UK avoids recession

10th September 2019.

UK brushes off recession fears

The UK avoids recession as the economy expanded by 0.3% month on month in July, according to official figures, well above economists’ expectations of 0.1% growth.

The services, manufacturing and construction sectors all grew in the month, after stagnating or shrinking in June.

“The pick-up in GDP in July is a reassuring sign that the economy is on course to grow at a solid – perhaps even above-trend – rate in the third quarter,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

That Britain’s economy grew by 0.3% in July compared with June, surprised forecasters, who had expected worse. The services sector was responsible for much of the growth. Though the news may mean we have avoided a technical recession,  (two consecutive quarters of contraction) at least for this year, given that there had been a 0.2% decline in output in the three months to June, the Office for National Statistics says underlying trends still indicate weakening growth.

Commenting on the numbers, the ONS’s Head of GDP Rob Kent-Smith said “While the largest part of the economy, services sector, returned to growth in the month of July, the underlying picture shows services growth weakening through 2019”.

Though mixed news, markets responded positively with sterling climbing to a six-week high against both the euro and the dollar as reported by the Financial Times.

Forecasters still fear no-deal Brexit could lead to recession

New research by BDO shows optimism across the services industry has fallen “dramatically” with surveys of more than 4,000 firms suggesting that a “recessionary mindset” has taken hold.

Peter Hemington, of BDO, said: “This month’s dramatic fall in confidence is a very worrying event.

Pessimistic companies don’t invest or hire, which is how recessions start.

The reason for this has to be that UK businesses have suddenly woken up to the fact that a no-deal Brexit is a real possibility.”

A separate forecast from KPMG said the knock-on effects to trade and business confidence of a no-deal Brexit would lead to the economy shrinking by 1.5% next year.

Yael Selfin, KPMG UK’s chief economist, said: “The UK economy now has the potential to strengthen over the next 12 months. But a no-deal Brexit could put paid to this upside, triggering the UK’s first recession for a decade.”

House prices up 0.3%

However the UK housing market is hanging on.

Figures from Halifax show that average UK house prices rose by 0.3% in August compared with July, hitting £233,541, with prices 1.8% up year-on-year.

Over the three-month period covering June through August, prices rose 0.1% compared with the three months before. August’s average sale price falls £654 short of the £234,195 peak reached in February.

Meanwhile, HMRC figures show that there were 86,630 home sales in July, a 12% dip on the number recorded in July 2018, while Bank of England data reveals that mortgage approvals have grown slightly, climbing to 67,306 approvals in July – a 1.2% increase on last year’s figures.

Brexit uncertainty leads to decline in new start-ups

The uncertainty is hitting new business start ups.

The number of new start-ups fell by almost 42,000 last year, or 12.9% , compared with 2017, an analysis of official figures revealed.

The Enterprise Research Centre (ERC) said the figures from its latest UK Local Growth Dashboard report reflected the ongoing lack of clarity around Brexit ahead of the UK’s planned exit next month. Established businesses were also scaling back their growth ambitions.

The ERC study reveals 284,000 start-ups were founded last year, down from 325,900 in 2017. The biggest drop among the four home nations was in Northern Ireland, where 15% fewer ventures were started.

In Scotland there was a 10.9% decline. Mark Hart, deputy director of the research centre and professor of small business and entrepreneurship at Aston Business School, said: “It’s particularly worrying that we’re seeing an absolute decline in the number of new businesses being started in the wake of the 2016 referendum.”

Domestic orders decline

The uncertainty is affecting manufacturing.

A report from trade body Make UK and BDO shows that domestic orders in the UK manufacturing sector declined in the third quarter for the first time in three years, while growth in export orders also weakened.

The report, based on a survey of 292 companies between July 31 and August 21 also found that investment intentions turned negative for the first time in three years.

It said: “Ominously, companies are cutting back on investment in transport equipment, factory machinery, and IT, just at the point in the economic cycle when spending would normally increase.”

A statement from BDO head of manufacturing Tom Lawton and Make UK chief economist Seamus Nevin said: “On current trends the economy, and the manufacturing sector in particular, looks headed towards a very challenging winter.”

Demand for staff weakest in seven years

A report by the Recruitment & Employment Confederation (REC) and KPMG shows that permanent appointments declined at their fastest pace in more than three years in August.

The analysis of data from around 400 UK recruitment and employment consultancies shows that advertised vacancies for both permanent and temporary jobs increased at “the weakest pace since the start of 2012”.

James Stewart, vice-chairman at KPMG, said: “Brexit uncertainty continues to take its toll on the jobs market, evident by the quickest drop in permanent placements in over three years as employers delay hiring staff.”

REC CEO Neil Carberry, who noted that permanent placements have dropped for six consecutive months, commented: “Much rests on business confidence – the confidence to invest, to hire someone, to try something new – and it’s clear that things are getting harder.

Sales flat in August

Analysis from KPMG and the British Retail Consortium shows that retail sales flatlined in August, while like-for-like sales were down 0.5% from the previous year.

August’s readings put total sales ahead of the average quarterly rate of minus 0.4%, but behind the annual average of 0.4% growth The 12-month average of 0.4% sales growth is the lowest on record.

KPMG’s Paul Martin, said: “For much of the retail market, efforts are being focused on preservation, not growth, in this uncertain climate.”

Or did High street sales fall 0.1%?

A report from BDO however shows that sales on the high street fell 0.1% in August, pointing to a “calamitous” fall in sales in the final week as hot weather prompted shoppers to stay away from high street stores.

Do you sell on credit?

With all the economic uncertainty 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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