British SMEs feel down: they might be right

LONDON | Sentiment among the UK’s small and medium-sized manufacturers fell for the third quarter running in the three months to January, as output stagnated and orders decreased against a backdrop of heightened economic and political uncertainty, the CBI said.

Of the 350 respondents to the CBI’s latest quarterly SME Trends Survey published on Monday, 26% said output rose while 25% said that it fell, and the resulting balance of +1% marks the first time that output has not risen since April 2010.

Concern over political and economic conditions abroad have risen sharply in the latest survey. 33% of firms believed that this would limit export orders in the next three months, the highest proportion since October 2008 (33%). Lucy Armstrong, chair of the CBI’s SME Council, said that firms have lost confidence in the economy because of

“rising concerns about the ongoing euro zone crisis, which has led to falling orders.”

The domestic orders’ sheet didn’t look more appealing, though, as it fell for a balance of -17% of firms and export orders fell for the second quarter running (-10%), both at the fastest rates since October 2009 (-19% and -13% respectively).

The Opinium Research survey seems to bring some partial explanation of this weak UK consumption: over one in six (17% or 8 million Brits) missed a payment for at least one bill in the last 12 months, potentially putting their credit profiles at risk, with credit cards coming out on top as the most missed payment.

Three million people have missed a credit card bill in the last year (7%). Council tax is one of the most common costs where people have delayed payments, as 1.9 million people missed a council tax payment (4%), an increase since 2010 (3%).

But data also showed that resilience against the tightening of credit and threat of recession confirms a social divide within the UK. Those living in Scotland and Wales were the biggest culprits for missing a bill payment with 22% neglecting their finances, while people in the East Midlands were the least likely to miss a payment, with almost 9 out of 10 (88%) not missing a payment on any major bill within the last 12 months.

About the Author

Victor Jimenez
London contributor at thecorner.eu, reporting about the City and the Eurozone economies. He regularly writes for Spanish newspaper group Prensa Ibérica--some of his features include shared work with journalists of The Daily Telegraph and the BBC.

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