting markets -
and too many proprietors seem to be reluctant to seek advice when problems
emerge.
The new administration has significant spending plans in all sectors
of the economy, with the costs appearing to outstrip the projected
income flows. If that scenario is right, then Prudence will need to
ensure that our rates of productivity rise substantially if the economy
is to stay on the rails - otherwise we can expect more 'windfalls'
and new taxes.
The biggest debate - the Euro - is yet to come. Of course it's easy
to see how much it will provide personal benefit to the traveller who
finds it difficult to work out the price of a pint in Benidorm. It
will also appeal to the businessman who cannot tell the difference
between joining the Euro and a devaluation of the pound - and which,
incidentally, has lost some 15% against the US$ in the last four years.
Regular visitors to Orlando will probably have spotted this already
- if the markets downgrade the pound against the Euro, then the rent
of a villa in Tuscany won't seem such a good deal either!
Swapping a strong currency for a weak one needs a pretty good reason,
let's hope the strategy is made quite clear when the debate, and the
referendum, gets under way.
We all wish for stability in business markets - and a difficult situation
to achieve in fast moving global markets that affect businesses of
all size, whether they manufacture or retail, at home or abroad. The
next five years will be interesting, and predictably for business rescue
practices, a busy time.
Jeremy Priestley is the Managing Partner of Poppleton and Appleby,
independent business rescue and insolvency specialists. If your business
has emerging problems speak to Jeremy Priestley on 0114 275 5033.
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