The corporate world is in a curious limbo. As the credit squeeze rumbles on, central bankers and corporate executives wait anxiously to see what effect the turmoil in the financial markets will have on the economy. So far the, impact has been muted. But if a recent study by McKinsey is any guide, there is plenty of scope for corporate profits to fall sharply.
Ever since the credit squeeze started last summer, economic policymakers have made a curious distinction. Their main priority, they repeatedly argue, is to prevent the turmoil in the financial markets from damaging what they refer to as the “real economy”.
