Cash Flow Threatened As Households Are Squeezed Tighter

21st February 2018.

UK households’ current financial pressures intensify as rising unemployment and high inflation leave people with less money to spend.

While living standards were predicted to improve once wage growth took off- this has yet to happen. Annual wage growth was largely unchanged last year aside from a slight jump in December, while inflationary pressure prolonged the squeeze on household finances. Britons have lost some of their spending power thanks to inflation, while higher interest rates have made it harder for businesses to borrow or spend on credit.

Here at the Credit Protection Association, we dedicate ourselves to guiding our customers through difficult economic conditions. For example, the household squeeze has had a great impact on our retail members who have witnessed a drop in sales as households have less money to spend on non-essentials.

Despite its record-low figures, unemployment has slowly started to rise. This was undoubtedly influenced by the departure of many Eastern European workers, whose absence has heavily affected the construction and engineering sectors. There has been some respite, however, with quarterly figures from the Office for National Statistics revealing the number of EU nationals working in Britain risen by an annual 4.5 percent over the final quarter of 2017.

Pay packets are expected to grow through the year, with last year’s growth spurt predicted to continue. The ONS found workers’ total earnings, including bonuses, rose by an annual 2.5 percent in the three months to December.

In December alone, total pay jumped by 2.8 percent, up from 2.3 percent in November.

With interest and business rates high, and inflationary pressure encouraging shoppers to be cautious; households are feeling the pressure. While wage growth looks set to relieve some pressure in the coming months, spending behaviour may not see much of a change. Retailers had a hard christmas last year, and it looks like 2018 may not be so kind either.

Here at the Credit Protection Association, we encourage many of our members within the retail or service industries to come to us for help. If you struggling to garner interest in your brand, or if you have the interest but not the cash to expand, then do not despair. Our debt recovery and credit management services can free up your cash flow; this can be used to purchase new technology, hire more workers or even open more stores; all of which will help your business achieve more sales and generate more cash.

Is your business suffering from the recent squeeze on households? Come to CPA for help and advice!