Businesses are being urged to take action to collect unpaid invoices as a new UK recession in on the horizon. The latest setback fro the UK economy has been touted as the “final straw” for thousands of small businesses across the country.
Rises in the late payment of invoices is stirring up a potential tidal wave of Small Business insolvencies. Thousands of small businesses are still failing to act on late payment or non payment of invoices that threaten their very existence.
Trade bodies across the all sector in the UK are calling upon the government to act swiftly as the Bank of England today warned the country is likely to be in a recession for up to a year from Autumn. It also has predicted that inflation would surpass 13%.
UK Hospitality chief executive Kate Nicholls commented “Today’s double whammy of forecasts is further evidence the government must act decisively and swiftly to bolster the plummeting confidence of hospitality businesses”
“Our sector is a massive potential driver of growth and employment but is ladened with debt”
Small Business must act to recover unpaid invoices
Chris Spencer from leading Debt Collection Agency Federal Management said “Every week there is a new report highlighting the rise of unpaid invoices for SME’s in the UK. Procrastination on taking action does not get invoices paid.”
“Every day we speak with Small Business owners who are on the very edge of a financial cliff. We urge any Business owner who has issues with unpaid invoices to act now”
Mortgage repayments to increase also
As well as the Bank of England’s comments regarding inflation and the impending recession, the BOE also warned mortgage repayments were likely to increase as well as energy prices continuing to soar.
The National Institute of Economic and Social research claims the UK is already in a recession. The depressing assessment reveals that average real disposable incomes will drop by 2.5% this year
“The UK economy is heading into a period of stagflation with high inflation and a recession hitting the economy simultaneously,” said Stephen Millard, NIESR’s deputy director for macroeconomics.
It also predicts that unemployment in the UK will rise above 5%
Previous financial forecasts had predicted a sharp rise in insolvencies off the back of the pandemic. The war is Russia has caused a global food shortage which has only fueled the flames of a global economy meltdown. This along with rising energy costs hitting every UK household.
The expected recession would be the longest downturn since 2008, when the UK banking system faced collapse, bringing lending to a halt.
The slump is not set to be as deep as 14 years ago but may last just as long and painful for British Businesses.
The Bank of England governor Andrew Bailey said he had “huge sympathy and huge understanding for those who are struggling most” with the cost of living.
“I know that they will feel, ‘Well, why have you raised interest rates today, doesn’t that make it worse from that perspective in terms of consumption?’, I’m afraid my answer to that is, it doesn’t because I’m afraid the alternative is even worse in terms of persistent inflation.”
Increasing interest rates is one way to try and control inflation as it raises borrowing costs and should encourage people to borrow and spend less. It can also encourage people to save more.
However, many households will be squeezed further following the interest rate rise including some mortgage-holders.
Senior Business figures are urging the Government to intervene however it appears little can be done to stem the tide of economic turbulence being experienced in the United Kingdom at the moment. Recovery of debt is more a priority for businesses than ever.