The Analysis News & Opinions
Opinion
Continued growth in new consumer finance
Credit concern over currency volatility
Our new figures show growth of 10% in consumer finance new business in October, compared with the same month last year. Credit card and personal loan new
business together grew by 13% compared with October 2016, while retail store and online credit new business increased by 3%. Second-charge mortgage new business increased 20% by value, and 19% by volume over the same period. The growth so far in 2017 has been in line
with expectations. The latest research suggests that total UK new consumer credit will grow by 4.1% in 2017 overall, and by 1.2% in 2018. Meanwhile, new business volumes in the
point of sale (POS) consumer new-car finance market fell by 7% in October, compared with the same month in 2016, while the value of new business was up by 2% over the same period. The percentage of private new-car sales
financed by our members through the POS was 86.1% in the 12 months to October, compared with 86% in the same period to September. The POS consumer used-car finance
market reported new business in October up 15% by value and 9% by volume, compared with the same month last year. Falls in new-business volumes reported by
the POS consumer new-car finance market so far in 2017 have mirrored trends in private new-car sales. In 2017 as a whole, new-business volumes
in the POS consumer car-finance market overall are expected to be around 2.3 million, a similar level to 2016.
Geraldine Kilkelly Head of research and chief economist, the Finance & Leasing Association
More than two-thirds of UK SMEs trading in foreign currencies say that they have been financially disadvantaged due to currency volatility sparked by the EU referendum. Findings of the ‘SMEs and International
Trade’ report, published by Bibby Financial Services, found that 67% of businesses, with foreign-exchange requirements, say they have been adversely affected by currency volatility in the past 12 months, with an estimated financial impact of £69,669 each. Michael McGowan, managing director
for foreign exchange at Bibby Financial Services, said: “By far the greatest challenge facing SMEs importing and exporting is currency volatility, sparked by the EU referendum and ongoing Brexit negotiations. “While there is a common perception that
a weaker Pound benefits exporters, our findings challenge this binary narrative. Importing and exporting are not mutually exclusive and more than a quarter of SMEs that import sell finished goods or component parts overseas. “As such, often importers and exporters
are equally exposed to currency volatility and wider economic uncertainty.” The research found that currency volatility
is the biggest challenge faced by UK importers and exporters today. Other key challenges for exporters included paperwork and administration, as well as logistics management. For importers, logistics and managing duty, VAT, and freight payments were the main issues.
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www.CCRMagazine.co.uk
Despite currency volatility featuring as the
top concern for both importers and exporters, research found that almost a quarter of SMEs trading overseas (23%) have never reviewed their foreign exchange arrangements to see if they could better protect themselves against future volatility. Mr McGowan added: “No matter how
big or small they may be, managing currency risk in today’s economic environment is vital. “The businesses that will be successful in
the long-term are those that are planning ahead and thinking strategically about how they can protect profit margins. We have seen examples where businesses have been able to avoid losing hundreds of thousands of pounds, by locking-in future contracts.” Meanwhile, Craig Evans, head of
commercial at Graydon UK, said: “Sadly, the Pound could turn out to be a very volatile currency during 2018, as its price movements could become even more dependent on the Brexit news and updates. “The Brexit negotiations are turning out
to be far more difficult than anyone anticipated and, with tensions recently between Ireland and the EU on the one side and the UK on the other side, a stagnation would put all parties under pressure, with the Pound suffering the most. The other major concern for SMEs exporting is the likely effect of the US Central Bank increasing interest rates and whether this can stem the downward spiral of the Dollar to the Euro.”
January 2018
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