The U.K. economy shrinks as factory output falls most since 2002.
James Salmon – 10th June 2019.
In figures released this morning factory output was shown to have fallen the most since 2002 causing the U.K. economy to shrink.
Manufacturing Production falls
Manufacturing production was reported this morning as falling 3.9% month on month and is down 0.8% on this time last year.
Industrial Production falls
Industrial production was reported this morning as falling 2.7% month on month and is down 1% on this time last year.
U.K. Economy Shrinks as Factory Output Falls Most Since 2002
U.K. manufacturing output was reported to have fallen the most in almost 17 years in April as the boost from Brexit stockpiling evaporated and car producers went ahead with planned shutdowns.
The 3.9% decline, the most since June 2002, saw the economy as a whole shrink for a second straight month in figures published by the Office for National Statistics
Vehicle production plunged by almost a quarter.
Gross domestic product (GDP) fell 0.4%, the biggest monthly drop since March 2016, leaving the economy at risk of a sharp slowdown this quarter.
Growth in the latest three months was a weaker-than-forecast 0.3%, down from 0.5% in the first quarter.
Factories benefited in the spring as production boomed and companies stockpiled goods to avoid supply disruptions ahead of the original 29th March Brexit deadline to leave the European Union.
But with Brexit now delayed until October, orders are being scaled back and demand is being met from those stock piles that were built up.
The pound dropped after the figures were published, and was lower at $1.269 & €1.224 as of 11a.m.
In a yet further blow to the sector, car makers including BMW and Peugeot brought forward planned shutdowns from the summer in case there were Brexit disruptions. Vehicle output slumped 24%, the most since records began in 1995, though economists predict the loss to be partially recovered in May.
There was also weakness in other sectors including pharmaceuticals, metals and chemicals.
The figures shed light on the fragility of the UK economic outlook as Brexit uncertainty continues. The weakening backdrop comes as the Conservative Party prepares to pick a new leader, with the leading candidates to succeed Theresa May insisting that a no-deal Brexit — the scenario businesses fear most — should remain on the table.
Construction and the dominant services industry failed to provide any support in April, and PMI data last week suggest the economy saw little if any improvement in May.
Construction fell 0.4% from March and services were unchanged; total industrial production dropped 2.7%, the most since 2012, as maintenance work hit output of oil and gas.
GDP rose 1.3% from a year earlier in April, down from 1.9% in March. Annualized growth in the latest three months was 1.1%.
The trade deficit narrowed to 12.1 billion pounds ($15.4 billion), as imports and exports plunged following stockpiling by both British and European Union companies in the first quarter.
In volume terms, exports fell 10.9% in April, the most since 2006; imports declined 14.4%, the biggest drop since records began in 1998.
FSB: 45% of small firms expect growth this year
A record low number of small business are expecting to grow over the next 12 months, according to the Federation of Small Businesses (FSB), with just 45% saying they are likely to see expansion in the coming year.
The FSB’s quarterly confidence index measure, which is based on a survey of 982 companies, stood at -8.8 in Q2, with this down 22 points on a year ago and marking the fourth consecutive negative reading.
The poll saw 72% of small firms say that the cost of running their business was increasing, with 48% identifying labour costs as the main reason and 34% saying regulation. It was also shown that 42% saw profits dip in Q2.
Mike Cherry, national chairman of the FSB, looks at the climate for SMEs in the Telegraph, pointing to a “regulatory offensive that accompanied the start of the current tax year.” He highlights Making Tax Digital, the requirement for firms to submit quarterly online VAT returns via HMRC-approved software. Mr Cherry urges to next Prime Minister to “remember that giving small businesses the freedom to compete is no game,” adding that it is “key to keeping our economy on track”.
Manufacturing confidence stutters
Figures from BDO show that confidence in manufacturing is at a six-year low, while output growth was at its lowest level in more than two years in May after businesses reversed record stockpiling.
BDO’s Peter Hemington commented: “The manufacturing industry is set to be particularly badly affected over the next few months as it becomes clear that Brexit contingency planning artificially inflated growth at the start of 2019.”
The bad news for manufacturing and only adds to the evidence that UK plc is under extreme pressure at the moment.
Construction sector slumped in May
Retail sales suffer their worst month in 24 years
Banks reject 70% of small businesses
Begbies Traynor shows UK companies are in significant financial distress
KPMG give Zombie company warning
Are you owed money by a manufacturer?
With pressures on the UK manufacturing it is essential that you stay on top of the credit limits you grant manufacturers and watch carefully for any late payments.
With tightening cash flow they will look for the easiest option to boost their cash-flow. Don’t let it be you.
You can’t just assume your customers can and will pay you, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
See the section below – About CPA.
If you are also struggling, do you realise you could be sitting on a fortune?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you are struggling like the above manufacturers and sold B2B on credit then there may be a hidden source of capital you can call on.
If you need extra capital, rather than shutting down or jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.
We can help you uncover the pile of gold, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could be the cash rescue your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Yes, CPA can help you boost your business cashflow.
Don’t let your bankers control you, contact CPA today.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply big manufacturers or small ones, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
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For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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