By: 29 April 2024
Economic uncertainty looms despite bright consumer outlook

The UK’s economic landscape is navigating through a blend of optimism and challenges, as revealed in a recent report by Atradius.

The report highlights a promising reduction of 18% in payment defaults for UK businesses overall compared to the previous year. However, beneath this overall improvement lie significant sector-specific struggles.

One sector experiencing a substantial increase in defaults is the paper and packaging industry, with a staggering 400% surge year-on-year. Energy claims also saw a notable uptick of 75%. These figures underscore the lingering impacts of economic turbulence on various industries.

Despite these challenges, consumer confidence remains a bright spot, boosting prospects for sectors like retail, domestic appliances, and hospitality. Retail, in particular, saw a 46% decrease in payment defaults, reflecting a positive consumer outlook translating into increased footfall and spending.

The consumer optimism contrasts with the broader economic uncertainty, prompting Atradius to caution against complacency.

James Burgess, head of commercial and insolvency expert at Atradius, emphasises the need for businesses to stay vigilant and adapt to evolving market dynamics.

While consumer sectors may be seeing a ray of hope, challenges persist for firms reliant on trade credit agreements. The looming threat of high inflation rates and a stagnant interest rate until late 2024 further underscores the importance of proactive risk management.

In this climate, trade credit insurance emerges as a crucial tool for safeguarding against supply chain disruptions and payment defaults. By providing protection against the domino effect of insolvency, such insurance enables businesses to navigate uncertainties with greater resilience and liquidity.

As Burgess puts it, “Summer may be approaching but there’s still a financial chill in the air, and it’s been felt by many cornerstone industries. We do not expect the interest rate to fall until later this summer, which could make the next 6 months challenging for firms in vulnerable sectors. The biggest step firms can take to be proactive in bracing themselves against the impact of this is to look at where their vulnerabilities are. Often, these lie in crucial supply chain agreements, which are reliant on resilience and liquidity along the supply chain. Protecting these with trade credit insurance can be ‘make or break’ on a rainy day.”

In essence, while brighter days may be on the horizon, strategic preparedness remains key for businesses weathering the storm of economic uncertainty.


Image: Canva.
Emma Cockings
Emma is a content editor for Claims Media. Emma is a experienced writer with a background in client-centric personal injury for a major firm. She has attended and reported on multiple brokerage events throughout her career.