TI survey finds green shoots still in danger

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A BLOW to hopes of an early improvement in the economy came yesterday from Trade Indemnity, whose latest quarterly financial trends survey found that no upturn is likely in the first three months of this year.

In a report that contradicted indications of improved confidence from employers' organisations, the credit insurance group said: 'The frost may get the green shoots yet.'

The number of respondents expecting an improvement in the first quarter, at 27 per cent, exceeds those expecting a deterioration by only 2 percentage points.

TI said: 'The overall tone of our latest survey is at odds with many other respected measures of business confidence . . . There is still plenty of gloom out there and the pessimists' views are supported by the damage to cash flow by the seemingly insurmountable late payments problems.'

There was a slight improvement in the number of firms paid on time, but from zero three months ago to 3 per cent, the same level as in the first quarter of last year. Barbara Bennett of TI said this was 'hardly cause for euphoria'.

Extended payment periods were still a cause for concern, with the average remaining throughout 1992 at 26 days after the due date.

The survey found almost a fifth of companies have to wait 30 days or more beyond the due date before they are paid, an improvement but of only 3 percentage points since the last survey. Furthermore, more people are experiencing long delays on large debts.

The worst-afflicted businesses were in steel stockholding and business services, but the problem occurred across the whole economy.

The survey found 30 per cent of firms were working at less than half capacity. The number has in fact fallen, from 34 per cent in the previous quarter's survey, but TI said this was still worrying since only 10 per cent reported they were operating at a satisfactory level of capacity.

Although lower interest rates are helping profitability, smaller companies continue to bear the brunt of the recession, TI said.

There was no improvement in the number of bad debts, and destocking continued. Cancelled orders 'continued to plague British industry'.