UK “World’s Slowest Economy”: Firms Must Look to Cash Flow

4th April 2018.

The UK remained the world’s slowest-growing major economy at the end of last year, according to new figures which leave GDP growth in the fourth quarter of 2017 unrevised at 0.4 percent.

Household spending slowed to its lowest annual growth since 2011, which along with rising inflation and stagnant wage growth, has left the economy in bad shape. While spending is expected to have shifted over Easter, this will slow back down once all the Easter chocolate, toys and gifts have sold out. Consumer spending is considered the “bedrock” of the economy so this slowdown will worry retailers as they ponder their shaky position on the high street. One of the few sectors to got good news were the factories, who saw output increase for 20 consecutive months with healthy domestic and export demand driving growth.

For those sectors only seeing doom and gloom, there are ways to give the economy and your own industry a boost. At the Credit Protection Association, our debt recovery services free up cash flow, affording our members the financial freedom to improve and expand their business. This can be anything from opening more stores or offices, to investing in shiny new technology and hiring more people to operate it.

John Hawksworth, chief economist at PwC said: “Among the G7, the UK was the only economy to see a deceleration in growth between 2016 and 2017, which does point to the dampening impact of Brexit-related uncertainty on UK business investment and the squeeze on consumers from the weaker pound pushing up UK import prices in 2017,” said.

Separate figures from the Bank of England have further shown that consumers have increased borrowing to combat squeezed households. According to the BoE, the pace of consumer credit growth increased last month due to higher spending on credit cards.

“Household spending power has been flatlining for the last two years. That has forced consumers to run down savings and borrow more just to sustain sluggish growth in spending,” Ian Stewart, an economist at Deloitte, said.

Households are likely to be awarded some relief, however, as the rate of inflation is starting to slow and pay growth, while still sluggish, is picking up.

According to new figures from The Times, Total investment spending, which includes government and business investment, as well as spending on private housebuilding, grew by 4 percent this year. Business investment alone rose 2.4 percent, compared with a fall of 0.5 percent a year earlier.

There is no question that rival economies are faring better than the UK, with economic growth in Russia and the US particularly strong. Brexit left us weaker, with domestic and international confidence in the country considerably reduced, we expect a rough road. It is therefore up to our industries, our sectors and our workers to boost our figures, keep our wheels turning and our competition on our tail. The Retail and construction sectors took a tumble, with new companies falling into administration each week, and our supply chain still recovering from the death of Carillion. Our businesses can help themselves, however, and simply paying attention to cash flow can fund expansion, enhance profits, and keep firms afloat a while longer.

At the Credit Protection Association, we offer our members a range of credit management and debt recovery services, providing business owners with renewed financial freedom as well as the credit checks to maintain it. Our credit reports and company directories ensure our members know exactly who they do business with, while our debt recovery professionals chase down unpaid invoices and late payers and provide the financial cushion to survive all economic downturns or upswings.

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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