The new year is a time for reflection and the setting of new year’s resolutions.
It is now also more than 10 years since the initial problems with the sub-prime mortgage market in the USA spread to Europe.
In the autumn of 2007, many of us watched on TV the queues forming outside the Northern Rock branches as depositors demanded their savings back.
The UK’s fifth largest mortgage lender was forced to approach the Bank of England for funding and it eventually fell to state ownership in February 2008.
Further state control of the UK banks continued in 2008 including Royal Bank of Scotland, Lloyds, TSB and HBOS.
The largest insolvency in history occurred on September 15, 2008 when Lehman Brothers, the US investment bank, filed for bankruptcy with assets worth $639bn (£477bn). For insolvency practitioners, this was going to be a busy time.
Where are we 10 years later? In November 2017, the Bank of England (BoE) produced its Financial Stability Report which included the results of the stress tests on the UK banks.
The results are very positive as the BoE believes that the UK banking system is resilient to deep simultaneous recessions in the UK and global economies.
For the first time since the stress tests were launched in 2014, no bank needs to strengthen its capital position.
It appears that the UK banking system has now recovered from the crisis.
Other economic data in late 2017, however, is not so positive. Inflation, as measured by the Consumer Price Index (CPI), rose to 3.1% in November and wage rises are expected to remain around 2% therefore creating a squeeze on household incomes.
Despite growth in exports fuelled by weak sterling, economic growth for Northern Ireland is predicted to be in the region of 1% during 2018.
Following the first interest rate rise in November, further increases are expected in 2018, and, of course, we still have Brexit to deal with.
Insolvency practitioners are already seeing the impact of those challenges. In October 2017, Monarch Airlines entered administration making it the biggest UK airline to enter insolvency. In November, Palmer & Harvey, one of the largest wholesalers in the UK with 90,000 customers and 3,400 staff, also entered administration.
In December, Toys R Us proposed a Company Voluntary Arrangement (CVA) with its creditors in an effort to change its business model and deal with its lease liabilities.
Although 10 years have passed since the start of the financial crisis, many businesses in Northern Ireland cannot take survival for granted.
Some sectors will undoubtedly continue to experience growth. However, taking time to prepare for a challenging economic environment in 2018 may be time well spent, and perhaps a good New Year’s resolution for many.