CARD SPENDING FELL IN OCTOBER AS COVID-19 RESTRICTIONS TIGHTENED

Data published today by UK Finance shows that spending across debit and credit cards fell in October 2020 compared to the previous month, as additional social distancing measures were introduced across the UK. The number of contactless transactions decreased as customers? spending behaviour changed due to the restrictions, but the value of contactless transactions rose by 15.8 per cent compared to the previous year, as consumers had the opportunity to take advantage of the increased £45 payment limit. Moreover, the volume and value of card transactions fell in October compared to the previous month. Balances outstanding on credit cards contracted by 14.7 per cent over the year to October, constituting the largest annual contraction since the pandemic began.

Eric Leenders, Managing Director of Personal Finance, UK Finance, said: ?October saw card spending decline in the UK as additional social distancing measures and Covid-19 restrictions were put in place across the country, reducing opportunities to spend on the high street and in pubs, bars and restaurants. Spending on contactless cards also fell as regional lockdowns came into force, restricting use of contactless across retail outlets. However, contactless remained popular for essential transactions, with consumers being able to make use of the increased £45 payment limit.?

BUSINESSES FACING DUAL CHALLENGE OF BREXIT AND COVID-19 UNCERTAINTY

While chairing the first meeting of a new business council to coordinate the government's economic response to the coronavirus pandemic, the prime minister told business leaders that an efficient roll-out of the Covid-19 vaccination is the UK's best tool for economic recovery (The Guardian, p28). Mr Johnson also reassured members of the ?build back better council? that British industry has promising opportunities to seize following Britain's departure from the European Union. In response to protests by seafood hauliers outside Downing Street, Mr Johnson said he ?understands the frustrations? of businesses experiencing difficulty exporting to the EU since the end of the transition period, adding that firms would receive compensation if they are struggling with exports to the continent 'through no fault of their own? (Sky News).

Separately, the Confederation of British Industry (CBI) has called on the chancellor to extend coronavirus business support measures until at least the summer (The Times, £, p33). In a letter to Rishi Sunak, the CBI urged the Treasury to extend the furlough scheme, provide 'targeted support? for businesses over the summer, and to extend the business rates holiday for UK firms forced to close under the current Covid-19 restrictions (City AM). The CBI also stressed the urgency of these steps by encouraging the chancellor to act ahead of the Budget, explaining that if Mr Sunak waits until March to extend support schemes, many businesses will have already been forced to make redundancies or have collapsed (Daily Mail, p75).

NEWS IN BRIEF

The UK Prompt Payment Code (PPC) is to be strengthened in a bid to support small businesses. Under the new regulations, large firms will be obliged to pay 95 per cent of small suppliers within 30 days, rather than the previous timeframe of 60 days (Financial Times, £, p3).

According to data published by Which?, one in three people have been unable to pay with cash at least once when attempting to complete a purchase during the coronavirus pandemic. Which? found that buying groceries was the transaction for which customers were most likely to have been refused the option of paying with cash (Daily Mirror, p24).

The Financial Conduct Authority (FCA) has announced new measures to protect consumers against high-risk investment schemes and frauds. The FCA told financial firms that it will strip them of their regulatory permissions if they do not make full use of them under a new ?use it or lose it? policy (The Times, £, p36).

Treasury minister Jesse Norman MP has suggested that tax rises may not be necessary if the economy bounces back strongly following an effective roll-out of the coronavirus vaccination programme. Speaking to the Treasury Select Committee, Mr Norman said the economy could be sufficiently boosted by households and businesses unleashing pent up demand once restrictions are lifted (The Telegraph, £, B1).

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