Financial optimism index points to fragility in consumer confidence.

20th August 2019

A key index into household financial confidence points to a fragility in consumer confidence.

The IHS Markit’s monthly household finance index has dipped to a three-month low, falling from 44.3 in July to 43.7 in August, the second-sharpest drop in demand for major purchases since September 2017.

The survey found that pessimism over job security increased to the highest level since March and also shows that almost a quarter of households expect interest rates to rise, the highest since October 2016.

“Latest survey data continued to highlight a fragile state among UK households towards their financial wellbeing,” said IHS Markit economist Joe Hayes.

“The Brexit haze, uncertainty over the political environment and the increased possibility of the UK entering recession appear to have dented expectations,” he added.

Retail sales

The survey results come despite a report last week showing a robust consumer with monthly retail sales rising in July, increasing by 0.2% – defying forecasts for a 0.2% fall.

Wages surge

And the fall in confidence also comes despite figures released by the Office for National Statistics last week showing  that wages surged amid rising employment according .

Income and well being up, but consumers fear for the economy

Despite household income rising and scores for well being increasing, British consumers fear for the economy in general, with worries over rising unemployment at a six-year high and expectations of the economy’s performance over the next year their most gloomy since 2011.

The Office for National Statistics said that “all main measures of economic well being increased” in the first three months of 2019, with household income up by 1.8% while spending per head rose by 1.2%, compared to the same period last year – an all-time high.

Per-capita net wealth rose by 3%, driven by an increase in the value of equity and investment fund shares and pension schemes.

Howard Archer, chief economic adviser at EY Item Club, points out that consumer confidence has played an important role in countering falling investment over the year so far.

Martin Beck at Oxford Economics notes: “Intuitively, personal circumstances are likely to be a more important driver of households’ willingness to spend than the rather nebulous concept of the ‘economy’.”

Economy shrinks 0.2%

Data from the Office for National Statistics shows that the economy shrank by 0.2% between April and June, marking the first contraction since 2012.

Consensus among analysts had seen a forecast of 0% growth in Q2. The 0.2% dip in GDP follows growth of 0.5% in the first three months of the year, with Q1 boosted by stockpiling ahead of the original Brexit deadline of March 29. This contributed to Q2’s fall, with buying reduced as companies utilised the stockpiled goods and materials.

Analysis of Q2 performance shows that import levels were down 13% quarter-on-quarter, exports fell 1.5%, manufacturing output was down 2.3% and business investment was 0.5% lower. PwC economist Mike Jakeman warned that the possibility of a recession – defined as two consecutive quarters where the economy shrinks – “is now very real”.

He commented: “Monthly data for June showed no growth at all, which suggests that the economy is entering the third quarter with no momentum.”

Tej Parikh, chief economist at the Institute of Directors, said the economy is “facing a bumpy ride going into the third quarter”.

Chancellor Sajid Javid offered that while we are in a “challenging period across the global economy … the fundamentals of the British economy are strong”.

UK faces long-term risks on all fronts

Economists have highlighted the economic risks facing the UK as it leaves the EU, suggesting Boris Johnson’s spending plans could backfire.

But a snap election resulting in a Corbyn-led Labour government would bring higher risks, they say, pointing out that an economy facing excessive regulation and poor fiscal discipline could not prosper even within the most frictionless trading regime.

With the risks of a no-deal Brexit and a far-Left government, it is no wonder investors are spooked; but for the UK to be taken seriously outside the EU it has to pursue policies that adhere to sound economic principles.

Job vacancies fall by 4%

The uncertainty is hitting the jobs market.

The number of job vacancies has fallen by 4% since the start of the year as firms contend with rising wages and a sluggish economy, according to BDO.

The firm’s Peter Hemington said: “This could be the beginning of the end of the strong employment market in the UK. Businesses are facing upwards pressure on wages even while the economy lags, so hiring plans are taking a hit.”

German financial sector wants EU to take hardline with UK

Findings released last week by Frankfurt University’s Centre for Financial Studies indicate a hardening of sentiment among German bankers and financial service providers, who now expect a no-deal Brexit is unavoidable, with 70% saying the EU should not offer the UK any more concessions to avoid no-deal.

Some 61% of those surveyed believe the financial markets have not yet effectively factored in the risk of no-deal, however, almost two-thirds said they believed the German financial sector was sufficiently prepared to cope with no-deal.

Hubertus Väth, managing director of Frankfurt Main Finance, which funded the study, said it would be important for financial centres in continental Europe “to demonstrate their efficiency” and successful cooperation could see Europe “emerge from the crisis even stronger.”

BoE told to cut rates ahead of Brexit

Following ONS data showing a 0.2% fall in GDP in the second quarter, the Bank of England has come under pressure to cut interest rates before Britain’s departure from the EU.

Geoffrey Yu of UBS Wealth Management said: “As uncertainty continues to loom over the UK economy, the difficult run of data is expected to continue and the Bank will need to consider its next step carefully as its global peers embark on further rate cuts.”

Elsewhere, Yael Selfin, chief economist at KPMG, commented: “It is clear that the uncertainty and prospects of Brexit are causing havoc on the UK business environment, with business investment contracting once again and significantly hurting the future prospects of the UK economy.”

SME bosses risk health by shunning holidays

However not everyones wellbeing is ok.

Small business owners are being urged to take a break after a survey by Simply Business found bosses are going without a holiday for several years.

Time pressures and money concerns mean that 9% of SME owners – equivalent to more than half a million – haven’t had a holiday in as long as five years.

The business insurance firm said the trend of UK business owners struggling to switch off could lead to mental and physical health issues and dent productivity.

Do you sell on credit?

With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.

Those customers 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 eventually, 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.

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 on credit, 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.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

Ready to speak to an advisor?

For help or advice on credit management, entirely without obligation.

Call us today

0330 053 9263

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 extremely 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 cash-flow.

Don’t let your bankers control you, contact CPA today.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

Read our blog here on how to crack down on the late payment culture.

Read our blog here on how to give late payers the slap they need.

The “Why” of the late payment culture.

New PM should walk the walk and back small firms over late payments

Paying late is “crack cocaine” to big business.

Late payment culture risks “spiraling out of control”

visit our late payment compensation page

See our full blog and FAQ on late payment compensation

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 sold B2B on credit then there may be a hidden source of capital you can call on.

If you fancy an bit of extra cash in your business, rather than 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 provide the cash boost 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 business owners  who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.

Those former clients who regularly paid you late can finally be made to pay.

Ready to speak to an advisor?

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!

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

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