Slow UK Growth Puts Pressure on Cash Flow

14th March 2018.

The UK economy will grow at a slower pace than any other major advanced or emerging nation this year, according to the OECD.

Chancellor of Exchequer, Philip Hammond, delivered his spring statement yesterday afternoon. A follow-up to his autumn budget last November, Hammond expressed his plans for the economy in the year ahead. While the overall tone of the statement was positive, with some observing his chipper demeanour was “tigger-like”, it wasn’t all good news. Ahead of the statement, the Organisation for Economic Co-operation and Development (OECD) announced that the UK growth was moving at a slower pace than expected. While Hammond was keen to push the message that there was light at the end of the tunnel, the gloomy forecast keeps that bright light just out of reach for the time being.

The economic growth of the UK has been stunted by a multitude of recent factors, from inflationary pressure and high business rates to the ‘retail apocalypse’ of our high streets. The major one in 2018 however, is the lingering ghost of Brexit. Since the referendum in 2016, the country has been in a semi-permanent state of uncertainty; unsure what the economic future was and unsure whether to jump ship. At the Credit Protection Association, we help our members recover from negative economic conditions. The recent slowdown in retail sales, as well as the hike in business rates, have damaged our members as well as the economy, but by leaving their cash flow in our hands both have a shot at recuperating.

The OECD said higher inflation in the UK would continue to squeeze household incomes. Furthermore, weak business investment would also weigh on growth for the next two years amid uncertainty surrounding the Brexit negotiations.

The think-tank left its prediction for UK growth in 2019 unchanged at 1.1 percent. This would be the joint-slowest expansion alongside Japan.

Álvaro Pereira, the OECD’s acting chief economist, urged the UK to introduce more policies to boost living standards, as well as address regional disparities.

“We do think that it’s very important for the UK to invest more in productivity-enhancing infrastructure,” he said.

The economy has struggled to keep pace under the weight of inflation, Brexit and high-interest rates, but there are some positive prospects on the horizon. Within the chancellor’s spring statement he announced plans to improve infrastructure and apprenticeships, as well as the good news that Britons are only borrowing to invest rather than to fund day-to-day spending. There may be far to go until we see prosperity but we are not looking towards another financial crisis just yet.

Whether the forecast is positive or negative, businesses should always prepare for every eventuality. In this case, while UK businesses buckle under heavy taxation and inflationary pressures, business expenses should be prepared accordingly. At the Credit Protection Association, our debt recovery services chase late payers and recover unpaid accounts, giving our members’ cash flow a big boost, which they can use to fight the next dip in profits or economic downturn.

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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