We have avoided an economic apocalypse and a form of recovery is imminent but we must prepare ourselves to live in a world dominated by powerful forces of half-dead, half-alive zombies. These zombies will ensure business does not return to any kind of acceptable normality for at least several years, according to PA Consulting Group's book "The Zombie Economy: Leadership in times of uncertainty".

It will be at least 2011 before we return to pre-crisis performance levels and growth rates will remain subdued for longer still. In this zombie world business leaders have at least two years before they can start thinking about business as usual - and even then it will not be the same business as usual.

Why a zombie economy?

The zombie economy is made up of not quite dead banks, governments, consumers and companies staggering along, struggling to function in the new world:

- Zombie banks whose balance sheets are too weak to support sufficient lending. Banks may be declaring huge profits but their recovery is partly an illusion. Losses of $3.4 trillion in the financial system have still not fully unfolded.

- Zombie governments whose finances are too stretched to sustain expansionary policies. Highly expensive government intervention means debt to GDP rates are set to rise to levels not seen outside war-time.

- Zombie consumers whose wealth is too depleted to allow them to consume. Because of the state of the economy in general, and bank lending in particular, US consumers are spending 5% less of their disposable income - they will be unable to act as the world's 'consumer of last resort'.

- Zombie companies the combined impact of zombie banks, governments and consumers is exerting a powerful negative force on companies. They are saddled with debt that they cannot comfortably service, impeding growth and investment. UK Corporate insolvencies are now at record rates.

The impact of a zombie world on any recovery

The impact of zombies on the economy cannot be overstated. The zombies are set to create a vicious circle that prevents any rapid return to business as usual, and a recovery that feels more like a recession. Mark Thomas, author of the book and head of the strategy and marketing practice at PA, says:

"The simultaneous existence of the zombies is something that has not occurred before in the working lifetime of anyone in business today. Business leaders are struggling to assess the impact of the zombies on their organisation.

"Companies are battening-down the hatches and waiting for recovery - but in the zombie reality this is a high risk strategy. We must prepare ourselves to live in the zombie world and companies need to take radical action. Businesses need to take certain actions now to survive and thrive in the zombie economy."

The winners and losers

The zombie economy will divide the business world into winners and losers. The winners are highly liquid and well-positioned to meet the needs of the zombie economy. They are more likely to benefit from competitor distress and they are unlikely to go under. While there will be winners and losers within each sector, some sectors overall have shown signs of resilience in the zombie world. Healthcare has so far been most resilient, though even here, the future will bring greater challenges.

In contrast the losers are companies who are not liquid or whose business model is unsuited to the zombie world. They could go under, and if they survive, are likely to struggle. Manufacturing, Banking and Construction are all sectors which face significant short term challenges and where further consolidation is likely.

How business leaders can overcome the threats from the zombie economy

There are four steps to thriving in the zombie world:

- secure liquidity

- create a portfolio of potentially winning businesses

- remodel each business to ensure that it can perform strongly in the new world

- subject to the success of the first three steps, take bold action to stake out a massively enhanced market position in the new world.