Time for Christmas cheer

Roll on Christmas and New Year. The festive season might not be a prosperous as some would like, but it will herald the end of, what has been for many, a bleak 2008

As stock markets in the UK and the US attempted on Thursday to draw back some of the losses over the last six months, there was more dire economic news on both sides of the Atlantic.

In London the FTSE closed up by 47 points at 4087. The Dow Jones was by late afternoon trading up 111 points, but companies are beginning to indicate their sales and profits will suffer as trading conditions continue to worsen.

Amazon was among those to cut its forecast for sales in the run-up to Christmas.

Formerly buoyant predictions that the downturn might bottom out and recover within 12 – 18 months now look optimistic.

The UK’s Federation of Small Businesses, representing 4.5m firms, said many of its members were facing closure unless banks took a more lenient stance on lending.

More than a fortnight after the British government’s £37billion bail out, it remains unclear how banks can accommodate increasing demands for loans from businesses.

Organisations across all sectors are facing increasing pressure from banks, themselves desperate to balance the books after a period of uncertainty.

Bankers were expected to come under pressure at a meeting with the government this week to ease lending restrictions to small firms.

The reality of underperforming markets in the longer term continues to impact on commodities, most obviously oil.

OPEC is expected to cut production, if not at its emergency meeting in Vienna on Friday then shortly after, although speculators are signaling no major change will occur.

Analysts continue to predict the oil price could fall further, hitting $50 by Christmas.

US crude dropped below the $70 a barrel barrier, a remarkable turnaround considering it stood at an all time high of $147.27 less than four months ago.

The fall is certain to reduce the cost of shipping, the rising price of which has been blamed for undermining the global economy.

But a shortage of trade credit, required if exporters are to get paid, has left some ships in dock and goods lying idle.

Never has supply chain management been so undermined.

The World Trade Organization has called a meeting later this month to discuss the shortage of trade credit.

The IMF has projected world trade will slow to 4.9 percent this year and 4.1 percent next year, due to reduced demand for imports as a result of overall weakness in the global economy.

World trade was relatively good over the summer, although growth is downward.

The volume of world trade in goods was unchanged in August following 2.5 percent growth in July, according to a monthly measure of world trade by the Netherlands Bureau for Economic Policy Analysis, monitored by the International Monetary Fund and other leading institutions.

But summer seems a long time ago now, and as winter is sets in uncertainty surrounds whether the market can weather the storms ahead.

The New Year and the spring may herald a new era of maturity in terms of financial management.

Early resolutions now would pay richer dividends.