Threat To Company Balance Sheets
Published / Last Updated on 16/12/2007
Bank of England Warning
The Governor of the Bank of England, Mervyn King, has pledged to monitor the impact of low market confidence on credit conditions and inflation. He says “he expects tighter credit conditions to be felt first in the housing and commercial property markets”.
He has also said that with borrowing less easily available, personal saving rates are likely to rise, leading to a slowdown in consumer spending.
Our view
The Bank of England’s role is to control inflation and maintain consumer confidence. This, we suggest, is not an easy job. The reality is that all markets, including business, move in peaks and troughs. A curb on consumer spending will ultimately mean it hits business profits.
We suggest business owners tighten their belts for 2008.
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