Recently released insolvency figures show relatively little change year on year, suggesting that the debate about whether the recession would be a V-, U-, W-, or an L-shape is now over.
Business doctor Tony Groom argues that four years after the economy collapsed the evidence is piling up that it is flatlining having not risen off the bottom of the decline.
Whatever the technical definition for coming out of recession may be (ie two successive quarters of growth), he says, a growth of 0.2% for the UK economy means it continues to bump along the bottom of an L-shaped economic decline, whether it is called a recession or not.
Had the recent decline followed the pattern of previous ones we should have seen a fairly sharp three-year V-shape, and the numbers of insolvent companies would by now be climbing noticeably, as they are generally held to do when an economy is on the road to recovery.
An increase in compulsory liquidations and Creditors' Voluntary Liquidations of 0.1% on the previous quarter and of 6.5% on the same period last year is a relatively small jump, not the dramatic rise that would be expected at the start of a recovery.
Add to this the evidence in the latest CBI quarterly survey showing a sharp decline in confidence among small and medium sized businesses.
They reported that domestic orders remained flat over the third quarter and that export orders had dropped by 8%. They expected domestic orders to fall by another 4% in the final quarter and no growth in exports and were indicating intentions of reducing their stock holdings.
As in the previous CBI quarterly survey firms were still planning to spend 20% less on buildings and 9% less on plant and machinery relative to the previous twelve months.
Investment intentions for plant and machinery particularly have remained negative for the second consecutive quarter - hardly suggestive of any optimism there.
Groom points out what he sees as possibly the most interesting feature of the just released quarterly insolvency figures, which is the noticeable increase in the number of Company Voluntary Arrangements (CVAs) relative to the numbers of companies in Administration as going concern formal insolvency procedures.
Compared to the same quarter last year, the statistics show that CVAs rose by 29.6%, while Administrations rose by only 6.3%. This may reflect the adverse publicity and concern over the use of Pre-Pack Administrations that in turn has promoted the use of CVAs for rescuing a business.
There may still be a question mark about whether the current situation really is the bottom of a traditional economic cycle. This would be supported by those commentators who are predicting that there are a lot of insolvencies lining up for the end of Q4.
Since a rise in insolvencies traditionally indicates the emergence from recession, perversely, this suggests that they are being optimistic rather than pessimistic.
But, says Groom, if the economy doesn't recover and there is a rise in corporate insolvencies, this will be truly damaging for the UK economy.
There is a huge difference between insolvency to restructure a business to prepare it for growth and insolvency to close it down. The latter will remove jobs from the economy.
Continuing low interest rates and no discernible evidence of banks or other creditors really piling on the pressure, nor any sign of the restructuring that normally indicates the bottom of a recession, coupled with the plummeting confidence of the country's so-called "engine of growth", the SMEs, suggest that the economy will bump along the bottom Japanese-style for the foreseeable future at best or will decline further at worst.
