DIFFICULT TRADING CONDITIONS, DOING BUSINESS IN A RECESSION

Difficult trading conditions, doing business in a recession, how the credit squeeze will make trading conditions difficult for businesses.

The Announcement that the bank of England is injecting 50 billion pounds into the financial and banking markets may appear good news on the face of it but don't expect trading conditions to be alleviated.

Whilst this may make it easier for banks to borrow money, possibly at a cheaper rate on the LIBOR because they can secure the loans against government backed bonds, it is unlikely to make mortgages or bank loans any more readily available or cheaper.

The bank of England is obviously worried that many UK banks are in greater difficulties than they have let on and are asking them to come clean about their financial problems and we are already seeing a number of banks going to their shareholders with rights issues in an attempt to raise funds.

The banks got themselves into trouble with reckless lending policies that have backfired causing them to have to write off billions in bad debts. They now realise, something that we were warning about two years ago; that UK property is over priced and most likely to continue to drop in value for some time. Quite simply, would you lend money to someone secured against something that was over valued and likely to drop significantly in value for the foreseeable future.

Unfair bank charges

Asset Finance

Commercial Mortgages

Bridging loans

The same applies to businesses who are facing difficult trading conditions. Oil and food prices are up which are major inflationary commodities and the pound is very weak against the Euro, making imports additionally more expensive. We predict that businesses are going to start laying off staff as consumer confidence drops which is highly likely. The UK borrow today spending spree is at an end, at least for the time being.

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All the time homeowners were sitting on a property that was increasing in value and knowing they could always borrow against that equity, they were happy to borrow on their credit cards or overdrafts. Now they feel more nervous as tens of thousands of pounds are wiped off their paper profits and retailers are already feeling the pinch.

Doing business in a recession