The UK’s food and beverage manufacturing industry has experienced a 92% increase in ‘Significant Distress. According to Begbies Traynor's Red Flag Alert research for Q4 2014, the UK's food retailing industry experienced one of the sharpest increases in ‘Significant’ financial distress of all sectors monitored - rising 58% to 4,552 struggling businesses compared to the same quarter last year. Meanwhile the worst performing sector was the UK’s food and beverage manufacturing industry, which witnessed a colossal 92% increase in ‘Significant Distress’, with 1,410 businesses now struggling to make ends meet, compared to 733 at the same stage last year. Overall, the statistics show that the UK’s SME food retailers and suppliers have been the worst casualties so far of the enduring price war between the UK’s supermarket giants, who have been slashing prices, while squeezing suppliers’ margins and elongating payment terms. Begbies Traynor predicts that more than 100 food and beverage suppliers will fall into administration before the year is up. To view Begbies Traynor's news release go to http://www.begbies-traynorgroup.com/news/business-health-statistics/supermarket-price-war-could-force-food-suppliers-to-go-bust. Retailers optimistic for 2015. A snapshot survey carried out by the BRC has shown that UK retailers are optimistic about their fortunes in 2015, with many predicting an improvement in sales and increases in both investment and employment levels over the next twelve months. The survey showed that 76% of respondents reported that they expected their sales to improve in 2015 compared with 2014. Commenting on the survey results Helen Dickinson, BRC Director General, said: “It's great to see British retailers optimistic about the coming twelve months. After a number of years battling against strong economic headwinds and shaky consumer confidence, it seems as though retailers are set for some cheer in 2015." For more information go to http://www.brc.org.uk/brc_news.asp. Britsh SMEs are thriving and growing, but with risks. New research by LV= Broker reveals that British SMEs had a strong 2014, with three quarters (75%) improving or maintaining their turnover in the past year compared to 2013. In addition, a new generation of SME owners has entered the market as 180,000 people started running their own business in the past twelve months. However, 4% of SMEs have no insurance cover in place, and 15% have no financial back-up plan in place if they were unable to trade for any reason. When asked why, 38% of the SMEs surveyed responded that they don't see the need for any contingency plan, 21% can't afford one and 10% say they plough all their profits back into their business. To view LV's news release go to http://www.lv.com/about-us/press/article/british-smes-thriving-and-growing. BDO's High Street Sales Tracker shows that sales on the UK high street fell over the crucial Christmas period. Like-for-like sales at mid-market retailers slumped 1.4% year-on-year over December as shoppers were absent from the traditional last minute rush in the wake of November's 'Black Friday' shopping frenzy. The fashion sector was hit the hardest - down 3.1% for the month. Like-for-like sales decreased in the run-up to Christmas, slumping to 6.1% down year-on-year in the last week of the year. Sophie Bevan, Head of Retail and Wholesale at BDO LLP, said: "When like-for-like sales dropped by over 3% in the second week of December, retailers started to get nervous, resulting in early discounting." To view BDO's news release go to http://www.bdo.co.uk/press/retailers-left-counting-the-cost-after-december-sales-fall.
BCC Economic Survey: UK business bounces back in Q4, but will it last in the New Year? The BCC's latest Quarterly Economic Survey for Q4 201 shows that manufacturing and services firms in the UK reported strong domestic and export growth to end 2014. David Kern, Chief Economist at the BCC, commented: “The latest results support our view that UK growth will stabilise well above 2%, and that Britain’s medium-term economic growth will be slightly higher in the next few years than the recent OBR forecast predicted. However, many balances remain below the high levels seen earlier this year, indicating that the overall pace of GDP expansion is easing." To view the BCC's news release with a link to the full report go to http://www.britishchambers.org.uk/press-office/press-releases/bcc-economic-survey-business-bounces-back-in-q4,-but-will-it-last-in-the-new-year.html.
R3 advises that business distress levels are staying near record lows. According to the latest Business Distress Index from R3, levels of UK business growth remain near their record highs, with two-thirds (65%) of businesses reporting one or more key indicators of growth. 40% of businesses are reporting an increasing sales volume, 36% are investing in new equipment, 34% are seeing increased profits, and 38% of businesses are expanding. Meanwhile, business distress levels are staying near record lows. Larger businesses continue to show more positive signs of growth compared to their smaller counterparts, with 88% of larger businesses (250+ employees) experiencing one or more indicators of growth (up from 82% in June 2014), compared to 46% of sole traders (49% in June 2014). To view R3's news release go to https://www.r3.org.uk/index.cfm?page=1114&element=20326&refpage=1008.
UK Businesses see 30% increase in debt through late payment of bills in 2014. New research has reported that the amount of debt a typical UK business is facing through customers paying late or not at all is growing is growing at an alarming rate. In the fourth Quarter of 2014, Lovetts saw a 30% increase in the level of debt each of its customers is pursuing for payment through Letters Before Action, growing from £42,000 in Q4 2013 to £55,000 in Q4 2014. Charles Wilson, CEO of Lovetts says: "It's a national scandal that late payment has exacerbated to such a level. What we see is only the tip of the iceberg. Every business pays late, forcing their suppliers to pay late - it's a vicious cycle which can only be cracked by firms taking a harder line with their customers past and present and using their right to claim compensation currently utilised by only a minority of businesses." To view Lovetts' news release go to https://www.lovetts.co.uk/news/UK-Businesses-see-30-percent-increase-in-late-payment-in-2014.aspx.
The UK ended 2014 as one of the world's most optimistic economies. New research from the Grant Thornton International Business Report (IBR) has found that the UK ended 2014 as one of the world's most optimistic economies. Although UK business optimism declined on a quarterly basis (from 82% in Q3 2014 to 68% in Q4 2014), the UK still ranked among the top five international economies in Q4, just ahead of the US. Taken on a full-year rolling average, the UK remains within the top five most optimistic economies over the year, at 79% - the country's highest annual average in more than 10 years and well above the global average of 41%. Scott Barnes, CEO of Grant Thornton UK LLP, commented: "In many ways, 2014 was the first year since the 2008/09 financial crises where businesses felt they were really back on track." To view Grant Thornton's news release go to http://www.grant-thornton.co.uk/en/Media-Centre/News/2015/UK-businesses-enter-2015-on-optimistic-footing-though-global-uncertainty-weighs-on-resurgent-business-confidence-/.
Global Economic prospects to improve in 2015, but divergent trends pose downside risks. The World Bank's latest Global Economic Prospects report has advised that after growing by an estimated 2.6% in 2014, the global economy is projected to expand by 3% this year, 3.3% in 2016 and 3.2% in 2017. Developing countries grew by 4.4% in 2014 and are expected to edge up to 4.8% in 2015, strengthening to 5.3% and 5.4% in 2016 and 2017, respectively. However the report also stresses that underneath the fragile global recovery lie increasingly divergent trends with significant implications for global growth. Activity in the US and the UK is gathering momentum, but the recovery has been sputtering in the Euro Area and Japan. China, meanwhile, is undergoing a carefully managed slowdown. Risks to the outlook also remain tilted to the downside, due to persistently weak global trade, the possibility of financial market volatility as interest rates in major economies rise, the extent to which low oil prices strain balance sheets in oil-producing countries and the risk of a prolonged period of stagnation or deflation in the Euro Area or Japan. To view the World Bank's report go to http://www.worldbank.org/en/news/press-release/2015/01/13/global-economic-prospects-improve-2015-divergent-trends-pose-downside-risks.
QBE finds that 36% of UK businesses would expect to see increased trade credit risk within their own customer base if interest rates rise by up to 0.5%. Research conducted by QBE has revealed growing concern among UK businesses about the impact of Bank base rate movement, with over one in five (22%) citing interest rates as the aspect of the UK economic environment that is of most concern. Nearly one in four (23%) of respondents indicate that an increase in interest rates of up to 0.5% would start to have a tangible impact on their business while almost half (47%) report that an increase of up to 1.5% would put them under pressure. 48% said they would have to take a more cautious approach to spending and increase scrutiny on levels of working capital and cash flow. In addition, over one in three (36%) expect to see increased trade credit risk within their own customer base. Trevor Williams, Head of Credit & Surety Europe at QBE commented “Our research reveals a marked sensitivity among UK businesses to even the smallest increase in interest rates. In particular, companies expect their working capital and the creditworthiness of their customers to be impacted. . . Companies offering unsecured trade credit to their customers would be prudent to explore the benefits and protection that credit insurance can deliver.” Click here to view QBE's news release.
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