Happy New Year to all and best wishes for 2008 – the economic indicators suggest we may rather need the latter.
The collapse of Maxjet on Christmas Eve, following the failure of Travelscope, bodes ill. Both had sought and failed to find emergency funding thanks to the deepening credit squeeze. Particular problems will have led the companies to that point, but many firms have difficulties. A recession exposes these and a squeeze on credit means there is nothing to carry a company through a crisis.
More firms will follow. No one knows how deep the downturn will go, but one industry analyst has already described the outlook as horrendous. The pages of the Financial Times, a paper not given to hyperbole, present a picture of unrelieved gloom.
Bravura comments about Brits being determined to travel contain a strong element of truth and may maintain spirits. They won’t hide the fact that any firm going into the recession with cash-flow problems, too much debt, too much capacity, too-heavy commitments or too great a concentration on a single area will be in trouble. Others may just be unlucky.