The Office for National Statistics have released the employment figures for December 2018 to February 2019 and they are looking very positive.
Starting with employment rate, this is rated at 76.1%, the joint highest figure on record and the unemployment rate was estimated at 3.9% which hasn’t been lower since 1975.
The office estimate that 53.9% usually work between 31 and 45 hours a week and 18.3% usually work over 45 hours a week. 4.83 million people now class themselves as self-employed, 76,000 more than the previous year and 14.8% of the workforce. There has been a fall in vacancies suggesting a strong demand and the wage recovery continues to gather strength although the TUC General Secretary says that the pay squeeze has been the longest in 200 years. .
There has been a slight rise in the numbers of women in work, but this is because the State retirement has risen.
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes
/bulletins/employmentintheuk/latest
P2P Finance News reports today on Growth Street’s research which finds that 43% of Manchester’s small businesses would turn to alternative finance in preference to banks. This is probably because 72% have a healthy knowledge of this area of finance as opposed to only 66% in the rest of the UK.
However, this figure is rising year on year (up 27% from last year) and it’s believed to be part of the general boosting of the Northern Power House as financial acuteness burgeons. In the North West in general, 39% of businesses have considered using Alternative Finance instead of banks in contrast with 35% in the rest of the UK.
http://www.p2pfinancenews.co.uk/2019/04/08/manchesters-small-businesses-turn-to-alternative-finance
John McDonnell has announced plans to create around 3,600 branches if they are elected into power.
As we reported last week, the rate of bank closures has meant that 2/3rds of banks have closed in the UK in the last 30 years. From over 20,000, there are now only around 7,500.
McDonnell believes this would cost around £2.5 billion but would allow face-to-face banking and remove the strangle-hold that big banks have on our society. "Poor access to local bank branches hurts our town centres and local communities, particularly affecting elderly and more vulnerable customers, as well as damaging the ability of local small businesses to invest."
On a more practical matter, the closure of banks has meant that cashing-up for small shops can make them vulnerable to theft with the loss of night-deposit facilities means cash remains on the premises. McDonnell has not yet revealed where the funding will come from.
The Scottish Affairs Committee meet in Westminster this week to discuss the rapid closure of banks in Scotland - 610 have closed in the last 8 years. They will take evidence from Citizens Advice and Scottish Rural Action amongst others. One of the concerns is the future prosperity of rural industries as sources of cash are removed and access to banks is removed for many. Overall, two thirds of UK bank branches have closed in the last 30 years.
The Banking fraternity expect that 72% of customers will be using Internet-Banking by 2023 but this leaves almost one third cut out from the banking system. Without a bank account much of everyday life becomes very difficult as pensions, utility bills and the like rely on a good, fast, internet connection and internet banking. We await the results of the committee with interest.
The CPI (Consumer Prices Index) showed a slight increase in inflation from January (1.8%) to 1.9% for February.
Among the rises are wine up by 8p a bottle due to duty rises and some strong ciders. Food has also risen slightly.
Estimates suggest that the rise will continue until at least April with some forecasting inflation at 2.5% by then, with increasingly high prices for imported raw materials.
Conversely, if the UK economy stagnates or dips, as many predict for post-Brexit Britain, then this could put the brakes on inflationary pressures.
News around the Brexit is invariably doom laden, but do the facts stack up?
In December, it was reported by the Office for National Statistics (ONS), that the UK remained a top destination for foreign investment, with investment increasing by 12.6% in the previous year.
The value of the UK’s foreign direct investment (FDI) rose by £149bn to £1.3bn in 2017. The Department of International Trade said this was the highest level of inward stock since records began. The department welcomed the news that the greatest growth from any country came from Indian investors, rising 321% to £8bn. Stocks from Asia totalled £128bn, with investment from Japan increasing 71% to £78bn. (https://economia.icaew.com/news/december-2018/foreign-investment-in-uk-highest-level)
But in contrast to that, in 2018, unsecured consumer lending fell at its fastest rate in five years, as Brits scaled back their spending amid Brexit uncertainty. And the Insolvency Service recently revealed that personal insolvencies rose by 16.2 per cent last year, while Individual Voluntary Arrangements were at the highest annual level ever recorded.
But there maybe a possible silver lining. If the economy worsens, traditional lenders are likely to take a more conservative ‘wait and see’ approach to their lending businesses. In the 10 years since the global financial crisis, we have seen this in action as banks tighten up their lending requirements and scale back SME funding. At the same time low interest rates have left many savers struggling to match the rate of inflation. This could create an opportunity for alternative lenders to step in and offer funding to UK businesses, while also allowing frustrated savers to make inflation-busting returns.
Furthermore, the P2P sector has been working hard to manage default risks by using extensive credit checks, provision funds, pooled loans and ‘skin in the game’ lending models. If anyone can make the most of a bad macro-economic situation, it’s alternative lenders. Their challenge will be to convince worried investors that they are up to the task.
Whichever way you read it, there are options and there will be solutions. The wider world seems to view GB Inc. positively even if we at home don’t. Take your Brexit news with a pinch of cynicism and make your own decisions.
Parts of this article featured in the March edition of Peer2Peer Finance News.