Inflation rises, UK leads for distressed firms & SMEs debt – business news 17 February 2021.

James Salmon, Operations Director.

UK inflation rises, UK well placed to bounce back, UK leads Europe for distressed firms, pandemic adds £173k to small firms’ debts, covid-19, 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.

UK Inflation

U.K. inflation surprised analysts by accelerating in January, as economists predict it is the first step toward a ramp up of inflation towards the Bank of England of 2% target.

Inflation rose 0.7%, driven by the cost of furniture, household goods and food, the Office for National Statistics said Wednesday.

January’s figure was up slightly from December’s reading of 0.6 per cent despite a return to national lockdown restrictions.

The BOE sees inflation picking up this year, driven by higher energy prices and the expiry of the VAT holiday for the hospitality industry in April.

Inflation is expected to reach 1.9% by the end of the year.

The Bank of England  is predicting a rapid economic recovery as the vaccination program now being rolled out allows businesses to reopen and lifts consumer confidence.

UK well placed to bounce back

Ambrose Evans-Pritchard in the Telegraph says the UK economy did not suffer a bigger contraction than the eurozone last year, despite some analysts suggesting otherwise. He says that it “never made sense that the UK’s output figures should have been exceptionally disastrous”, adding that close analysis of data points to a “story of apples and oranges”, arguing that confusion over figures is due to measurement models that has delivered “an epidemic of bogus quantification”.

Mr Evans-Pritchard highlights that like-for-like nominal GDP contraction was 10% in Spain, 6.2% in France, 4.8% in the UK, 3.8% in Germany and 2.3% in the US. Neil Shearing from Capital Economics says the UK is “clustered in the middle of the pack with Germany, France, and Italy”, adding:” We might beat some of the others and get back to pre-pandemic levels by the end of this year, if there are no nasty surprises.

David Owen of Jefferies comments: “The UK actually outperformed other countries in Europe slightly if you look at nominal GDP, and we’re expecting another outperformance this year.” On the impact exiting the EU may have on the UK’s economic bounce-back, Mr Evans-Pritchard says that while much has been made of the immediate economic shocks of Brexit, little has been said on the “silent offsetting effects”.

Moody’s: UK leads Europe for distressed firms

Research by Moody’s has found that the UK has the highest number of distressed firms in Europe. Across the continent, there were 113 companies with a B3 negative rating or lower in December, with the UK accounting for the highest proportion with 28 distressed companies. Kristin Yeatman, vice president and senior analyst at Moody’s Investors Service, said: “We expect the number of companies rated B3 and lower to remain broadly stable over the first six months of 2021 as defaults, upgrades, and withdrawals are set to outnumber downgrades at those levels.”

Pandemic adds £173k to small firms’ debts

Folloing the news that we lead on distressed firms, a study by cloud computing firm Sage suggests that the coronavirus crisis is likely to give SMEs an additional £173,000 debt pile each year. The report surveyed more than 1,000 small businesses and found that around half have taken out a pandemic-related loan, leaving firms with an average additional debt burden of around £173,000 once repayments begin.

Almost a third of those surveyed said they were unsure how they would clear their debts. The report notes that SMEs have seen revenues slide by more than 20% on average during the latest lockdown, with this coming on the back of a 41% decline in revenue last year. On possible support measures, more than 70% of SMEs surveyed backed an extension of the VAT cut, saying it would provide “breathing space” and prevent wide-scale job losses.

38% of small firms plan to trade overseas

A survey of 791 small UK businesses has found that 38% are likely to trade overseas this year. The poll for digital challenger law platform Lawbite saw more than half of the manufacturing firms polled say they plan to trade in Europe, with just over a third saying they wanted to focus on Asia instead. Close to a quarter of respondents said they would conduct more overseas trade if the legal barriers were less complicated.

FSB Chair: Government must increase business support

Mike Cherry, chairman of the Federation of Small Businesses (FSB), has urged minsters to help companies that fell through the gaps in business support amid the coronavirus crisis, saying the Government “urgently needs to come forward with a road map to recovery and interventions”. Mr Cherry, who was speaking in response to the Treasury Committee’s Economic Impact of Coronavirus inquiry update, has proposed a Directors’ Income Support Scheme and suggests that building support initiatives according to what workers have missed out on would be the best remedy for those who have lacked support.

London hardest hit by job losses

Analysis by the Institute for Fiscal Studies (IFS) shows that London suffered the largest number of job losses of any UK region amid the pandemic. The number of London employees on payrolls dropped 5.5% between February and December 2020, almost double the figure recorded in Scotland, which saw the second-highest number of job losses. The IFS said the coronavirus crisis has affected the jobs market across the UK, with every region recording an increase in losses over 2020. Northern Ireland was the least-affected region, with losses of almost 1.5%. The think-tank has warned that job losses are set to increase as the furlough scheme comes to an end. It notes that 8% of the UK workforce was still on furlough in December, with the rate in London higher, at 10%.

IFS: £60bn in tax rises needed

The Institute for Fiscal Studies (IFS) has warned that tax rises will be required to help foot the nation’s coronavirus bill, saying the Chancellor is likely to need to raise an additional £60bn via taxes over the coming years. However, due to ongoing economic uncertainty, the think-tank does not believe increased taxation should be rolled out in the March budget. The IFS has also called on policymakers to scrap stamp duty, arguing that such a move could help stimulate the economy. It has also suggested that support measures rolled out amid the pandemic should be extended before being phased out rather than being “cut completely in one go”, warning that extending the furlough scheme beyond a point where most restrictions have been eased “will actually choke off recovery”.

Firms mull office options

With the coronavirus crisis driving an increase in home-working and uncertainty over the future of office-based working, a CBI and PwC survey of financial services firms has found three-quarters are reviewing their office space requirements as expensive city centre sites go under-used.

Poll shows support for CGT rethink

A poll for campaign group 38 Degrees saw 61% of respondents say they would support an increase in capital gains tax that brought the levy in line with income tax. This comes after an Office for Tax Simplification report last year suggested that CGT is “counter-intuitive” and “creates odd incentives”, with the review suggesting reform of the tax could add £14bn to Treasury coffers. Tax Justice UK executive director Robert Palmer commented: “When the Chancellor raises taxes it is crucial those with the broadest shoulders take the strain; this poll shows the public agree.”

Sunak urged to follow Scotland on rates relief extension

Scotland has extended its business rates holiday, with Finance Secretary Kate Forbes announcing that the tax relief will apply to businesses in retail, leisure, hospitality and aviation – sectors which have been badly hit by the coronavirus outbreak – and will last until April next year. The move has prompted calls for Rishi Sunak to announce a similar policy, with industry leaders urging the Chancellor to confirm an extension before his upcoming budget. Jerry Schurder, head of business rates at real estate advisor Gerald Eve, said that with firms “on their knees” and desperate for further support, “they need to know now, rather than waiting until March’s Budget to find out what their obligations will be.” John Webber, head of business rates at property firm Colliers, has also urged Mr Sunak to act immediately. Analysis by real estate advisor Altus Group shows that the rates relief, which is due to end on March 31, saved 358,264 occupied retail, leisure and hospitality properties in England from paying around £10.13bn.

450,000 families in housing arrears due to Covid-19 

More than 750,000 families are currently in arrears with their housing payments, with 450,000 struggling directly because of Covid-19, according to new research from Resolution Foundation

‘Romance fraud’ rises 20% during lockdown

Bank transfer romance fraud increased by 20% between January and November last year, according to new data from UK Finance

Covid-19 general news

There were 10,625 new cases in the UK yesterday (total 4.06m) with 799 more deaths (total 118k).

Globally 347,722 new cases brought the total  to 109.5 million with 2,419,697 deaths.

181m vaccine does have now been given worldwide.

Prime Minister Boris Johnson has said he is “hopeful” coronavirus restrictions can be cautiously eased in the coming weeks, with vaccines providing “grounds for confidence”. Johnson said he wanted the current national lockdown to be the last – and for the unlocking to be “irreversible” – ahead of the publication of his road map next week.

Restrictions on leisure and hospitality will be eased at four-weekly intervals, starting with some hotels in April. Next comes pubs and restaurants in May, according to the Daily Mail.

The UK has identified 1.7 million more who could be at high risk. This increases those needing to shield to 4 million and 820,000 have been prioritized for the vaccine. 15.5m have now been vaccinated in the UK. Every adult in the U.K. could get both doses of the vaccine by August, the head of the U.K.’s vaccine task-force told Sky News.

The Times reported that authorities in England are preparing for nationwide “surge” testing that will see hundreds of thousands of rapid lateral flow tests posted to homes and workplaces every day.

British companies are considering employment contracts requiring staff to have vaccinations, the Financial Times reported, as the government said it was “up to businesses” if they wanted to demand proof.


Yesterday the FTSE 100 closed at down 0.11%  at  6748.86 and the 250 closed basically flat, down 0.01%. The Euro Stoxx  50 also fell 0.21% while the broader European 600 slid a marginal 0.06% as the rally in early trading faded to finish marginally down. Wall Street’s main indexes hit all-time highs, with investors piling into economically sensitive stocks on hopes of more fiscal aid to lift the world’s biggest economy from a coronavirus-driven slump, before easing off in later trading as rising bond yields dampened enthusiasm. Overnight, the S&P 500 slid 0.06% and the NASDAQ dropped 0.34%.  Asian Markets were mostly lower, hit by profit-taking after a strong rally across the world in recent weeks, with investors worried over valuations.

The strong rally in US treasury yield overnight pushed Dollar notably higher although Sterling itself is no pushover, rising against most currencies. Sterling is at 1.1504 Euros and 1.3881 US Dollars.

Oil Prices hovered near 13-month highs  as Texan production continued to be battered by the cold snap. Brent Crude is at $63.75 and Gold dropped to $1785 as US treasury yields rose.

Bitcoin hits $50,000 for first time.  The market value of all cryptocurrencies is now close to $1.5trn. Alys Key in the I reflects on bitcoin after the cryptocurrency hit an all-time high of more than £36,000, noting the asset’s volatility and citing Mazars’ chief economist George Lagarias who said: “We feel that, due to its volatility, bitcoin lacks many of the established qualities that make up ‘money’, such as being a stable store of value and unit of account.”

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 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.

Discover NOW the potential value of late payment compensation hidden in your sales ledger!

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.

Discover NOW the potential value of late payment compensation hidden in your sales ledger!

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 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 Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.