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UK Finance Business Review Q2 2023

ended 13. September 2023

UK Finance has just published its Q2 Business Finance Review. Full report here and some key takeaways below. Any thoughts, send them across ASAP as this story is BREAKING.

  • While there were a few positive growth headlines in Q2, the biggest picture remains a relatively weak one
  • In the past three months, we have seen some gradual upward drift in overdraft utilisation rates – from an average of 45 per cent in 2022 in Q4 to 49 per cent in the most recent quarter
  • There are few obvious drivers of stronger growth in the near term. While inflation has fallen back from the double-digit highs from earlier this year and will drop further with cuts to the energy price cap, household budgets continue to remain under pressure. That will limit the contribution that household spending will make to growth at least for the remainder of this year
  • More businesses are noting the challenge of higher interest rates according to the ONS business conditions survey. The Bank of England has now raised interest rates on 14 occasions and Bank Rate now stands at 5.25 per cent. Higher interest rates are already limiting businesses’ appetite to borrow, and that brake is likely to be in place in the near term
  • Our latest data show that small and medium sized businesses continue to prudently manage their finances to navigate this stagnant demand environment – utilising existing facilities and diverting some deposits to secure higher returns – but plans for investment or other business development opportunities appear to be on the back burner. As such, demand for new loan finance has been muted.

3 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The UK is no longer the sick man of Europe, but the world. It's too easy to accept that this is a result of Covid and war in Ukraine. It's simply the result of an uninspired, neglectful government. The US introduced the Inflation Reduction Act and the federal government invested their way out of higher inflation. Sunak and co have decided to sit on their hands. A general election in 2024 cannot come soon enough for British business and they will all be wanting a change of colour.
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Editor
Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Worrying but expected results as the Bank of England tackles inflation. Consumers are feeling the pinch and the reliance on overdrafts and other revolving credit accounts is on the rise as households struggle to maintain the current costs of living. SMEs are shrewd and by design more nimble than larger companies and their focus will be on navigating the current situation, possibly having been hit by the increasing costs of COVID Bounceback loans, less consumer demand and their confidence will be dented.
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Marcus Wright
Managing Director at Bolton Business Finance
With gross lending and approvals down slightly to SME's, these latest figures from UK Finance match what we are seeing from our clients. Higher interest rates are damping demand for new lending and making some existing borrowing more costly. We are recommending businesses review any existing variable rate lending facilities, as it may be possible to negotiate improved terms with either existing lenders or by switching to a new provider.