GDP falls 9.9% in 2020 – business news 12 February 2021.
James Salmon, Operations Director.
GDP falls 9.9% in 2020, covid-19 but the Bank of England Economist predicts a double digit recovery, the FCA says a quarter are struggling financially, Brexit, market and other business news.
Here are CPA we want to share the business news stories we have seen that we think will affect our members and readers. Many of us are busy fighting to protect our businesses and therefore might have missed some of the news that could impact small businesses, their owners and those that sell on credit.
GDP falls 9.9% in 2020
The UK economy records its worst annual GDP figures since 1709 when a three month long great frost killed crops across Europe, the Thames froze solid. The thaw then caused flooding and GDP fell 23% and didn’t recover for a decade
However a rise of 1% in the fourth quarter means we didn’t enter recession and it beat the estimates of only 0.5% growth.
The gain came despite the 3rd national lock-down that started in November and marks a big difference to the 19% fall in the second quarter when then first lock-down began.
Today’s GDP figures from the Office for National Statistics confirm that in 2020 Britain experienced its deepest recession in a century.
The enforced shutdowns aimed at suppressing covid-19 crushed economic activity, especially in sectors reliant on human contact, such as hospitality and bricks-and-mortar retail.
But just as extraordinary as the speed of the collapse has been the scale of government support. Almost £60bn ($83bn) has been spent on the job-retention scheme, under which the government has picked up 80% of the wage bill for furloughed employees, together with over £25bn on grants and tax cuts for firms. Government-backed cheap loans worth over £85bn have been extended to private firms. That support has provided some insulation from the economic damage.
Despite all the disruption, corporate insolvencies in 2020 were down by one-fifth compared with 2019. This year may be starting from a low base, but it looks like the economy is only heading upwards.
Chancellor of the Exchequer Rishi Sunak said the economy displayed “resilience” over the winter but insisted it was right to “proceed cautiously” on ending the lock-down. The government will set out “the support we’ll provide through the next phase of pandemic” in the budget, he said.
The economy is currently set to shrink 4.2% in the first three months of 2021.
Quarterly rises in GDP are usually a sign of a healthy, strengthening and growing economy. Unfortunately this small climb in output, while better than expected, is from a very low base and does not reflect the dire situation that many businesses are facing.
Earlier this week the Resolution Foundation warned that the UK Government has risked creating a legion of zombie companies and we must avoid amplifying this status of many of the UK’s SMEs, living off an ever-increasing debt pile, at all costs.
While, the BBLS and CBILS played instrumental roles in keeping many resilient SMEs alive and acted as important triage systems to identify and support viable businesses that needed credit, we must now accept that we have passed this triage phase and we face rising insolvencies and unemployment. It will be a survival of the fittest.
Those with healthy cash-flows, strong credit management and strict credit policies will be best protected as their customers struggle. CPA is keen to help you be among the survivors. Through our LPC division we are helping SMEs unlock hidden capital and our subscription service is helping our members monitor their customers and chase overdue payments to keep their credit management up to date and their cashflow strong.
Haldane predicts double-digit growth
The Bank of England’s chief economist Andy Haldane believes British households will embark on a massive spending spree once they are liberated from the coronavirus lock-down. With an estimated £250bn saved up due to the restrictions, Mr Haldane is predicting a recovery “to remember”. He believes that a year from now, “annual growth could be in double-digits.” In an article for the Daily Mail, he contends that the public are “desperate to get their lives back” and the rollout of the vaccines means we’re on the cusp of “enormous amounts of pent-up financial energy” being released.
The UK economy is like a “coiled spring” ready to release large amounts of “pent-up financial energy”, the Bank of England’s chief economist has said. Andy Haldane said consumer confidence would surge back thanks to the vaccine programme, with the economy firing “on all cylinders” by spring. He is the latest economist to forecast a sharp rebound in growth after an expected easing of restrictions.
FCA report: ‘quarter of Britons struggling financially’
The Financial Conduct Authority’s new Financial Lives Survey reveals that the pandemic has left one in four Britons with “low financial resilience”, with young people and ethnic minorities more likely to have become vulnerable. The watchdog found that the number of people who are over-indebted, have low levels of savings, or low or erratic earnings increased from 10.7m to 14.2m during 2020. The report also suggests there are now 27.7m adults with “characteristics of vulnerability” such as poor health, low financial resilience or recent negative life events, up 15% on February 2020. Nisha Arora, the FCA’s director of consumer and retail policy, called the findings “worrying”, adding: “It is likely the picture will have got worse since we conducted the survey”. AJ Bell analyst Tom Selby warned that “financial vulnerability is like blood in the water to scammers”, and urged consumers to be care ful as “there has already been a surge in scam activity since the pandemic started”.
Small businesses to be offered grants to cope with Brexit disruption
The Government is to create a £20m Brexit support fund to help small businesses handle changes to trade rules with the EU and to prepare for further changes to import controls in April and July.
Brexit
The U.K. and the EU have hit an impasse on discussions over how to implement the Brexit trade deal. Face to face meetings did not resolve the key disagreements over trade that have caused consternation in the U.K.-EU relationship in the six weeks since Brexit was completed. At issue is the part of the U.K.’s exit deal covering Northern Ireland, and the imposition of checks on goods moving across the Irish Sea from the main land.
EU’s attacks on the City of London could be self-defeating
The proportion of euro-denominated swap trading done in London fell from about 40% last July to 10% in January, according to IHS Markit. Trading of euro swaps at EU venues rose to 25% of the market from 10% while trading on US marketplaces more than doubled to 20%.
The news comes after data showed that Amsterdam overtook London as Europe’s biggest share trading hub in January. Some experts argue that the trading shift is largely symbolic considering the relatively small profits involved and that the EU’s intransigence over passporting for financial services will ultimately damage the EU, cutting itself off from access to one of the world’s deepest capital markets, potentially leaving Europe’s banks more vulnerable.
The Netherlands picked up business that Britain lost since the end of the Brexit transition period. In January an average of €9.2bn-worth of shares a day were traded in Amsterdam, compared with €8.6bn-worth in London.
PwC’s global head of Brexit policy Andrew Gray comments: “There is obviously a need in Europe for investment to be more linked to capital markets than it is to bank lending … I’ m not sure that is necessarily supported by effectively ring-fencing Europe as a whole, limiting the amount of capital flows and effectively placing further burden on the banking sector to provide funding for investments.”
Treasury mulls freeze on personal allowances
The Treasury is considering scrapping the planned increases in personal income tax allowances in next month’s Budget, according to the Telegraph. The move would keep both the £12,500 and £50,000 thresholds in place and raise £6bn in revenue by 2024-25. Tory MP Andrew Griffith backed the idea while Mike Brewer, the deputy director of the Resolution Foundation, said: “There are good reasons that freezing income tax allowances is tried and tested revenue raiser – it’s a classic stealth tax, a way to improve the fiscal outlook without generating much uproar.”
Britain kicks off G7 presidency with call for tax on big tech
Rishi Sunak is expected to call on tech giants to pay more in tax after seeing their profits explode during the pandemic. The Sun reports that the “Amazon and Facebook Tax” will be top of the Chancellor’s agenda when he meets with his G7 counterparts later today.
NHS
Yesterday Boris Johnson set out a plan to reform the National Health Service. The reforms, the first major governmental changes in a decade, would help to integrate different parts of the NHS and social care more closely. But they would also downgrade the importance of the internal market: competition will no longer be an “organising principle”. With 7% of GDP spent on NHS (£160 billion) the government wants more central control and to politicize decision making.
Covid-19 general news
There were 13,494 new cases in the UK yesterday taking the total above 4) with XXX more deaths (total xxx).
Globally 437,761, new cases brought the total to 107.7 million with 2,368,808 deaths.
159 million vaccine does have now been given worldwide.
Government ministers will reportedly discuss a Cabinet Office proposal to create vaccine and testing certificates for when international travel is able to resume.
Astrazeneca is on course to launch a new vaccine that is effective against emerging Covid variants by the autumn, the company has said. Clinical trials for the “next generation” of Covid vaccine would commence in the spring, with mass production set for six to nine months’ time.
Blood-thinning drugs reduced the risk of death from Covid-19 in a new study.
New data from the Centers for Disease Control (CDC) show allergic reactions to Covid-19 vaccines are rare and anaphylaxis, one type of severe reaction, occurs in only 2 to 5 people for every million vaccinated.
Markets.
Yesterday, European equity markets were mixed, with stocks lacking conviction in any direction. The FTSE 100 closed at down 0.07% at 6528.72 and the 250 Closed up 0.1% at 21,017.85. The Eurostoxx 50 was up 0.64% and the 600 up 0.46%.
Overnight, the S&P 500 rose 0.17% and the NASDAQ rose 0.38% after remarks by US Federal Reserve Chair Jerome Powell eased fears of a tightening of monetary policy.
The US Dollar was back in selloff mode in early after slightly worse than expected jobless claims numbers. Sterling is at 1.1383 Euros and 1.3779 US Dollars.
In commodities, gold prices and oil prices were mostly unchanged yesterday but have dropped this morning as OPEC reduced its demand forecasts and hopes grew regarding the US stimulus bill. Brent Crude is at $60.55 and Gold is at $1814
Minimum pension age set to rise
The minimum pension age is set to increase to 57 in 2028 under plans unveiled in a government consultation. At present, people aged 55 can access their retirement funds but the Treasury wants to see this age-limit increased by two years from April 2028. Raising the normal minimum pension age to age 57 could encourage individuals to save longer for their retirement, and so help ensure that individuals will have financial security in later life. The rise will maintain a 10-year gap between the point someone can access their private pension and the state pension age.
BBC
China prohibited the broadcast of the BBC World News, blaming the ban on the broadcaster’s recent reports on its coverage of human-rights abuses in Xinjiang, protests in Hong Kong and the pandemic. Last week Britain’s broadcast regulator revoked the licence of China Global Television Network, a state media channel. The BBC’s channel had never been widely available in China.
Disney
Disney surprised markets, thanks to revenues from its Disney+ streaming service, which now has nearly 95m subscribers. Stay-at-home viewers offset losses run at the theme parks. Disney returned to profit this past quarter despite its “parks, experiences and products” segment having fallen by 53% year-on-year.
Don’t let Covid-19 bust your business!
It will if your cash flow dries up, either sooner or later.
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for sometime to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. Above all tactfully, because maintenance of goodwill is paramount.
To meet the needs of creditors in the current crisis, we have designed a “critical care” package especially tailored for the situation.
- The annual package costs start at very low rates
- A minimum performance warranty is provided
- Several complimentary services included
Clients instruct CPA on-line via their PC or phone, completely user-friendly. Your late paying customers are told to pay you direct (not to us).
A very recent report shows a 23% increase in the number of unpaid invoices since March 11th THIS YEAR – are you getting a build-up of late payers?
Right now, overdue accounts must be a concern and CPA has a great track record of encouraging slow-payers to pay their suppliers quickly.
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
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 your 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.
You might be hesitant about contacting a debt collection agency. What are they going to be like?
Can they help your particular type of business?
There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.
Debt collection agencies are not all alike.
Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain
the best possible relationship with customers!
At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.
The Credit Protection Association has helped has assisted tens of thousands of UK businesses with their credit control requirements, since the First World War.
We are polite, firm and efficient when it comes to recovering outstanding debt.
“We have used CPA for a number of years now. The website is easy to navigate around with lots of helpful reports. The staff are always at hand and very friendly. CPA has helped us reduce our debt over the years and keep track of potential issues with our customers.”
~ CPA client in Buckinghamshire
“The service from CPA has proved to be everything that you said it would be. We have already seen a huge benefit. We have had a number of overdue accounts paid promptly and directly to us. It is also a huge weight off our mind to know that once we have passed an overdue payment over to you, you take care of everything whilst keeping us informed.
~ Credit Controller client in Warrington
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.
You put up with the PAIN – now claim the GAIN!
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.
Did you know that your business is entitled to a minimum of £40 for every commercial invoice paid late to you over the past 6 years?
How many of your invoices are paid late each month – 20, 50, 100 or more?
At £40 per invoice that’s claim of £57,600, £144,000, £288,000 plus interest. The more invoices the bigger the claim!
At £100 per invoice it’s £144,000, £360,000, £720,000 plus interest.
For over 20 years, CPA has calculated and recovered Late Payment Compensation on behalf of Clients!
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.
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 extra 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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The Credit Protection A,ssociation – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.