SURVEY REVEALS MORE SMES PLANNING FOR THE FUTURE
The latest independent SME Finance Monitor published today by BVA BDRC reveals that businesses are increasingly looking ahead to the future, with 42 per cent of SMEs saying their plans were future-focused in the third quarter of 2020, compared with 25 per cent who were still focused on the immediate impact of the pandemic. Prior to the stricter movement and lockdown restrictions introduced in October and November, the SME Finance Monitor’s findings show clear signs of an improvement in business outlook. In contrast to Q2, more SMEs were positive, with 40 per cent rating their mood as good, up from 25 per cent in the previous quarter.
Improvements to the outlook for SMEs came as usage of government-backed lending schemes grew, with the overall proportion of businesses utilising finance increasing from 30 per cent in Q2 to 40 per cent in Q3, with around nine in ten SMEs who applied able to secure Covid-related finance in Q3. The proportion of SMEs happy to borrow to grow was 34 per cent, back in line with 2017, with access to finance much less likely to be perceived as a major barrier to their business going forward (eight per cent) than other factors such as the current economic climate (41 per cent).
Stephen Pegge, Managing Director of Commercial Finance at UK Finance, said:
“The banking and finance industry is providing an unprecedented package of support to help businesses through these tough times, including supporting nearly 1.5 million businesses through government-backed lending schemes.
"Despite the considerable challenges which remain, it’s encouraging to see that a growing number of businesses are now able to look ahead to the future and access the support they need to prepare, with nine in ten SMEs who applied successfully securing finance.
"The industry continues to work closely with government, regulators and business groups to ensure SMEs have access to the best support, information and guidance. Through our Let’s Talk Business campaign, we are encouraging all businesses to contact their finance providers now to discuss how best to prepare and consider any additional financing needs.”
UK GOVERNMENT TO PUBLISH ECONOMIC ANALYSIS OF MORTGAGE APPROVALS REACH 13-YEAR HIGH IN OCTOBER
Mortgage approvals rose at their fastest rate in more than 13 years in October, according to the latest figures from the Bank of England (The Times, £, p42). There were 94,600 mortgage approvals for home purchases during the month, about ten times higher than in May 2020 and the highest number since September 2007. The Financial Times (p1, £) reports that property experts expect the strength of the housing market to continue until March 2021, when the government’s nine-month stamp duty holiday is due to come to an end.
The Bank of England statistics also revealed that borrowing using credit cards, overdrafts and personal loans fell by 5.6 per cent annually in October, the sharpest annual fall since the Bank started collecting this data in 1994 (The Independent). The drop was driven by households making net repayments of £590 million in October, with credit card repayments making up £499 million of the total.
MPs are set to vote today on the government's proposals for stricter tiers across England to contain the coronavirus pandemic (BBC News). The government has announced around £40 million of grants for pubs in tiers two and three to be distributed by local councils, following calls from MPs for more economic support for the hospitality industry (Bloomberg). Both Labour and the SNP have said they will abstain on the vote, meaning the measures are widely expected to pass.
Meanwhile, The Times (p1, £) reports the government has prepared detailed analysis of the impact of coronavirus on specific sectors of the economy. Each sector has reportedly been given a red, amber or green rating based on factors including the impact of the pandemic on revenue, jobs and financial stability. It is understood that those sectors assigned a red rating include aerospace, the automotive industry, retail, hospitality and tourism.
NEWS IN BRIEF
The high street fashion group Arcadia has gone into administration, putting over 13,000 jobs at risk. (Reuters).
German chancellor Angela Merkel has warned that time is running out to reach a post-Brexit trade agreement between the UK and EU, as talks continue over outstanding issues such as fishing and level playing field guarantees (Daily Telegraph, £, p8).
The insolvency trade body R3 has warned that changes to tax rules coming into force today that will see the partial return of “crown preference” could impact on business lending levels (The Times, £, p41).
Almost 700,000 people in the UK have been pushed into poverty as a result of the economic impact of coronavirus, according to analysis by the Legatum Institute think tank (The Guardian, p9).
More than three-quarters of people in their 20s have had to dip into their savings in the past six months to cover day-to-day costs, according to a survey by Fidelity International (The i, p11, print only).
