30% of global business leaders pessimistic.
29/1/2019.
30% of CEOs worldwide are expecting a global slowdown in the economy over the next twelve months — up from just 5% last year — according to a new survey conducted by PwC. Unveiled during the World Economic Forum in Davos, the research highlights a rising pessimism amongst business leaders, as an increasing tendency towards protectionist policies and the breakdown of relations between the US and China give cause for economic concern. In the midst of this “trade tension and protectionism,” PwC chairman Bob Moritz said that the finding regarding “waning” business confidence “stands to reason.”
In Britain, business confidence amongst executives was also found to have dipped significantly, with the number of UK business leaders expecting a global decline in the next twelve months increasing from 12% to 34% year-on-year.
No-deal Brexit and China economy slowdown cause concern
The IMF has expressed similar concerns for the worldwide economy in a new report, adjusting its 2019 growth predictions for the global economy from 3.7% – forecast in October last year – to 3.5%. In particular, the IMF has significantly downgraded its growth expectations for advanced economies and predicts a drop from 2.3% in 2018 to 2% in 2019 and 1.7% in 2020.
The report blames not just trade tensions but also Brexit-related uncertainty and a sharp slowdown in China’s economy for this projected global decline. China’s official growth rate fell in the first month of 2019 to its weakest level since 1990, whilst the effect of Brexit on the global economy remains an unknown and concerning element. In the event of a no-deal Brexit, the IMF predicts significantly aggravated volatility in the financial markets when Britain leaves the EU in March. Provided that Britain reaches a withdrawal deal with the EU however, the IMF predicts a more stable outcome, with UK GDP forecast to grow by 1.5% this year and 1.6% in 2020.
Businesses advised to “take stock of risks” and prepare
Based on its report, IMF leaders called for greater international co-operation on trade policies to boost business confidence in investing. IMF chief economist Gita Gopinath said that although the figures do “not mean we are staring at a major downturn, it is important to take stock of the many rising risks” and she called for businesses to prepare accordingly. Duncan Swift, vice president of restructuring trade body R3, meanwhile warned of the “difficult” outlook for UK businesses, stating that “negative consumer confidence, high personal debt levels, renewed upwards pressure on wages, and possible future interest rate rises will all have to be navigated” to avoid collapse.
The strain of slowdown already appears to be affecting British companies, with corporate insolvencies rising at the highest pace since ten years ago. Government statistics published in December 2018 found a 19.3% year-on-year rise in UK businesses becoming insolvent between July and September last year – the sharpest spike in UK corporate insolvencies since the second quarter of 2009. In order to navigate difficult market conditions, businesses are advised to ensure that their credit management systems are as strong as possible, so as to minimise the impact of potential future volatility.
How can CPA help?
With your business customers putting up their defenses, now is the time to get professional credit management systems in place.
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 predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
As a third party collector, we can 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.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper.
Also if you have regularly been paid paid late by business customers, why not talk to our new Late Payment Compensation department? We can help unlock hidden potential compensation claims you are due from those bad payers. This compensation could springboard your business to success.
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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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