Spending cuts 'prolong recession'

http://news.bbc.co.uk/go/rss/-/1/hi/scotland/8491535.stm

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Public spending cuts could make the impact of recession longer in Scotland than the rest of the UK, according to a leading business consultancy.

PKF has said the number of upcoming corporate deals is limited by the economy, and access to bank finance.

It said there are better prospects in healthcare, the energy sector and the hotels sector.

But its review of deal-making across Britain said "growth is not even being considered at the moment".

PKF said the hard-hit construction industry has been helped by public sector projects, but that looming cuts mean many projects will be cut back or delayed.

'Real problems'

The consultancy's Frank Paterson, specialising in corporate finance, said Scotland is dominated by small and medium-scale enterprises, which have been experiencing cash flow problems.

He said: "The recovery of the Scottish market will be further challenged by the enforced reduction in spending and job cuts which local authorities and the NHS is being asked to implement in the coming year.

"In terms of debt financing, it will continue to be difficult to secure bank financing and this will continue to restrict deal flow.

"Securing financing for organic growth remains extremely difficult and won't get much better in 2010.

"More fortunate businesses are getting by on their existing banking facilities but for others - those which do not have sufficient existing facilities - there are real problems because they will in most cases be unable to secure additional funds from banks."