When can we expect a recovery? This must surely be the question all SMEs are asking themselves. Most have adjusted to the recession as best they can, costs have been cut, cash flow managed more effectively and surplus labour made redundant. It has been painful, profits have been slashed, if they exist at all, but we hear of more and more businesses saying that they think they will survive the recession.
But just how much longer until the belts can be loosened? There has been some talk in recent weeks of green shoots of recovery whilst the Bank of England warns that the economy is unlikely to recover this year.
So where are the green shoots and what shoots should we be concentrating on as a sign of real recovery? Well, it was the property market collapse that lead to this recession and it is likely to be the property market that will lead the recovery. And here, there are some signs that the recession has at least bottomed out.
Redrow, the construction and house-building firm has announced that it has started to commission new homes again after a year and is recruiting once more after cutting the payroll from 1,300 to 650 last year.
Galliford Try, another property development firm, issued a statement saying that it was selling houses at a similar rate to a year ago and at similar prices to last autumn.
The NHBC, which regulates the construction of new homes, said that last month saw the first rise in applications to build new homes in over 18 months.
RICS, the Royal Institution of Chartered Surveyors, said that in the quarter to April 2009, house prices have fallen at their slowest for 15 months.
Shares in the major house builders, Redrow, Bovis Homes, Barratt and Persimmon, have also risen recently.
It’s certainly too early to announce the end of the recession but it looks like things might have bottomed out and, if the housing market does continue with its gradual improvement, then this will surely have a knock-on effect for all SMEs. As to when this will happen, I’m off to gaze into my crystal ball.
Gary Cousins
Business Solicitor
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