Strong balance sheets spare us the worst

Article Abstract:

UK companies have seen a sharp decline in profits, and this will make it inevitable that the economy will suffer a hard landing. However, companies will avoid additional wide-reaching retrenchment by using their balance sheet strength. The absence of liquidity restraints means that de-stocking on the scale of the last recession will not take place, and there will be fewer enforced redundancies than in the early 1990s. There will be growing confidence that a slowing economy will not be accompanied by rising inflation.

Finance, Corporations, Corporate finance

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The UK is investing in a better class of boom

Article Abstract:

There are a number of factors which are likely to fuel a boom in capital investment in the UK in 1997. Most significantly, demand is accelerating and GDP is also rising. Furthermore, uncertainty about demand is becoming less significant in restricting investment, and profit margins are high. A strong investment recovery will certainly boost the fortunes of the UK economy, but will also bring the danger of the economy overheating, creating either rising inflation or a growing current account deficit.

Investments

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Don't be surprised if growth slows significantly next year

Article Abstract:

The UK economy may begin to encounter difficulties in 1998, having enjoyed very favourable conditions in 1997. The sharp rise in the exchange rate is likely to start having an impact on UK exporters, and the effects of interest rate rises will begin to be felt. Household income growth could slow down sharply, especially if unemployment rises. Employee morale is likely to remain low as job security continues to be a problem, and this will mean that the saving ratio will stay high.

Economic development

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