Warning corporate belt-tightening could hamper recovery

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Businesses need to rethink their approach to finance or the effects of the recession will be unnecessarily prolonged, HSBC research suggests.

Its report “Business of Recovery”, which questioned over 2,100 small businesses and 30 business and economic experts, concluded companies surviving the downturn will emerge in a fitter state due to restricting cash flows and reducing costs. However, if the trend for parsimony becomes too entrenched, with companies cost-cutting at the expense of investment, economic recovery may be hampered. Currently, only 15% of UK-based companies are seeking external investment, while 80% of businesses report they ‘don't need money' due to belt tightening and utilising their own resources. A surp...

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