Welcome to April's issue of Credit Management News Digest, our new sister newsletter to Credit Insurance News Digest. This issue is sponsored by Markel. 

Index
 
UK Economy
UK growth to slow in 2019 as uncertainty bites, but could pick up in 2020 with an orderly Brexit. UK GDP growth could dip to 1.1% in 2019 before picking up to around 1.6% in 2020 according to PwC’s latest UK Economic Outlook report. PwC advises that the drag on business investment due to ongoing uncertainty about the outcome of Brexit is causing slower growth at present, but assuming an orderly exit from the EU followed by a transition period, investment and GDP growth should pick up later in 2019 and in 2020. John Hawksworth, Chief Economist at PwC, commented: “Brexit-related uncertainty is likely to dampen growth in all regions in 2019, but there could be some acceleration in growth across the UK in 2020 if an orderly Brexit can be achieved. In this scenario, the Bank of England could resume very gradual interest rate rises later in 2019 or in 2020, but it is unlikely to take any action until the fog of uncertainty has cleared.” To read PwC's news release go to https://www.pwc.co.uk/press-room/press-releases/UK-growth-to-slow-in-2019-as-uncertainty-bites.html.
The UK economy might have been about 3% larger by the end of 2018 without Brexit. S&P Global has published an article, 'Countdown to Brexit: What might have been for the UK economy', which analyses the extent to which the UK economy has already suffered from the anticipation of Brexit. According to the article, the economy moved onto a lower growth trajectory almost immediately after the referendum and, had the UK not decided to leave the EU in the 2016 referendum, S&P estimates that the economy might have been about 3% larger by the end of 2018. Furthermore, if and when uncertainty finally lifts, S&P notes that it will take time before some of the effects kick in. "Moreover, some businesses have ventured well beyond the point of no return." To read S&P's article go to https://www.capitaliq.com/CIQDotNet/CreditResearch/RenderArticle.aspx?articleId=2190948&SctArtId=469326&from=CM&nsl_code=LIME&sourceObjectId=10935272&sourceRevId=1&fee_ind=N&exp_date=20290403-14:31:51.
UK economy to falter further as Brexit uncertainty bites. The British Chambers of Commerce (BCC) has slightly downgraded its growth expectations for the UK economy, forecasting growth of just 1.2% in 2019 (down from 1.3%), which if realised would be the weakest growth in a decade. The BCC has also downgraded its growth forecast for 2020 to 1.3% (down from 1.5%) and published its first forecast for 2021 of 1.4% growth. Growth in the dominant services sector is expected to weaken to 1.1% in 2019, which would be the slowest growth since 2009. The manufacturing and construction sectors are also expected to grow by less than expected in BCC's previous forecast. The BCC forecast assumes that the UK will avoid a messy and disorderly exit from the EU, and warns that another scenario would lead to revisions in the next forecast. To read the BCC's news release go to https://www.britishchambers.org.uk/news/2019/03/bcc-forecast-uk-economy-to-falter-further-as-brexit-uncertainty-bites.
KPMG revises UK growth forecast due to Brexit and global headwinds. According to KPMG UK’s quarterly Economic Outlook, the lack of clarity around Brexit and headwinds from the global economy has resulted in a downgrade of the short-term outlook for the UK economy. Assuming that a Brexit deal can be reached, the analysis predicts the economy will grow at a rate of 1.2% in 2019 and 1.5% in 2020. Regardless of the outcome of Brexit, the EU will continue to be one of the largest markets for the UK by virtue of its size and proximity. Based on KPMG analysis, seven EU countries currently feature among the top ten largest potential trading partners for the UK, representing 49% of UK’s potential exports market, with Switzerland accounting for another 3%. The two largest world economies, China and the US are the only non-European economies among the top ten. To read KPMG's news release go to https://home.kpmg/uk/en/home/media/press-releases/2019/03/kpmg-revises-uk-growth-forecast-due-to-brexit-and-global-headwinds.html.
UK mid-sized businesses outpaced by EU counterparts. According to new research by BDO, turnover growth of the UK’s mid-sized businesses increased by a healthy 11% in the last year, bringing overall turnover to £1.3 trillion. This pales in comparison, however, to the accelerated growth witnessed in equivalent EU markets, with Germany seeing an upturn of 20% during the same period, while both Italy and Spain experienced increases of 15%. Of the top five EU economies analysed, only French mid-sized businesses experienced slower growth than those in the UK, with a 9% increase bringing overall turnover to £1.8 trillion in the last year. Although UK mid-sized businesses still remain the most profitable across the top five EU economies, profit growth tells a similar story to revenue growth with UK mid-sized businesses recording a 4% increase in the last year compared with a 19% increase in the previous year. European counterparts Spain, Germany and Italy experienced significantly higher profit growth of 37%, 30% and 24% respectively. Again, only France lags behind the UK, having experienced a profit drop of 3%. To read BDO's news release go to https://www.bdo.co.uk/en-gb/news/2019/uk-mid-sized-businesses-outpaced-by-eu-counterparts.
Brexit Sensitivity Index 2019 shows which countries are the most vulnerable. S&P Global has published its second edition of 'Brexit Sensitivity Index 2019: Who has the most to lose? 'which lists the 21 countries most exposed to Brexit. S&P found that nine of the ten countries with the greatest exposure to Brexit in 2016 are still in that group today, although there has been a reshuffling in the rankings, with perhaps the most notable change being that the Netherlands has moved up four places to become the third most vulnerable economy. Ireland (1st place) and Luxembourg (2nd place) also feature as the economies most susceptible to any trade and migratory aftershocks of a potential Brexit. To read S&P's article go to https://www.capitaliq.com/CIQDotNet/CreditResearch/RenderArticle.aspx?articleId=2187857&SctArtId=468960&from=CM&nsl_code=LIME&sourceObjectId=10927634&sourceRevId=1&fee_ind=N&exp_date=20290327-23:47:13.
The number of UK scale-ups hits a record high. According to a new report, 'ScaleUp Insights' from The ScaleUp Institute, the total number of scaleups in the UK increased in 2017, with 36,510 businesses growing their turnover or employee numbers by more than 20% a year - an increase of 3.7% (or 1300 scaleups) compared to 2016. There are now 35% more scaleups in the UK than there were in 2013, compared to GDP growth over the same period of just 9%. Furthermore, growth has taken place across the country and there are now no scaleup ‘cold spots’ in the UK. According to the Institute, Scaleups generated £1.3 trillion in combined turnover in 2017, more than half the total of all SMEs, and were on average 42% more productive than their peers. To read the ScaleUp Institute's report go to http://www.scaleupinstitute.org.uk/research/the-scaleup-landscape/.
UK Late Payment
New proposals to tackle UK late payments. Real Business has reported that the UK Chancellor of the Exchequer's (Philip Hammond) Spring Statement included some important new proposals to tackle the continued problem of slow payments for SME suppliers. These included requiring large buyers to appoint a non-executive director with specific oversight of the company’s payment terms and requiring businesses to publish audited reports on their payment times in their annual account. The Federation of Small Businesses (FSB), which has been campaigning on this issue for many years, described them as potentially marking the end of the late payments crisis, which according to FSB figures leads to the closure of 50,000 businesses a year. To read Real Business' article go to https://realbusiness.co.uk/tackling-slow-payments-spring-statement/.
115,000 UK businesses wait an average of 57 days for payment. According to new data from Begbies Traynor, almost 115,000 businesses waited an average of 57 days for payment in 2018 with more than 1,000 of these subsequently entering insolvency as a result. Of those 1,000, 34% had debtor days in excess of 57 days and 15% for longer than 86 days. During 2018, media companies were made to wait the longest for payment, with an average of 69 debtor days.  Begbies Traynor's research also found notable increases in the length of debtor days between 2011 and 2018, with a 9% increase in the telecommunication & information technology sector (from 62 to 68 days), a 5% increase in travel & tourism (46 – 48 days), general retail (41 – 43 days) and media (66 – 69 days). To read Begbies Traynor's news release go to https://www.begbies-traynorgroup.com/news/commentary/115000-businesses-waiting-an-average-of-57-days-for-payment.
The impact of late payments on UK SMEs. Accountancy Age has published an article, 'The impact of late payments on SMEs', in which Duff & Phelps has highlighted their concerns that the late payment culture is resulting in further low productivity and financial instability. In their statement, the firm reported: “Our concerns follow recent research by Bacs Payment Schemes, which claimed that small businesses are facing a collective bill of £6.7 billion per annum in outstanding payments owed by other companies—up from £2.6 billion in 2017.” Paul Williams, Managing Director at Duff & Phelps went on to cite the fact that around 50,000 businesses fail each year due to late payments. This amounts to a £2.5 billion shortfall for the UK economy to withstand. The average value of each late payment now stands at £6,142 according to Mr Williams. To read Accountancy Age's article go to https://www.accountancyage.com/the-impact-of-late-payments-on-smes/.
UK and EU Exports and Trade
A third of EU trade is with the United States and China. Latest data from Eurostat has found that in 2018, the US (€674 billion, or 17.1% of total extra-EU trade in goods, i.e. the sum of exports and imports) and China (€605 billion/15.4%) continued to be the two main goods trading partners of the EU, well ahead of Switzerland (€265 billion/6.7%), Russia (€254 billion/6.4%), Turkey (€153 billion/3.9%) and Japan (€135 billion/3.4%). However, the trends observed over time differs significantly for the top trading partners of the EU. For example, after recording a significant and almost continuous fall from nearly 25% in 2000 to 14% in 2011, the share of the US in EU total trade in goods increased again to reach 17% in 2018. In contrast, the share of China has almost tripled since 2000, rising from just over 5% to more than 15% in 2018. To see Eurostat's latest research go to https://ec.europa.eu/eurostat/documents/2995521/9678910/6-20032019-AP-EN.pdf/0ebd7878-dad5-478e-a5f0-3ae2c91f7ea3. Please note that the text above is a summary of Eurostat's news.
The share of UK exports to the EU has decreased significantly from 54% in 2000 to 45.6% in 2018. New data released by the Office for National Statistics indicates that UK exports increased by 2.7% to 634.1 billion in 2018, with exports to India (up 19.3%), Japan (up 7.9%), China (up 4.6%) and Canada (up 4.2%) growing faster than those to the EU (up 3.6%). The research also shows that the UK's export of goods and services to non-EU trading partners in 2018 reached a high of £345.1 billion, with the share of exports going to the UK’s top 3 non-EU trading partners - USA, China and Switzerland - increasing from 21.3% in 2000 to 25.4%. In contrast, the share of UK exports to the EU has decreased significantly from 54% to 45.6% over the same period. According to Eurostat, the UK was one of only two EU member states to export more goods to non-EU countries than within the EU in 2018. To read Gov.UK's news release go to https://www.gov.uk/government/news/uk-bsuinesses-embrace-global-demand-for-british-produce.
UK export growth on the brink of contraction in the first quarter of 2019. According to the latest European Export Index report by BDO, UK export growth fell perilously close to the point of contraction in the first quarter of 2019 with further disruption expected later this year. German export growth also slowed due to weaknesses in the global automotive industry as car sales continued to stall in key markets. BDO suggests that dismal figures from the UK and Germany are consistent with a broader slowdown in export growth observed across the EU, although the French economy bucked the trend witnessed across Europe, exceeding expectations to become the top performing exporter among the EU’s five largest economies. To read BDO's news release and download the full report go to https://www.bdo.co.uk/en-gb/news/2019/uk-export-growth-on-brink-of-contraction-in-first-quarter-of-2019.
UK Trade Sectors
UK manufacturing activity continues to weaken. Manufacturing output growth in the quarter to March 2019 was at its weakest since May 2018, according to the latest monthly CBI Industrial Trends Survey. Output volumes expanded in 11 out of 17 sub-sectors, with growth driven predominantly by the food, drink, tobacco, chemicals, and metal manufacture sub-sectors. Meanwhile, the mechanical engineering, paper, printing & media, and motor vehicles & transport equipment sub-sectors were the main drags on growth. Looking ahead, firms anticipate output volumes to grow at a broadly similar pace in the next three months. Anna Leach, CBI Head of Economic Intelligence, said: “The manufacturing sector has slowed again this month and is now barely growing. Brexit uncertainty is one of the biggest threats to growth in the UK manufacturing sector – both current and future – as firms prioritise stockpiling goods over investing in the future of their business." To read the CBI's news release go to https://www.cbi.org.uk/media-centre/articles/manufacturing-activity-continues-to-weaken/.
UK High street struggles to gain ground as retail woes heighten. According to BDO’s latest High Street Sales Tracker, disappointing in-store like-for-like sales in March failed to offset last year’s dire performance. Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “With increased footfall, falling unemployment and rising wages, the stars should have aligned for high street retailers in March. Yet sales remained extremely poor and any positive movement failed to make a dent in the huge negative result we had last year caused by the Beast from the East. . . Retailers continue to trade on paper-thin margins and the impact of further increases in business rates and staffing costs from this April will only add to the fears of further possible high street casualties.” To read BDO's news release go to https://www.bdo.co.uk/en-gb/news/2019/high-street-struggles-to-gain-ground-as-retail-woes-heighten.
UK Quarterly Economic Survey for Q1 2019 indicates that both the Services and Manufacturing sectors are performing weakly. The British Chambers of Commerce’s (BCC) has reported that its latest quarterly economic survey found that the percentage balance of firms reporting an increase in export sales in the UK services sector stood at zero - its weakest level since 2009, and the orders balance turned negative for the first time in eight years. The balance of firms reporting improved domestic sales and orders also weakened significantly in the quarter. Among manufacturers, the percentage of firms reporting an increase in domestic and export sales and orders dropped back to their 2016 levels. Reacting to the Q1 results, Dr Adam Marshall, Director General of the BCC, said: “These are some of the weakest figures we’ve seen in nearly a decade." To read the BCC's news release go to https://www.britishchambers.org.uk/news/2019/04/bcc-quarterly-economic-survey-q1-2019-business-hits-the-brakes.
UK retail sales fell in March. UK retail sales volumes fell in the year to March, compounding a subdued start to 2019, according to the latest monthly CBI Distributive Trades Survey. The survey found that retail sales volumes fell sharply (by 18%), the fastest contraction in 17 months and indicative of a four-month run in which sales have not grown. Year-on-year growth in internet sales slowed in March (+21%) to the lowest rate in 12 months. Although this disappointed retailers’ expectations for strong growth in March, sales volumes are expected to rise again in April (+15%). The CBI noted that it is possible that year-on-year sales growth in March has been distorted by the later timing of Easter this year. To read the CBI's news release go to http://www.cbi.org.uk/news/retail-sales-fall-in-march-cbi/.
Global Economy and Trade
2019 will see 70% of the global economy experience a slowdown in growth. The Head of the International Monetary Fund (IMF), Christine Lagarde, has predicted that the global economy is losing momentum and that many countries will experience slower growth in 2019. In a speech delivered ahead of the IMF’s annual spring meeting, she commented: "Only two years ago, 75% of the global economy experienced an upswing. For this year, we expect 70% of the global economy to experience a slowdown in growth." However, she also stressed that though the outlook is 'precarious', the IMF does not anticipate a recession in the near term. To read the IMF's transcript of Ms Lagarde's speech go to https://www.imf.org/en/News/Articles/2019/03/29/sp040219-a-delicate-moment-for-the-global-economy.
Stable GDP growth in G20 area with the exception of Mexico, UK, Brazil and Canada. The OECD has advised that provisional estimates indicate that growth of GDP in the G20 area was stable at 0.8% in Q4 2018 and slowed marginally in the OECD area (to 0.3%, from 0.4%). Most notably, growth rebounded in Japan to 0.5% in Q4, following a contraction of 0.6% in Q3, while Korea (to 1.0%, from 0.6%) and India (to 1.6%, from 1.5%) also saw significant improvements. On the other hand, GDP growth slowed in a majority of the remaining G20 economies - significantly in Mexico and the UK (to 0.2%, from 0.6%), in Brazil and Canada (to 0.1%, from 0.5%), and more moderately in South Africa, the US, China, Italy and Australia. Overall, year-on-year GDP growth for the G20 area slowed to 3.4% Q4 2018 (from 3.6% in Q3), with India recording the highest growth (6.8%) and Turkey the lowest (- 3.1%). Year-on-year growth for the OECD area slowed to 1.8% (from 2.2%). To read the OECD's news release go to http://www.oecd.org/newsroom/g20-gdp-growth-fourth-quarter-2018-oecd.htm.
Global trade growth loses momentum as trade tensions persist. The World Trade Organisation (WTO) has reported that world trade will continue to face strong headwinds in 2019 and 2020 after growing more slowly than expected in 2018 due to rising trade tensions and increased economic uncertainty. WTO economists expect merchandise trade volume growth to fall to 2.6% in 2019 (accompanied by GDP growth of 2.6%.— down from 3.0% in 2018). Trade growth could then rebound to 3.0% in 2020, out-pacing GDP growth due to faster GDP growth in developing economies, although this is dependent on an easing of trade tensions. To read the WTO's news release go to https://www.wto.org/english/news_e/pres19_e/pr837_e.htm.
Credit Management News 
The vital role of credit management for SMEs in the post-Brexit future. The Chartered Institute of Credit Management (CICM) and ITN Productions Industry News have announced that they have launched 'Credit Experts', a news and current affairs-style programme exploring the evolving credit landscape – from new technologies and artificial intelligence solutions for managing customer outcomes to essential guidance for SME. Philip King, Chief Executive of CICM said: “Credit professionals play a vital role in multiple areas of commercial and consumer credit, delivering expert knowledge, advice and services that support economic growth and best client/customer outcomes. ‘Credit Experts’ focuses on some of the most recent examples of best practice and new technology, providing a ‘snapshot’ of an industry that continues to innovate and evolve.” 'Credit Experts' can be viewed at www.cicm.com.
The likelihood of late payment can be mitigated by good cash flow management. Hilton-Baird has reported that 57% of UK businesses have experienced problems with cash flow, with 38% of these consequently unable to pay their debts. The average small business is owed £31,055 in overdue invoices, with self-employed workers 2.5 times more likely to have cash flow issues than businesses with up to 49 employees. According to Hilton-Baird, the likelihood of late payment can be mitigated and controlled to a degree by good cash flow management. Hilton-Baird notes, for example, that for many companies, employing a digital solution can make a fast and significant change and cites research that raising an invoice on mobile, for instance, results in payment after an average of 8 days as opposed to 28. To read Hilton-Baird's news release go t https://www.hiltonbairdcollections.co.uk/small-business-lose-an-average-of-26000-due-to-poor-cash-flow/.
Recommended Business Apps
Tripit. The Tripit software and app allows frequent business travelers to manage a master itinerary of travel. Once users have forwarded their confirmation emails for flights and hotel bookings to Tripit, Tripit automatically creates a master itinerary that can be easily shared to managers, colleagues or family. Tripit users are also provided with updates on the status of their flights, allowing them to check for delays - or possibly even find better seats. It also gathers weather forecasts, maps, and directions. To sign up for Tripit go to https://www.tripit.com/web.

Square Point of Sale. Square Point of Sale allows you to turn any iPhone, iPad or major Android device into a mobile POS that accepts credit and debit cards (including contactless cards) and mobile payments like Apple Pay. The Square Point of Sale app is free to download, card readers are £39+VAT and payment processing fees are 1.75% of each transaction for all major credit cards. Additional capabilities include online sales reports, inventory and digital receipts. For more information go to https://squareup.com/shop/hardware/gb/en. 
 
Basecamp is a great app which simplifies tasks for you and your team. It offers six main components: a chatroom, a message board, a documents and images bank, a task list, a calendar, and a recurring check-in system which together help reduce the difficulties and extra work which happens when emails, chat threads, Word documents, etc are scattered in several places. It's also free for the first 30 days. Go to https://basecamp.com/ or download from the App Store or Google Play. 

Late Payment iCalc is a useful free app from Safe Collections designed to encourage prompt payment by UK companies. Enter the invoice value, day it became overdue and the app gives you a complete breakdown of both the fixed costs and interest payable on any unpaid invoice. Download from the App Store or Google Play. 

MY MINUTES aims to help focus the mind and avoid distractions. The app allows you to easily set up daily business and personal goals, such as 'spend 1 on admin' or 'answer emails' and sets reminders for activities. Users build up streaks as they meet their goals and keep their streak alive by continuing to hit their own targets. The app is available for iPhones only.
April's Quiz - sponsored by Markel. 
We are delighted to launch April's News Quiz.
Just nine short questions (all answers can be found in this issue and Credit Insurance News Digest), with the chance to win a wonderful prize, kindly donated by Markel, of a £50 Amazon gift card.
We will announce our next winner in the next issue on 8 May.
Click here to take part.

Thank you to readers who took part in March's Quiz. We are delighted to say that the winner was Clodagh Garavan at Evo Surety.
About the Sponsor: Markel
Credit is vital to the commercial world. Markel’s global solutions promote trade by ensuring that buyers and sellers can do business with confidence. We offer a wealth of experience in trade credit, political risk and surety covers, to control counterparty payment default, expropriation, confiscation and performance risks.
Markel's team offers expert knowledge of commercial counterparty and sovereign covers across a wide spectrum of trade sectors. The key benefits for clients include security of non-cancellable credit and country limits, balance sheet and cash flow protection, improved terms for bank financing facilities, effective alternatives to letters of credit or other types of collateral, reduced need for bad debt reserves, fulfilment of capital adequacy requirements, increased potential for sales growth and security of performance obligations - all because the risks are hedged and secured on a firm foundation.
The team has extensive experience of providing global solutions for clients, but can also tailor policies for specific credit risks, markets and contingencies. As a result of the complexity of our clients’ risks spanning political, cultural, legal and social differences, it is crucial to choose an insurer who understands all of the facets of international and domestic trade, combined with a detailed understanding of available solutions across a variety of contexts and geographies.
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