With the news that consumer spending fell by a massive 3.9% in June, the biggest fall for 22 years, many experts are predicting dark times ahead for the UK economy.

As is often the case, if the UK press predicts a recession then it may become a self fulfilling prophecy as consumers and businesses react accordingly.

Should we be worried though? Recent figures produced by the ONS (Office of National Statistics) show that although growth has been relatively poor, the UK economy grew by 0.3% in the first quarter of 2008, and the ONS predict growth of 1.75 to 2.25% for the whole of 2008. These are hardly the signs of a country on the verge of recession.

For what it’s worth, I believe that we should exercise caution and no more. As mentioned above, it is easy to talk ourselves into a recession which is something we need to avoid. However, it would be prudent to take some precautions nonetheless:

Many firms focus on increased sales but do not look at the other end. Cost control will become increasingly important and now would be a good time to take a detailed look at your business expenditure. Significant savings can be made by analysing your costs (including business taxes) and taking corrective action if and where necessary.

Your marketing plans will also help you - in troubled times many firms cut their marketing spend but, contrary to the advice above, increasing your marketing spend can pay dividends (literally). I am not talking about lazy advertising – putting an advert up and waiting for the customers to come to you – I am referring to strategic marketing, going directly to your target market using innovation and creativity mixed with common sense.

Many profitable firms go under due to lack of cash. We already have a credit crunch, and if there is to be a recession then sufficient cashflow will be vital to the continuing operation of any business. Make sure that you have plenty of it, and also enough in reserve. Draw up a cashflow statement for the next 12 months and if required take action now whilst time is on your side.

Firms that take action in the above areas will be more likely to weather any storm that may or may not be coming our way. If there is to be a recession, we at Dormer Finance Limited refuse to take part in it. Don’t let your business do so.