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UK Mid-market firms lose £48 billion each year from failing to adequately mitigate risks. The UK’s mid-market businesses lost approximately £48 billion last year due to a failure to adequately mitigate risks directly within their control, according to new analysis by KPMG Enterprise. In particular, an over-reliance on a small number of suppliers has left companies vulnerable to costly fractures in their supply chain and a loss of vital revenues amounting to approximately £8.3 billion each year. Furthermore, despite half of respondents saying that the threat of losing major customer accounts was their most pressing day-to-day concern, over a quarter (29%) admitted that they rely on their top five customers for more than half of their turnover – again, leaving them exposed to the risk of bad debt, or a significant loss of income should those key customers switch loyalties. To read KPMG's news release go to https://home.kpmg.com/uk/en/home/media/press-releases/2016/05/companies-leaving-the-back-door-open-in-pursuit-for-growth.html.
New 90-day moratorium for failing UK businesses will seriously impact creditors. In response to a review of the corporate insolvency framework being undertaken by Insolvency Service (IS), Philip King, Chief Executive of the Chartered Institute of Credit Management has warned that a move to a new model similar to Chapter 11 for UK businesses heading towards insolvency could have serious consequences for creditors, cashflow and thousands of small businesses within the supply chain. A central plank of the IS’ proposals is the creation of a new moratorium, which will provide companies with ‘…an opportunity to consider the best approach for rescuing the business whilst free from enforcement and legal action by creditors.' The proposed moratorium would last for three months, with the possibility of an extension if needed. Mr King commented: "Viewed positively, this is a 90-day window for a company to work with a supervisor to turn the business around, save jobs, and secure a long-term future . . . Looked at another way, it is 90 days in which the less scrupulous can fritter away assets whilst being ‘untouchable’, to the serious detriment of creditors and the stability of the supply chain.” To read CICM's news release go to http://www.cicm.com/new-90-day-moratorium-failing-businesses-will-seriously-impact-creditors-cicm-warns/.
Deloitte European CFO Survey: Politics dominates business worries. Deloitte has reported that its latest European CFO Survey has found that 25% of CFOs say they are more optimistic about the financial prospects for their company than they were three to six months ago, unchanged from the third quarter of 2015. CFOs in Sweden were the most optimistic, with 62% more positive. Spain (47%) and Ireland (45%) report the second and third highest levels of optimism but both have declined, "perhaps influenced by inconclusive elections." Overall, 68% of European CFOs say there is a high level of financial and economic uncertainty facing their business. Perceptions of uncertainty are highest in Germany, with 93% of CFOs reporting high levels of uncertainty, followed by the UK (83%) and Russia (72%). The lowest levels of uncertainty are seen in Norway, Sweden and Belgium. To read Deloitte's news release go to http://www2.deloitte.com/uk/en/pages/press-releases/articles/european-cfo-survey-q1-2016.html.
CBI predicts slower UK growth as dark cloud of uncertainty looms. According to the latest CBI economic forecast, the UK economy is expected to continue to grow – but at a slower rate – through 2016 and 2017, and there are signs that global economic risks, including uncertainty ahead of the EU referendum, are starting to weigh on investment plans. The CBI's latest quarterly forecast predicts that the UK will see 2.0% GDP growth in both 2016 and 2017, both of which are downgrades from its last forecast in February (2016 – 2.3%, 2017 – 2.1%). Carolyn Fairbairn, CBI Director-General, commented: “We expect the UK’s growth path to continue but it is likely to be at a slower rate than previously thought. . . At present, the economic signals are mixed – we are in an unusually uncertain period.” To read the CBI's news release go to http://news.cbi.org.uk/news/cbi-predicts-slower-growth-as-dark-cloud-of-uncertainty-looms/.
UK exporters report modest Q1 growth amid softening economy. The British Chambers of Commerce and DHL's latest Quarterly International Trade Outlook has reported that the number of UK firms reporting an increase in export orders and confidence rose at the start of 2016, following a drop in growth at the end of 2015. The report’s Trade Confidence Index, measuring the volume of trade documentation, rose by 1.4% in Q1 2016, compared with the previous quarter, to stand at an index of 116.04 in Q1 2016. However, in annual terms there was a decline of 4.4% on Q1 2015. During the same period, ONS data and the BCC’s Quarterly Economic Survey have shown that economic growth softened across the UK. Dr Adam Marshall, Acting Director General of the British Chambers of Commerce, said: “Our latest analysis suggests that, despite efforts from businesses and government alike, we are not yet succeeding in transforming the UK’s export performance." To read the BCC's news release go to http://www.britishchambers.org.uk/press-office/press-releases/bcc-uk-exporters-report-modest-q1-growth-amid-softening-economy.html.
Credit Managers’ Index contradicts the Purchasing Managers’ Index which put manufacturing at a three year low. The Chartered Institute of Credit Management (CICM) has advised that its latest Credit Managers’ Index (CMI) (sponsored by Tinubu Square) has increased by 0.3 to 59.0, contradicting the PMI which put manufacturing at a three-year low. However, the CMI also found that while all three ‘favourable’ factors (credit sales, new credit applications and the order books) improved; each of the seven ‘unfavourable’ factors worsened for the second quarter in a row, with bad debt provision and rejected credit applications especially impacted. Michael Feldwick, Head of Tinubu Square in the UK commented: “The next few months are going to be a particularly nervous time for the British economy, as the EU referendum debate reaches its conclusion and the after-effects are felt. The critical thing for credit managers, is to ensure they are doing everything they can to control credit exposure in this uncertain environment.” To read the CICM's news release go to http://www.cicm.com/news-manufacturing-bucks-trend-latest-cicm-uk-cmi/.
European companies fear Brexit fallout could test economic resilience. With just five weeks to go until the UK’s referendum on European Union membership, new research from Grant Thornton’s International Business Report (IBR) reveals that the European business community is fearful of the impact a Brexit would have on the continent’s economy. Grant Thornton asked business leaders across Europe what impact a British exit from the European Union would have on the continent. Nearly eight in ten (79%) of those surveyed within the eurozone believe a Brexit would have a negative impact; in comparison, less than 4% believe it would be positive. In the UK itself, the vast majority of firms (68%) believe that Brexit will have a negative impact on Europe. The figures are also high among businesses in countries with long-standing trade relationships with the UK including Ireland (96%) and Germany (89%). To read Grant Thornton's news release go to http://www.grantthornton.co.uk/en/news-centre/european-companies-fear-brexit-fallout-could-test--economic-resilience/.
Enhanced manufacturing growth index indicates that the UK manufacturing sector is undervalued by £50 billion. RSM has advised that new statistics from Cranfield University’s enhanced manufacturing growth index indicates that the UK manufacturing sector is undervalued by £50 billion and is worth £208 billion. The new figures take into account the industry’s increasing capacity to generate economic growth in such areas as design and support in addition to just production. Mike Thornton, Head of Manufacturing at RSM, said: ‘The report highlights that manufacturing is more significant to the UK economy than commonly quoted. This reinforces what many people in the sector already believed, and cements the UK’s position as a manufacturing powerhouse, despite economic, political and resource pressures." To read RSM's news release go to https://www.rsmuk.com/news/rsm-responds-to-new-enhanced-manufacturing-growth-index.
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