A ticking time bomb is waiting to explode in the aftermath of the festive period, an expert has warned.

Andy Kay, corporate finance director at accountants and business advisers Horwath Clark Whitehill, is among those economy watchers who fear a double-dip recession.

Mr Kay said some commentators were suggesting the recovery would be anaemic and below trend.

However, there were signs of restocking of inventories and slow pick-up in production. Order books appeared to be improving.

He noted: "Businesses are looking to come out the other end. Many tough business decisions have had to be made. Owners have been taking proactive steps to deal with the situation.

"However, any recovery will need working capital funding and that can be when things really get dangerous. It is so easy to over-trade, become mesmerised as finally a run of new orders arrive, and find that you run out of cash."

Indeed, some businesses would need to take people back on to deliver on new orders.

And he cautioned that banks were carefully managing exposure. They still had a reduced appetite for lending while overall lending levels were down. Asset values had also declined.

Credit insurance lines had been reduced or removed, and some funders were reluctant to lend beyond insured limits.

Various Government-led initiatives had sought to help, with, most notably, the business payment support service from HM Revenue and Customs particularly welcome and widely utilised.

But there were challenges to overcome.

Mr Kay went on: "The quarterly rent bill has to be paid in December just when traditional industries see a dip in profitability.

"And we could see the unwinding of the HMRC arrears and payment schedules in the New Year. It will be interesting to see if further payment plan arrangements will be allowed.

"We all know the Government is badly in need of money to repair the public finances, but HMRC must still work with the banks and other stakeholders to try to mitigate the likelihood of double-dip recession."