Business rescue expert in Norwich sounds “distress” warning
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The view over the city from the new central Norwich offices of business rescue and insolvency specialists McTear, Williams and Wood looks bright and prosperous.
However, founding partner Andrew McTear warned that as the Chancellor of the Exchequer sets course for the next five years there could be trouble ahead for some businesses.
He said: 'Since we came out of recession in quarter three of 2009 the recovery has not been around investment by businesses but around the ability to borrow money very cheaply.
'As well as reducing the cost of money, ultra-low interest rates also seem to have made creditors more lenient and these factors have enabled even struggling businesses to tick along just so.'
Mr McTear said this was reflected in the insolvency and business distress index produced by his company.
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While there had been a downward trend in insolvencies across East Anglia since the recession peak after the collapse of Lehman Bros in 2008, the line on the graph for regional businesses in distress - companies who were balance sheet insolvent - was still rising slightly.
It was these companies - 'traditionally they would have been likely to go into liquidation within a year or two' - that could be vulnerable in any future economic dip.
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However, Mr McTear said that was difficult to forecast as the once predictable seven-year cycle for recessions had been skewed through the interest rate lowering intervention of central banks in western economies.
He said: 'The last proper recession in terms of business failures came in the early 1990s. It was quite short, quite sharp and followed by the normal pattern.
'We should have had another recession at the beginning of the millennium but we did not. There was the technology stocks crash but that did not translate into a significant rise in business failures.'
While the Lehman Bros collapse had brought the economic world to a halt, it did not have such a dramatic impact in terms of business failures.
'Our volume of work doubled but in a normal recession we would expect it to go up three or four times,' he said.
McTear, Williams and Wood has moved to former Anglia Television offices in Crown Road from its previous headquarters in St Faiths Lane in its 15th anniversary year.
Mr McTear recalled how he and Chris Williams had started their business in a small office at his home in Newmarket Road, Norwich, before they moved into Faith Lane, subsequently expanding their accommodation there.
Starting out with four staff in Norwich and two in Ipswich they now had a workforce of 45 - including five partners - with offices in Cambridge and London as well.
Turnover had reached £3m-plus and they were looking to develop their business in London while keeping their base in Norwich.
He said: 'We advise about 150 businesses a year. One third of them don't go into any form of insolvency process.
'However, in two-thirds of the cases, directors leave it too late to seek advice and then there are very few options.'