News

Covid 19 - The road to economic recovery?

  • Posted On: 4 May 2020

We are starting to see the first signs that the lockdown in the UK may ease. In the last couple of weeks an increasing number of businesses have reopened, albeit often in a limited way to allow for social distancing. On top of this there are widespread news reports of the Government's thinking on how the UK may start to return to work, with an announcement due on the 7th.

It has always been clear that access to working capital and finance will, for many businesses (large and small), be crucial at this time. The Government has put in place numerous facilities to help businesses through the lockdown, using the banks to deliver the loan packages, and HMRC the support for furloughed employees. One issue not yet addressed is support for the UK credit Insurance industry. Trade credit insurance is often crucial in underpinning a businesses' access to credit lines from suppliers, which in turn helps to underpin cash flow. Insurers are faced with a level of claims that could be worse than those seen in 2008-9 and they will act to protect their balance sheets, as they have done in the past, and this will mean a significant reduction in capacity. Inevitably those firms most financially vulnerable will find themselves unable to get credit, with the likely consequences that will bring.Governments in mainland Europe (France, Germany, the Netherlands, Belgium) have already recognised this and agreed to support the industries there. The UK Government has been apprached, and is considering the proposals made by the insurance industry here. We beleive that this support will be crucial to help us to get back to whatever the new normal will be, and have lobbied individually, and though organisations like the Institute of Export, in support of this initiative.We urge you to do the same. 

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