Welcome to the July 2022 issue of Credit Management News Digest. This issue is sponsored by STA International.

UK & ROI: Late Payment & Insolvencies
21 June. European businesses expect a jump in late payments during the second half of 2022. Intrum’s yearly European Payment Report, a survey of 11,000 companies in twenty-nine European countries, shows that businesses are expecting late payments to grow significantly in the coming months. According to Intrum, six in ten companies are worried that the risk of late payments will grow this year, largely because of inflation, increased regulation and rising interest rates, and half of the surveyed businesses reported that they are weaker now than before the outbreak of the pandemic. 53% of respondents commented that they would like to improve their management of late payments but find this difficult due to a lack of skills and resources in-house. To read Intrum's news release go to https://www.intrum.com/press/press-releases/press-release-article/?id=F5F424C7C53D406F#Stagflation_fears_European_businesses_expect_jump_in_late_payments_during_second_half_of_2022.
17 June. UK corporate insolvencies increased by 79.2% in May compared to a year earlier. Latest data from the Insolvency Service has found that, although UK corporate insolvencies decreased by 8.9% in May 2022 (1,817 compared to April's total of 1,995), this was an increase of 79.2% compared to May 2021's figure of 1,014. The monthly fall in corporate insolvencies was mainly driven by a reduction in Creditors' Voluntary Liquidations. Christina Fitzgerald, President of R3, commented: "There simply hasn't been time to draw breath between the issues caused by the pandemic and those now arising from our current economic challenges, and many businesses who have survived so far are now starting to struggle — and rising interest rates will add extra costs for firms to deal with." To read R3's news release go to https://www.r3.org.uk/press-policy-and-research/news/more/31265/r3-responds-to-may-insolvency-statistics/.
4 July. Ireland's rate of business failures continues at a record low level, but clouds are on the horizon. A new analysis by PwC has found that business failures in the Republic of Ireland were up by 18% in the first six months of 2022 compared to the first six months of 2021 and had increased by 14% in Q2 2022 compared to Q1 2022. However, despite this increase, the overall rate of business failures continues to remain at artificial and record low levels — the failure rate (16 per 10,000 companies over the 12 months to the end of June 2022) was much lower than the average rate over the past seventeen years (52 per 10,000 businesses). PwC notes that there was a 58% increase in the number of SME liquidations in Q2 2022 compared to Q1 2022 and that this was the primary driver of the overall increase in the business failure rates. This trend is expected to continue in the second half of 2022. To read PwC's news release go to https://www.pwc.ie/media-centre/press-releases/2022/restructuring-update-q2.html.
12 July. New data indicates a surge in Winding Up Petition Applications filed in the High Courts of England & Wales. New research by InfolinkGazette has found that, after a slow start in 2022, when the number of Initial Stage Winding Up Petition Applications filed in the High Courts of England & Wales averaged just 30 petitions per week, the last twelve weeks have seen numbers increase to an average of 46 per week (56 per week average in the last five weeks). Greg Connell, Managing Director of InfolinkGazette, commented: “the Insolvency Service are still reporting compulsory liquidations at only 50% of pre-pandemic levels, but the ramp up in court filings shows the change in direction. With Creditors Voluntary Liquidations already up 33% on pre-pandemic levels and Compulsory Liquidations moving in that direction, all the indications suggest that the current insolvency surge will gain new impetus from Compulsory Liquidations and result in new highs for UK unsecured creditor losses.” To read InfolinkGazette's news release go to https://www.infolinkgazette.co.uk/?pid=6.
UK Economy
13 July. The UK GDP is estimated to have grown by 0.5% in May 2022. The Office for National Statistics (ONS) has reported that UK GDP grew by 0.5% in May 2022, following a decline of 0.2% in April 2022. Stagnant growth had been widely predicted by economists. All main sectors contributed positively to growth. Services grew by 0.4% and were the main contributor to growth between April and May, while Production grew by 0.9% in May 2022 — driven by growth of 1.4% in manufacturing. In addition, Construction output increased by 1.5% in May 2022 and is now at its highest level (£15,053 million) since monthly records began in 2010. To read the ONS' news release go to https://www.ons.gov.uk/economy/economicoutputandproductivity/output/articles/ukeconomylatest/2021-01-25.
4 July. Pressures on UK business are reaching new heights. The British Chamber of Commerce's (BCC) Quarterly Economic Survey for Q2 2022 shows a weakening in the proportion of firms reporting increased domestic sales, investment intentions, and longer-term turnover confidence. Confidence in profitability also took a significant knock, with 28% of UK firms currently predicting a decrease in profits, while 65% of firms now expect their prices to rise in the next three months — a record high and a 23% rise on a year ago. Only 1% overall expect a decrease in their prices. Responding to the findings, Director General of the British Chambers of Commerce, Shevaun Haviland, said: "The red lights on our economic dashboard are starting to flash. Nearly every single indicator has seen a deterioration since our last survey in March." To read the BCC's news release go to https://www.britishchambers.org.uk/news/2022/07/pressures-on-business-reaching-new-heights-quarterly-economic-survey-q2-2022.
27 June. Tough times are ahead for the UK economy as inflation bites. According to KPMG's latest UK Economic Outlook report, UK GDP growth is set to slow to 3.2% this year and is forecast to fall further to 0.7% in 2023. However, KPMG has also developed an alternative scenario, which models how a sharper deterioration in the external environment causing a recession in some of the UK's major trading partners, together with a stronger fall in domestic consumer spending, could see the UK economy enter a mild recession next year. Yael Selfin, Chief Economist at KPMG UK, commented: "Manufacturing and financial services look to be among the worst affected sectors in our downside scenario." To read KPMG's news release go to https://home.kpmg/uk/en/home/media/press-releases/2022/06/tough-times-ahead-for-the-economy-as-inflation-bites.html.
13 June. NIESR notes an increased chance of a recession in the UK, and the Bank of England warns of a deteriorating outlook. New monthly data from the National Institute of Economic and Social Research (NIESR) has warned that the UK's negative growth of -0.3% in April (slightly weaker than forecast) compared to a month earlier "increases the chances of a recession." NIESR also now forecasts that month-on-month GDP growth will stagnate in May and June, leading to a decline of -0.4% in Q2 overall, with Service sector activity set to fall by 0.4% in the second quarter of 2022 and Production sector output expected to decline by 0.9%. The Bank of England has also warned that the economic outlook for the UK and globally has deteriorated materially, and there are a number of downside risks that could adversely affect UK financial stability. To read NIESR's report go to https://www.niesr.ac.uk/wp-content/uploads/2022/06/NIESR_Monthly_GDP_Tracker_June_2022.pdf.
8 June. UK economic growth is expected to grind to a halt in 2022. The British Chambers of Commerce (BCC) has downgraded its expectations for UK GDP growth for 2022 to 3.5% (from 3.6%) against a deteriorating economic outlook and has advised that it now expects the UK inflation rate to reach 10% in Q4 2022. Expectations for growth in 2022, currently 3.5%, are less than half the 7.5% growth recorded last year. In addition, no growth is expected in Q2 and Q3, followed by a 0.2% contraction in Q4. This negative outlook reflects a combination of soaring inflation, weak business investment, tax rises and the global economic shocks — initially caused by COVID and then compounded by the war in Ukraine. Annual UK economic growth is expected to slow sharply to 0.6% in 2023 before recovering slightly to 1.2% in 2024. To read the BCC's news release go to https://www.britishchambers.org.uk/news/2022/06/bcc-economic-forecast-testing-times-as-quarterly-growth-dries-up.
6 July. The number of UK start-ups grew significantly during the pandemic. A joint report by CBI Economics and NatWest Group has found that the number of UK start-ups grew by 800,000 during the first year of the pandemic — an increase of 22% — which could contribute more than £20 billion to the UK economy in future. Four in five of these start-ups report no plans to wind down their business. The research also notes that even pre-pandemic, the number of new businesses created as a share of total firms was higher in the UK (13%) than in the US (8%) and in Germany (11%). Furthermore, in 2018, the one-year survival rate for new businesses was 89% — around 9% higher than the EU average. To read the CBI's news release go to https://www.cbi.org.uk/media-centre/articles/pandemic-born-businesses-could-add-204bn-to-uk-economy-joint-cbinatwest-study-reveals/.
UK Trade Sectors & Exports
13 July. UK exports of goods increased in May 2022 driven by a 12.7% increase in exports to non-EU countries. The Office for National Statistics (ONS) has reported that exports of goods increased in May 2022. Total exports of goods, excluding precious metals, increased by £2.3 billion (7.4%) in May 2022 compared with April 2022. This was driven by a £1.9 billion (12.7%) increase in exports to non-EU countries, while exports to EU countries increased by £0.4 billion (2.6%). Goods exports to the EU reached £16.9 billion in May 2022, their highest level since the series began in 1997. However, this record level of exports to the EU is likely related to rising prices in 2022. Once adjusted for inflation, exports to the EU still rose, but were only at their highest since December 2020. To read the ONS' news release go to https://www.ons.gov.uk/economy/economicoutputandproductivity/output/articles/ukeconomylatest/2021-01-25.
7 July. UK export revenues declined by 6% in the past year. The July edition of the UK Exporter Monitor by Coriolis Technologies and the Institute of Export & International Trade (IOE&IT) has reported that total exporter revenues have dropped across the UK by 2% since last month. Wales takes the biggest hit to revenues with a drop of 4%, followed by a 2% fall for England, a 1% decline in Scotland, and a 0.47% decrease in Northern Ireland. This translates to an overall loss of £85.44 million across the UK since last month. In comparison to June 2021, England’s exporter revenues have dropped by 6%, Northern Ireland’s by 4%, Scotland’s by 17%, and Wales by 10%, totalling a £334.12 million (6%) drop in total UK exporter revenues since this time last year. To read the IOE&IT's news release go to https://www.export.org.uk/news/610622/UK-export-revenues-decline-by-6-in-the-past-year---UK-Exporter-Monitor-July-2022.htm.
20 June. The export market for UK manufacturers has "almost ground to a halt." Make UK/BDO's Q2 Manufacturing Outlook survey has indicated that growth and orders for UK manufacturers are slowing significantly, exports are almost at a standstill, and investment is "nose diving". According to the survey, the balance on output fell from +24% in Q1 to +10%, with total orders almost halving from +42% to +20%. In addition, BDO notes that the export market has "almost ground to a halt" at +4% (+18% in Q1). 67.8% of the companies surveyed said rising energy costs were causing catastrophic or major disruption, and 71.9% cited increased raw material costs posing a similar threat. Looking forward, UK manufacturers expect to continue to increase their UK and export prices substantially in the next quarter, with both these figures expected to dwarf previous record levels in the survey's 30-year history. To read BDO's news release go to https://www.bdo.co.uk/en-gb/news/2022/industry-calls-for-pre-recess-support-package-amid-worsening-economic-outlook.
13 June. Goods exports to the EU increased by 15% in the quarter to April 2022.  New data from the British Chamber of Commerce (BCC) has found that UK goods exports accelerated in April 2022, with exports to the EU rising by 8.1% (£1.2 billion) and to the rest of the world by 6.5% (£0.9 billion). The increase was driven mainly by fuels and, to an extent, by machinery and transport equipment. Comparing the periods February-April 2022 to November-January 2021-22, goods exports to the EU increased by 15% and to the rest of the world by 2.7% — an overall rise of 8.8%. This is in line with OBR forecasts from last autumn for export growth (so far) in 2022. Comparing the 2022 data with that in 2018 — the last stable period before EU exit and changes in methodology — exports were 6.1% higher in the three months to April 2022 compared with the three months to April 2018. To read BCC's news release go to https://www.britishchambers.org.uk/news/2022/06/bcc-upswing-in-trade-must-be-sustained.
12 July. UK sales volumes see declines "not seen since the depths of the pandemic". The British Retail Consortium (BRC) has reported that UK retail saw total sales decrease by 1.0% in June, against an increase of 10.4% in June 2021. This is below the 3-month average decline of 0.8% and the 12-month average growth of 3.0%. On a like for like basis, UK retail sales decreased 1.3% compared to June 2021, when they had increased 6.7%. Helen Dickinson OBE, Chief Executive of the BRC, commented: “Sales volumes are falling to a rate not seen since the depths of the pandemic, as inflation continues to bite, and households cut back spending. Discretionary purchases were hit hard, especially white goods and homeware, while consumers also traded down to cheaper brands in food and non-food alike." To read the BRC's news release go to https://brc.org.uk/news/corporate-affairs/decline-in-sales-volumes-not-seen-since-depths-of-pandemic/
8 July. The cost-of-living crisis weighs on UK retail sales growth. According to BDO's latest High Street Sales Tracker, total like-for-like (LFL) sales, combined in-store and online, increased by +8.4% in June compared to the equivalent month in 2021 (when shops had been open for over two months). Total non-store LFL sales remained relatively flat at just +1.6% in June. While this is the online retail sector's third consecutive positive result, BDO notes that it is a disappointing performance given it is based on low growth of +8.2% in June 2021. The fashion sector continued to outperform the lifestyle and homewares sectors, recording total LFL sales growth of +15.2%, compared to a base of +73.7% in June 2021. This is the sixteenth consecutive month of positive like-for-like sales. To read BDO's news release go to https://www.bdo.co.uk/en-gb/news/2022/cost-of-living-crisis-weighing-on-retail-sales-growth.
26 June. UK private sector growth slows sharply. According to the CBI's latest Growth Indicator, UK private sector growth slowed sharply in the three months to June (+5%, from +23) — the slowest rise in activity since April 2021. The slowdown was broad-based across sectors, with consumer services seeing the biggest hit (-41%), marking the sharpest fall experienced by the sector since February 2021. Growth also slowed across business and professional services (+10%) and distribution (+9%). The former was the weakest increase in activity in four months and the latter the weakest since April 2021. The only sector to see a solid rise in output was manufacturing (+25%), though growth here also eased on the ten-month high seen in May (+30%). Looking ahead, private sector activity is expected to be broadly flat in the next three months (-3%) — the weakest forward-looking expectations since February 2021. To read the CBI's news release go to https://www.cbi.org.uk/media-centre/articles/private-sector-growth-slows-sharply-growth-indicator/.
21 June. The UK is forecast to become the largest entertainment and media market in Europe next year. According to PwC's latest Global Entertainment & Media (E&M) Outlook 2022-2026, the UK is forecast to become the biggest entertainment and media market in Europe in 2023 — overtaking Germany. UK E&M revenue is expected to reach £83 billion in 2022, with growth forecast at 4% per annum over the next four years — the second-fastest growth rate in Western Europe. By 2026 revenue is anticipated to generate £97 billion. To read PwC's news release with a link to the full report go to https://www.pwc.co.uk/press-room/press-releases/UK-forecast-to-become-the-largest-entertainment-and-media-market-in-europe-next-year.html.
Global Economy
13 July. Global growth is predicted to decrease to 3.1% in 2022. Atradius' latest Economic Outlook warns that disruptions from the war in Ukraine, lingering lockdown restrictions and multi-decade high inflation have generated a new set of adverse shocks for the global economy. Despite global GDP recovering to 5.9% in 2021, Atradius now expects growth to decrease to 3.1% in 2022 and to 3.0% in 2023. GDP growth in advanced economies is expected to slow to 2.7% in 2022 and 2.1% in 2023, while GDP growth in emerging market economies is forecast to be nearly halved in 2022 to 3.5% (down from 6.9% in 2021). Atradius notes that the continuation and escalation of the war in Ukraine is the key risk to its outlook, potentially leading to 1.7% lower GDP growth by the end of 2022. All regions would be impacted by shortages, higher commodity prices, and political instability, with Europe and especially Eastern Europe the most impacted. To read Atradius' news release go to https://group.atradius.com/publications/economic-research/economic-outlook-july-2022.html.
27 June. Downside risks of a recession are building up fast. A new Economic and Market Outlook by Allianz Trade forecasts global GDP growth of +2.9% this year and +2.5% in 2023, down by -0.4% and -0.3% compared to its last forecast in March. The revision is due to the impact of the war in Ukraine and the longer-than-expected lockdowns in China, which Allianz Trade anticipates will reduce output by -1.2% and -0.6%in 2022 and 2023 respectively. Although Allianz Trade warns that a soft landing remains its baseline scenario for 2022, it notes that downside risks of a recession are building up fast. In an alternative adverse scenario, this could mean that global GDP growth would contract by -2.8% in 2023 to -0.3%, with a recession of -1.4% in the US and -2.5% in the Eurozone and the UK. To read Allianz Trade's executive summary, with links to the full report and presentation, go to https://www.allianz-trade.com/en_global/news-insights/economic-insights/global-economic-outlook-make-or-break.html.
21 June. The world economy is at a crossroads. Coface's latest Economic Publication has reported that the war in Ukraine has already upset the global geo-economic balance and heightened the risk of a hard landing for the world economy. In consequence, Coface has revised downwards its evaluation of nineteen countries, including sixteen in Europe (Germany, Spain, France and the UK in particular), and made only two revisions upwards (Brazil and Angola). At the sectoral level, the number of downward revisions (seventy-six in total, as opposed to nine upward revisions) highlights the spread of these successive shocks across all sectors. Coface notes that as the horizon continues to darken, the risks are naturally bearish and no scenario can be ruled out. To read Coface's news release with a link to the full report go to https://www.coface.com/News-Publications/News/A-recession-to-avoid-stagflation-The-world-economy-at-a-crossroads.
14 June. G20 GDP growth continued to slow in the first quarter of 2022. The OECD has reported that its provisional estimates suggest that GDP in the G20 area rose by 0.7% quarter-on-quarter in the first quarter of 2022. This was a decrease from the 1.3% increase recorded in the fourth quarter of 2021 and mainly reflects a weaker performance in the US (where GDP contracted by 0.4% quarter-on-quarter after rising by 1.7% in Q4 2021). The OECD also reported that the UK and South Africa exceeded their pre-pandemic (Q4 2019) level of GDP for the first time in Q1 2022, by 0.7% and 0.5% respectively, while Italy reached its pre-pandemic (Q4 2019) level of GDP for the first time. However, GDP in Germany, Japan and Mexico remained below pre-pandemic levels (by 0.9%, 0.6% and 2.1% respectively) in Q1 2022. To read the OECD's news release go to https://www.oecd.org/newsroom/g20-gdp-growth-first-quarter-2022-oecd.htm.
8 June. Global GDP growth is projected to slow sharply this year. The OECD has warned that the war in Ukraine and supply-chain disruptions exacerbated by shutdowns in China due to the zero-COVID policy are dealing a serious blow to economic recovery. As a result, global GDP growth is now projected to slow sharply this year, to around 3%, and remain at a similar pace in 2023. This is well below the pace of recovery projected last December. Growth is set to be markedly weaker than expected in almost all economies, with many of the hardest-hit countries in Europe. In the Euro areas, after a strong rebound in 2021, real GDP is projected to grow by 2.6% in 2022 and 1.6% in 2023. In the UK, GDP is projected to increase by 3.6% in 2022 before stagnating in 2023. In the US, the pace of GDP growth is anticipated to weaken from its recent very high levels to 2.5% in 2022 and 1.2% in 2023. To read the OECD's report go to https://www.oecd.org/economic-outlook/.
7 June. A sharp slowdown in global growth is anticipated. The World Bank's latest Global Economic Prospects report has predicted that global growth is expected to slump from 5.7% in 2021 to 2.9% in 2022 — significantly lower than the 4.1% that was anticipated in January. It is then expected to hover around that pace over 2023-24. Growth in advanced economies is projected to sharply decelerate from 5.1% in 2021 to 2.6% in 2022 — 1.2% point below projections in January. Growth is then expected to further moderate to 2.2% in 2023. Among emerging market and developing economies, growth is also projected to fall from 6.6% in 2021 to 3.4% in 2022 — well below the annual average of 4.8% from 2011-2019. To read the World Bank's news release with a link to the full report go to https://www.worldbank.org/en/news/press-release/2022/06/07/stagflation-risk-rises-amid-sharp-slowdown-in-growth-energy-markets.
Events & Professional Development
SCHUMANN Digital Risk Management Conference 2022.

The SCHUMANN Conference is the cross-industry and multinational online event for decision-makers and executives around credit risk management, compliance, and digitalisation projects. 

On 27 September 2022, you can expect expert knowledge, how-to strategies from our customers and inspiration to help you increase your competitiveness through process automation.

  • via live stream 
  • 27 September 2022 
  • 10:00 a.m. to 5:00 p.m. (CEST) 
  • The conference is aimed at decision-makers and executives in charge of credit risk management, compliance, business development and digitalisation.
  • Industries: Manufacturing and trade, energy, financial services, credit & surety, etc. 
  • Participation is free of charge

For more information go to https://prof-schumann.com/en/conference
To register Click here.

STECIS, the Trade Credit Insurance & Surety Academy endorsed by ICISA, offers a range of webinars and classroom training courses.
The classroom training courses are scheduled to take place in September 2022 on the following dates:
  • 27 & 28 September 2022: Trade Credit Insurance Foundation Course
  • 29 & 30 September 2022: Trade Credit Insurance Advanced Course
  • 27 & 28 September 2022: Surety Foundation Course
  • 29 & 30 September 2022: Surety Advanced Course
To avoid missing out on this opportunity, please register with us before the 25th of July to let us know your interest in this course and reserve your place. We will let you know after the 25th in the unlikely event the course cannot go ahead
All classroom courses will take place in the Steigenberger Airport hotel close to Schiphol Airport/Amsterdam the Netherlands. The courses include lunches and a dinner at the end of the first training day.
The courses are hosted by seasoned experts from the industry and there is ample opportunity for posing questions, discussions and networking.
Also there is the possibility to arrange an inhouse training: then there will be created a tailor made outline for your staff on basis the training demand of your of your company. The training will be effected at your own offices or at a venue of choice.
Detailed information about the webinar and classroom training courses is available on the Stecis’ website: www.stecis.org also further information can be obtained by sending an e-mail to info@stecis.org.
About this month's sponsor: STA International
STA International is a cash management solutions company offering UK & International B2B and B2C debt collection and outsourced credit control services.
For commercial and consumer debt collection, we only charge you a commission on the money we collect. It is now more important than ever to minimise your costs by recovering late payment interest, and our collection fees from your B2B debtors, whenever we can. When we do so, you’ll receive your principal debt plus interest, and your debtor will pay our collection costs.
For outsourced credit control clients, STA operates in the clients’ name, providing transparent receivables management, improving cash flow, and saving you additional staffing costs.
What distinguishes STA International is our philosophy of professionalism in cash collection. Our fundamental approach is to obtain full recovery, doing it in a way which preserves customer goodwill, and which tries to educate customers to pay more promptly in the future. Anything less than that is not a total solution to the issue of credit management.
To find out more, please visit www.stainternational.com.
Call Sam Cable on 01622 600921; email sam.cable@staonline.com.
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