Table of Contents
Economic Overview
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- Annual GDP growth falls by record low in 2020 due to COVID-enforced economic shutdowns
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- Figure 1: Annual GDP growth rate, 2016-20, (% change)
- Bank rate set at a record low of 0.1%
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- Figure 2: Bank rate, by date of adjustment, 2008-20, (%)
- CPI 12-month rate shows signs of rising but remains low…
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- Figure 3: Consumer Price Index, January 2020-21, (12-month rate, %)
- …which has boosted real earnings growth
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- Figure 4: Real average weekly earnings, total pay, January-December 2020, (% monthly change year-on-year, seasonally adjusted)
Business Health
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- A third of small businesses’ finances are ‘tight’ or ‘struggling/in trouble’ with many expecting to have to borrow to survive
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- Figure 5: Current finance situation of the business, June 2018 vs June 2019 vs June 2020, (% of respondents)
- Business turnover grew between the start of 2019 and 2020 but is likely to have stalled in 2021…
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- Figure 6: UK business turnover, at the start of 2020, by business sector, (£m)
- …as company insolvencies are likely to rise when government support schemes are removed
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- Figure 7: Underlying company insolvencies in England and Wales, Q3 2018-Q4 2020, (units, seasonally adjusted)
- Private sector profitability falls and investment levels expected to decline
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- Figure 8: UK PNFCs net rate of return, Q3 2018-Q3 2020, (% return)
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- Figure 9: UK total business investment, Q3 2018-Q3 2020, (chained volume measures and not seasonally-adjusted, £bn)
Special Focus: B2B Finance
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- Net lending significantly rose in 2020 driven by the COVID support schemes…
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- Figure 10: UK MFIs’ net loans to non-financial businesses, Q1 2019-Q4 2020, by size of business, (£m, not seasonally adjusted)
- …although credit availability and demand remained unchanged at Q4 2020
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- Figure 11: Availability of corporate credit to PNFCs in the past three months, Q4 2018-Q4 2020, by business size, (net percentage balance)
- Figure 12: Demand for corporate credit by PNFCs in the past three months, Q4 2018-Q4 2020, by business size, (net percentage balance)
- Write-offs on loans to PNFCs fell in 2020
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- Figure 13: Write offs of loans to PNFCs from banks and building societies, Q3 2018-Q4 2020, (£m, not seasonally adjusted)
What’s Next?
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- Business confidence bounces back from almost decade-low level
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- Figure 14: Business confidence index, Q4 2019-Q1 2021*, (index figure)
- General consensus implies economic rebound from Q2 2021 and beyond
- March 2021 Budget
- Purchasing Managers’ Index Surveys
- Four stage ‘roadmap’ out of lockdown offers hope for businesses
- Businesses given extension to repay COVID support loans which should reduce financial burden
Appendix – Abbreviations
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- Abbreviations
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