‘Two years of hurt’ for Tees
BUSINESS leaders claim the Tees Valley is set for “at least two years” of hurt after the failed $700bn rescue of the US financial system and record profit falls among UK financial services firms.
A survey by the CBI and PricewaterhouseCoopers said only 10% of firms had increased business volumes in the three months to September, against 61% reporting a drop - a balance of -51% and the weakest result since the survey started in December 1989. Meanwhile profitability among UK financial services firms declined at a record rate, with a balance of 49% of firms reporting a fall.
With the US House of Representatives rejecting a $700bn rescue proposal for stricken US financial institutions - prompting widespread falls among global stock markets - business leaders believe the fall-out could last longer than expected for Tees Valley firms.
Business turnaround specialist Mark Blayney - who runs Darlington-based firms Turnaround Help and Creative Finance - said: “We are in for a very rocky two years at least. The only thing which surprises me with the survey is that so many people are giving positive answers.”
But he added that banks were still “quite interested” in lending to local firms with “the right kind of proposals.”
“Lenders want to know how you are going to repay them and, if it goes wrong and you can’t make repayments, how they are going to get their money back. The equity in the asset will give banks extra security.”
Fears over the security of global financial system sparked a 100-point fall in the FTSE 100 in early trading today.
But Gary Fawcett, assistant director with North-east investment managers Brewin Dolphin - which has offices in Tees Valley - said local investors were not panicking or looking to pull their money out of stocks and shares.
“Stocks and equities are long-term investments,” he said. But he admitted: “In this kind of climate people are moving their money into more defensive, sectors such as utilities.
“There has been a shift out of more consumer-oriented markets.”
