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Is the worst yet to come for the UK economy?

With more than 140,000 companies in the UK falling into financial trouble in the final quarter of 2009 there is a stark warning today that the worst of the UK economic downturn may be yet to come. While that is not to say that the UK economy is not starting to recover, the aftermath of what has been the worst economic downturn since the 1920s has still not hit home in many areas of the UK economy.

As we have covered on numerous occasions, many companies are still looking to reduce their cost base and it is easy to see why perhaps the worst may be yet to come. The UK banking industry has been reluctant to step forward with new lines of finance because of the cost of finance and also risks involved in bailing out UK companies at the moment. As a consequence it is highly likely we will see more and more potentially viable UK businesses going under because of short-term cash flow problems and funding issues.

When the UK banking system will click into action and assist UK businesses remains to be seen but the longer the drought of credit continues the more companies will fall by the wayside.

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