News

It's (almost) official: we're in recession. Presumably this won't come as much of a surprise to any of you.

UK economic growth stalled in the second quarter, according to revised government figures, and it is widely predicted that when the Q3 figures are published we’ll be in negative growth – also known as recession.

And as if that wasn’t bad enough, I understand that more and more print companies are having their credit limits reduced, or even withdrawn, as the crunch continues to bite and credit insurers brace themselves for a rising number of business failures.

In effect this means some printers’ costs have virtually doubled overnight, because not only are they having to pay bills that were on 30- or 60-day terms, they may well now be having to pay on order.

There has also been another round of energy price rises, which compounds the misery of print firms, many of whom have already seen their bills double year-on-year.

So while August was a terrible month, it looks like September might just be worse.

However, if our conservative estimate that £20m worth of capacity has gone out of the industry in the past four weeks is accurate (see analysis p24), surely that’s ‘good’ news for the ‘last man standing’ business model?

Well, by my reckoning, unfortunately not. If the industry really does generate £14.6bn in sales, and if we generously say that the average print business is running at 10% below capacity, then realistically we need to see nearer £1.46bn of capacity exit the industry to fill the industry’s presses and, he adds wistfully, enable meaningful price rises.

Clearly this is gross over-simplification, but the summer of print’s discontent could be just a taste of what’s ahead and that’s bad.

Darryl Danielli is editor of PrintWeek.