Company profitability and finance

Quarterly Bulletin 1991 Q3
Published on 01 September 1991

This article, which continues an annual series, reviews the performance of UK industrial and commercial companies during 1990. The main points include:

  • Profitability continued to decline during the course of the year, as steeply as in previous recessions, but the level remained above that of both 1974-75 and 1980-81.
  • Total income rose, albeit modestly, as the fall in gross trading profits was offset by rises in non-trading income and income from overseas.
  • Investment expenditure began to decline from its high level. In contrast, growth in dividend payments remained exceptionally high.
  • The financial deficit increased to £27 billion (5% of GDP) compared with £21 billion (4% of GDP) in 1989.
  • Bank borrowing was considerably reduced during the year, with some switch towards the capital markets.
  • Company insolvencies, which began to increase in 1989, rose by 44% in 1990.

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