Credit Management December 2022

NEWS ROUNDUP
Mass insolvency and
redundancy fears as
UK heads for recession
M
ORE than two
out of every
five (41 percent)
established small
and medium
businesses (those
with between 10 and 100 employees)
across the UK expect to shut their
doors permanently, be forced to
conduct mass redundancies or close
locations within the next 12 months.
And more than one in three (39
percent) fear their business will
be fatally or critically impacted by
any forthcoming recession, while
a similar number (43 percent) say
they will have to borrow money
just to keep their business afloat or
refinance existing debt (37 percent).
It paints a worrying picture for
British business as we look likely to
enter a recession, with this segment
of the economy accounting for
around 30 percent of UK jobs.
The data comes from a recent
survey by Allica Bank of 150
established small and medium
businesses in the UK across
multiple industries. It reveals, too,
that 83 percent of business owners
want to see their bank do more
to support them as costs of raw
materials, fuel, interest rates and
inflation continue to rise.
Conrad Ford, Chief Product Officer
at Allica Bank, agrees that banks
will play a critical role in keeping
business owners’ heads above the
water: “It’s clear that large numbers
of established small and medium
businesses are struggling to stay
afloat and in fact, many are going to
find themselves in further debt just
to keep the lights on.
“Banks must do more to help these
businesses – either with funding
or sharing expertise – because
Government help can only go so
far. As an industry, we support
businesses who, in turn, employ
millions of people already struggling
in a cost-of-living crisis. Our team
of relationship managers have been
working closely with our business
customers to provide information
and support, and we think that’s
going to become ever more
important in the coming months.”
Ania George, Operations Director
at Ashley Care, a Norfolk-based
operator of three care homes, told
Credit Management: “As employers
of 150 staff, we are very concerned
about the current market conditions
and the severe economic headwinds
of double figure inflation, significant
Millions of people in the UK admit
they never think about their credit
score, despite many saying they are
expecting to borrow more money from
their bank or lender in order to manage
the cost of living crisis.
New research commissioned by
CRIF – a provider of consumer and
business credit information – surveyed
thousands of people in countries
across the continent including France,
the Czech Republic, Italy, Germany,
Slovakia, and the UK.
The findings show nearly half
(46 percent) of UK consumers never
think about their credit score,
significantly higher than the European
Brits least likely in Europe to
think about their credit score
average (31 percent excluding the UK),
and the highest of all European
countries surveyed, including France
(35 percent), Germany (40 percent) and
Italy (27 percent).
This is despite the UK having
one of the highest household debt
levels in Europe, and one in five (19
percent) saying they expect to borrow
more from their lender in the next
12 months.
Understanding of how credit scores
are calculated is also poor. Less than
half (48 percent) of people in the UK
say they understand how their score is
calculated, and one in five (20 percent)
say that were their score to go down,
they wouldn’t know how to improve it.
This lack of engagement and
understanding is having a detrimental
effect. One in ten (10 percent)
consumers say they have been turned
down for borrowing since March 2020
(the start of the pandemic lockdowns
in the UK). Of this group: 64 percent
say they received no information from
their lender on how to improve their
situation; 50 percent say they had to
turn to more expensive forms of credit,
such as payday or short-term loans –
the highest in Europe; and 52 percent
say they were surprised to be turned
down as they believed they had a good
credit history.
Brave | Curious | Resilient / www.cicm.com / December 2022 / PAGE 6