Key Indicator – investment decisions in a mature business cycle

21st century city setting for mature business cycle

A mature business cycle is one where the prevailing conditions are such that any economic slack is largely used up and assets are richly priced after a period of expansion.

Arguably this is the position in which the economies of the developed countries, such as the USA, UK, EU and Japan now find themselves, where there is a stable population and slowing economic growth. In this context a growth rate of 2% is seen as acceptable.

Arguably, too, mature economies are at a pivotal moment, in that a market economy is never static and there have been signs for some time that the situation is somewhat volatile, as a selection of headlines in any period illustrates.

For example, on April 28 a new report on global trends published by KPMG Enterprise suggested that increased activity from venture capital investors had been pushing up deal prices in the North of England, and the billionaire investor Warren Buffett told the Financial Times that he is “ready to buy something in the UK tomorrow” regardless of Brexit.

A month later, a member of the Bank of England’s MPC (Monetary Policy Committee) was reported in The Times as saying that “levels of business investment in Britain could be stronger than they appear, because official measures underestimate spending on intangible assets”.

Within days of the collapse of British Steel in Scunthorpe into administration there were reportedly 80 potential buyers for the business.

All this seems positive but at the same time there are equal numbers of less positive headlines suggesting a global economic slowdown, rising prices and inflation in some countries and worries about an imminent recession being due at this point in the economic cycle.

According to a recent article in the Economist on the mature business cycle, markets are choppier, perhaps due to the latest developments in the on-going trade war between the US and China, and it would be wise, it says, for investors to watch what happens in the foreign-exchange market where, it argues, the dollar is “a thermostat for global risk appetite: it rises with a weak dollar and falls with a strong one”.

Clearly, for investors, especially those that are rent seekers or seeking quick returns on their money, the current volatile economic situation is hardly welcome. Questions arise about where it is safer to put money and it is hardly a surprise that commodities such as oil (see last month’s Key Indicator) are seeing significant price rises.

VOIP a phone solution for growing SMEs

VOIP replaces the old-fashioned switchboard

As a SME develops and grows costs can quickly escalate, no more so than its phone and communication systems and yet there is a cost-effective solution called VOIP that some may not be aware of.

VOIP stands for Voice over Internet Protocol and is essentially a broadband-based phone service that can include a free switch board.

A business can make calls using laptops or PCs but equally using VOIP telephones, which cost very little and are the only additional piece of hardware needed if bought upfront since the exchange is either embedded in the phone or provided by the VOIP supplier who is normally also the broadband service provider.

A VOIP system allows the business to dispense with call handling and an in-house switching system, all of which can be set up and automated by someone familiar with IT systems. You can have unique phone numbers and set it up so that calls can be switched from one number to another.

With a phone-based service, you use VOIP the same way you use a regular landline: by picking up the phone to answer it or dialling a number to place a call.

Calls are not confined to only others who are using a VOIP system and usually there is no additional or at most a minimal cost for calling overseas. The system can also be used to make conference calls and it allows you to take your number with you when you travel.

It has been estimated that savings using VOIP can be as high as 95% per month but if you are considering this option, there are some things to remember.

Getting your VOIP system right

Basic requirements are a high-speed internet connection and VOIP phones which are inexpensive. You should also remember that in the event of a power cut your phone set-up will not work and it is therefore wise to have a secondary power source, such as a generator, as a standby.

For businesses with multiple users, a separate PBX (Private Branch Exchange) is not required as the phones can be set up to manage calls within a network and can also be set up to transfer calls between phones like in a normal office exchange as well as routing incoming and outgoing calls. Most Internet Providers offer hosted/virtual PBXs, so that your SME does not have to go to the expense of buying and installing expensive equipment.

There is one caveat if considering using VOIP for your business, and this is that you will likely come across many phone company providers, such as BT, as well as specialist providers, who will offer to install and manage your set-up and hire you the phones.

You should remember that the uplift charged by VOIP phone companies is their gross profit plus phone hire if they supply the hardware and for the small, but growing SME this means a significant, and unnecessary, expense.

This website is a very useful introduction to all things VOIP.

Why advice to aspiring women leaders may have been all wrong

The numbers of women leaders are not rising despite the growing calls to eliminate gender discrimination in the workplace.

women leaders advised not to emulate men

There are just six female CEOs of the FTSE 100 companies and at the start of the year The Equality Trust revealed that they earn 54% of their male counterparts.

Some years ago, Sheryl Sandberg published her book Lean In, in which she argued that women should show more drive and determination, put themselves forward for daunting tasks, and showcase the same level of confidence conveyed by male leaders.

But either aspiring women leaders have been ignoring Sandberg’s advice or, if they have followed it, it has not resulted in promotion.

The “lean in” advice may even be wrong according to personality scientist Tomas Chamorro-Premuzic, an international authority on psychological profiling, talent management and leadership development who argues that it could actually be counter-productive.

It is more likely, he says, that if women mimic the accepted male behaviours of self-promotion, showing ambition and so on, it could actually lead them to mimic the dysfunctional behaviours that are shown by many toxic leaders.

Regular readers may know I have tackled the subject of the “dark triad” of corporate leadership behaviours in previous blogs, identifying the traits of narcissism, Machiavellianism and psychopathy shown by many such leaders.

In fact, the problem, says Chamorro-Premuzic, is that while gender discrimination plays a part in potential women leaders being overlooked, the primary reason why so many incompetent leaders are appointed is because there is a general difficulty in identifying and selecting competent leaders.

He identifies several reasons for this.

Firstly, he argues “there is not much overlap between people’s self-perceived and actual talents for leadership”. Often, he says, the most incompetent leaders suffer from “extreme deficit of self-awareness”. This could also be applied to many politicians.

Secondly, he says, narcissists and psychopaths often lean in. This leads to excessive risk-taking, which may be counter-productive for a business’ stability and growth. Therefore, if leaders are selected on ability to showcase aggressive behaviours we are likely to select a disproportionate number of candidates with antisocial tendencies.

However, the biggest problem with the lean in argument, he says, is that we have double standards when evaluating women and men, leading to women typically being rejected and disliked for being intimidating bulldozers or simply for not being “feminine” enough.

Instead, his advice is that in order to pick the best potential leaders, of either gender, we should be looking for such qualities such as integrity, emotional intelligence and communication skills.

Moderate ambition therefore may be a better indicator of leadership potential and aspiring women leaders’ greatest advantage because it means “having the drive and ability to lead without wanting to become the centre of the universe … perhaps because that place is usually reserved for narcissistic men.” Boris beware!

What should be on the SME wish list from the new Bank of England governor?

The search has begun for a replacement for Mark Carney, Bank of England (BoE) governor, who is due to leave his post in January 2020.

So far, the speculated names in the frame have included Andrew Bailey, the chief executive of the Financial Conduct Authority, seen as a “safe pair of hands”, Ben Broadbent, the Bank’s deputy governor for monetary policy and Andy Haldane, the Bank’s chief economist.

But also included have been Shriti Vadera, chair of Santander, Janet Yellen, former head of the US Federal Reserve, and Raghuram Rajan, economist, and former head of the Indian Central Bank.

Chancellor Philip Hammond has reportedly said that Mark Carney’s “steady hand has helped steer the UK economy through a challenging period”.

In the light of the ongoing turmoil that is a still-not-finalised Brexit, political populist turmoil and US-inspired trade wars with China and potentially the EU, clearly another “steady pair of hands” at the BoE is needed, as well as someone who may have to deal with a government that wishes to take back much of the power that was handed over by Gordon Brown when he was Chancellor.

Beyond a steady hand what qualities might SMEs like to see in a Bank of England governor?

The BoE headhunting will be carried out by Sapphire Partners, a head-hunting firm that specialises in diversity and placing women in top roles. The company is run by an all-female management team.

While they will obviously be seeking the best candidate for the job this could be an encouraging sign for many, given the various ongoing headlines about the difficulties women entrepreneurs have in being taken seriously and accessing finance as I have reported in past blogs.

At the time of Carney’s appointment in 2013 it was revealed that loans to SME fell by £4.4bn in the three spring months. Since then the signs have been that the main banks have continued their reluctance to lend to SMEs, so perhaps a signal of SME support from the new Bank of England Governor would be welcome.

To be fair, Carney and the Monetary Policy Committee have resisted the temptation to raise interest rates, which has been a huge benefit to many SMEs, particularly in the current turbulent economic climate. This has been welcomed by FSB (Federation of Small Businesses National Chairman) Mike Cherry.

In an interview published on the Government’s website in February this year, Mark Carney referred to the BoE’s upgrade of its RTGS [real-time gross settlement] system to take advantage of new technology to “not only lower the cost and increase the speed of payments, but has the potential to be transformative beyond the financial sector” and he said would benefit SMEs.

He also said “These benefits would multiply if delivered alongside services trade liberalisation, which has the potential to increase productivity growth, reduce excess imbalances, and make free trade work for all, including SMEs.”

So clearly he has been mindful of the considerations for SMEs, but what else would you like to see from the new Bank of England governor?

Leave your suggestions in the comments section below.

Are Internet unicorns another bubble destined to burst?

Reminiscent of the hubris leading up to the 2000 dot com crash, the start of this year there has seen a queue of internet unicorns lining up to launch on the stock market via Initial Public Offerings (IPOs).

A unicorn business is defined as a private, venture capital-backed firm worth over $1bn. Among those that have either launched IPOs or considering them are Lyft (launched in March), Uber (launched in early May), Pinterest, AirBnB and possibly We Work and Slack.

So far, the results have been distinctly underwhelming with Lyft’s shares valued at $72 each on debut, giving the seven year-old company and rival to Uber a market value of slightly more than $24bn.

Uber set its launch value at $90 billion (£70 billion) and listed share prices at $45 each. However, within hours on its first day of trading Uber’s share value had dropped by 7.6% down to $41.51.

Neither of the two ride-hailing businesses has so far ever made a profit.

Last year, despite boasting revenues of $11bn Uber made operating losses of $3bn and while its revenues grew from $343m to $2.1bn between 2016 and 2018, its losses also soared, from $682m to $911m.

The hubris might best be justified by the fact that We Work was valued at ~$20bn at last fundraising, despite last year losing ~$4bn. Contrast this with UK listed Regus that made ~€800m last year and is currently valued at ~$4bn.

There is no doubt that trading conditions in the last two years have been challenging, with a global economic downturn, trade wars and political populist movements all making markets more volatile.

This may be behind the incentive for unicorns to rush into IPOs before economies find themselves in recession. Again, readers might like to recall the market bubble ahead of the dot com crash in 2000 when Lastminute.com was the last of old “retail” internet firms to list before the crash with many of those who missed the boat subsequently falling by the wayside.

Are there more deep-seated problems with internet unicorns?

Ilya Strebulaev, professor of finance at Stanford University, has extensively researched private venture capital backed companies and come to the conclusion that unicorns are overvalued by about 50%.

Prof Strebulaev argues that typically venture capital-backed businesses make losses “because they basically sacrifice profits to achieve very high growth or scale” but the question is whether their business models will be sufficiently flexible to allow them to convert losses to profits over time.

The current crop of internet unicorns are significantly larger than the internet companies that were involved in the mid-1990s dot com bubble and 2000 crash but a lot depends on their plans for the future.

Lyft has plans for using the money generated from its IPO to invest in acquisitions and technology, including autonomous driving, for example.

Uber has already suffered from protests by its drivers over their treatment with stories rife of drivers earning so little that they have to sleep in their vehicles and with protests ongoing there are concerns that it would face significantly increased costs if forced by regulators to classify drivers as employees rather than contractors.

An item in its IPO prospectus is particularly telling “as we aim to reduce driver incentives to improve our financial performance, we expect driver dissatisfaction will generally increase.”

If these companies are pinning their hopes of future profitability on driverless cars and dispensing with drivers altogether they, and their investors may have a long wait.

Business opportunities for SMEs in the growing demand for sustainability and cutting waste

cutting waste is essential to preserve a beautiful environmentThe neoliberal economic model based on perpetual growth has come under increasing attack from environmental campaigners particularly since the week-long Extinction Rebellion activity in April this year.

With almost-daily horror stories about climate change, global warming and the amount of plastic waste littering the planet, not to mention a significant decrease in biodiversity, it is clear that action needs to happen a lot more urgently than has previously been admitted.

Changing the developed world’s economic model from perpetual to sustainable growth is no doubt going to be a major challenge, particularly in the face of a rise in populist political parties putting national self-interest first and also of some leaders, such as US President Donald Trump who despite the evidence still questions the truth of climate change.

Nobel prize-winning economist Joseph Stiglitz makes a distinction between good capitalism, which he calls “wealth creation”, and bad capitalism, which he called “wealth grabbing” (extracting rent).

Some of this thinking may be behind the recent announcement by the UK’s largest money manager, Legal & General Investment Management that warned about “climate catastrophe” and has promised to get tougher on boards where it identifies a high level of executive pay, lack of diversity in senior corporate roles, as well as “insufficient stewardship” of the way the business is acting.

The company voted against the re-election of nearly 4,000 directors in 2018 – an increase of 37%. – and it has published a blacklist of eight companies whose shares they decided to dump.

In October last year, ten companies announced that they were cutting waste by ditching plastic. They included McDonalds, Starbucks, Aldi, Lidl, Pizza Express and Costa. Supermarkets have also been at the forefront of a drive to eliminating throwaway plastic shopping bags, with Morrisons offering both re-usable and paper alternatives and encouraging shoppers to bring their own containers when buying vegetables.

There is already some evidence that becoming a “greener and leaner” company can actually benefit a business’ bottom line.

SMEs have been encouraged to cut their CO2 emissions and offered financial incentives for changing to more environmentally-friendly processes, such as better building insulation and reducing paper use and have seen their overheads reduce as a result. Use of automation and AI has also benefited some.

Are there positive business opportunities for SMEs as a result of cutting waste?

There has been an increase in the number of small businesses, mostly located in High Street shops, specialising in the repair of household products that would once have been discarded and in teaching people how to do the repairs themselves.

Other small businesses have developed classes teaching people how to make or re-purpose their own clothes and are reportedly thriving.

Here are examples of two other SMEs that have developed, and are thriving based on their social, sustainable and environmental awareness.

In Ipswich, a clothes company originally set up in partnership with Indian producers out of a concern for Fair Trade, has recently formed another partnership with African producers to source sustainably-grown cotton which local garment workers then use to make attractive clothes that are imported to UK to be sold online. One of the selling points of the garments produced is that each item comes with a verifiable history of its production.

Another business operating nationwide and based in Essex has created a service for building contractors with contracts to re-purpose or refit existing buildings. It offers site preparation that includes initial site layout, demolition, removal of internal and external fixtures and fittings, and the removal of all waste sorted into recyclable materials that are verified by an independent adjudicator and certified so that both this company and the contractor have evidence of their efforts to be as sustainable and environmentally friendly as possible. It also clears sites at the end of the contract.

With some innovative thinking, there are huge opportunities for SMEs to create completely new, social, sustainable and environmentally friendly products and services.

If you have any examples do please let us know in the comments.

Price and environmental pressures in the cargo shipping sector – stormy waters ahead?

cargo shipping on stormy seaIn early April a national newspaper published a report on the captain and crew of a cargo ship who had been stranded in the Persian Gulf off the UAE for 18 months without pay or food.

The cargo ship, said the report: “became a floating prison from which he and his 10-man crew could not escape without losing their claim to thousands of dollars in unpaid wages.” The ship’s owners had got into financial difficulties but would not sell the ship because they “would not get a good price”.

This is becoming an all too frequent story and in 2018 alone according to the IMO (International Maritime Organisation) an estimated 791 sailors on 44 ships had been abandoned in this way as a slump in orders led to overcapacity in cargo shipping and took its toll on owners.

Over the last couple of years, a global economic downturn has been gathering pace exacerbated by Trade Wars between the USA and China leading to lower demand on trade routes between Asia, the USA and Europe.

Demand has also been affected by rising costs including for fuel, port handling, insurance and security. These have increased significantly over the past few years, not least due to piracy off Somalia and the recent threat by Iran to block the Straits of Hormuz.

Will 2019 bring any relief for cargo shipping?

Growth in the first 11 months of 2018, was the slowest recorded in the past decade for intra-Asia at 3.8% and the predictions are that European containerised imports may be stuck at a demand growth of no more than 2% for the foreseeable future.

Rates have been relatively steady for a couple of years but, it has been argued, they are barely recovered from a loss-making, low-rate 2016. For some charter cargo shipping companies rates are expected to remain loss making, leading to numbers of idle ships.

While there is some potential for demand from South America and Africa to grow, the outlook is very uncertain.

An added complication is that the IMO has introduced a mandatory cap on the amount of sulphur in ship fuel starting form 2020. Lower sulphur fuels are expected to be more costly than the current Heavy Sulphur Fuel Oil (HSFO).

The increased emphasis on climate change and environmental protection will play an increasingly important role in the cargo shipping sector as it will in other sectors and it will not escape from the geopolitical pressures of trade wars, rising populism and uncertainty over regulation due to these, Brexit and other issues.

It will be some time before there is any relief for the cargo shipping sector.

Two examples that justify agility when pursuing a retail turnaround

retail turnaround to prevent extinctionThis blog contrasts the fortunes of Majestic Wines with those of Debenhams as arguably examples that show how retail business can survive a rapidly changing environment.

There have been efforts by many struggling High Street retailers to improve their businesses by using an insolvency mechanism called the CVA (Company Voluntary Arrangement).

The most recent of these is Debenhams, which, having secured £200 million in new loans in March and followed with a pre-pack administration sale in early April, effectively wiping out its shareholders including the vociferous Mike Ashley who also owns Sports Direct and BHS.

It was acquired by new owners, a consortium of banks and hedge funds, who almost immediately launched a major store closure programme ultimately to involve 50 stores, in conjunction with a CVA aimed at persuading landlords to reduce the rent for remaining stores by up to 50%.

Debenhams’ sales had dropped by 7.4% in the previous six months but it has been argued that the store chain’s problems were more deeply rooted in its dinosaur-like lack of adaptation to the change in consumer buying habits.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “As an investment, Debenhams is a tale of woe from start to finish.

“The strategy since float was out of kilter with the changing habits of consumers. But even before the float [in 2006], its private equity owners had put the department store under financial pressure, by selling off a number of freeholds in favour of leasing them back.

“Hindsight is a wonderful thing, but the road to Debenhams’ ruin has been paved with poor decisions, as well as a dramatic shift towards digital shopping.”

Richard Lim, chief executive of Retail Economics said: “We should not understate the significance of this collapse. Debenhams has fallen victim to crippling levels of debt, which has paralysed its ability to pivot towards a more digital and experience-led retail model.

“Put simply, the business has been outmanoeuvred by more nimble competitors, failed to embrace change and was left with a tiring proposition. The industry is evolving fast and it paid the ultimate price.”

By contrast, a restructure announced by Majestic Wines demonstrates a fine example of retail turnaround agility, where the key word is “pivot”.

In 2015 Majestic bought Naked Wines, a subscription-based online business founded in Norwich by entrepreneur Rowan Gormley in 2008, and appointed Gormley as its CEO.

In March this year, he announced plans to close 200 Majestic stores and to rename the company as Naked Wines. According to Majestic almost 45% of its business came from online with a further 20% from international sales.

The Majestic business model had been to locate its outlets on cheaper out-of-town sites with parking and to sell wines sourced directly from producers in bulk only, in multiples of 12.

But with the change in consumer behaviour Gormley took the decision to restructure the business by pivoting it to online sales only – a potentially more lucrative option as it will release capital from the physical stores to invest in attracting more customers.

Mr Gormley believes that Naked Wines has the potential for strong sustainable growth and has said “We also believe that a transformed Majestic business does have the potential to be a long-term winner, but that we risk not maximising the potential of Naked if we try to do both.

His innovative restructuring may prove that his prediction of sales reaching £500m and of an increase in regular customer payments by 10-15% this financial year may well be correct.

There is no need for retail businesses to become dinosaurs but survival in a changing world requires vision and bold decisions.

May 2019 Key Indicator – is there still a direct link between rising Brent crude oil prices and inflation?

Brent crude oil refineryThe Bank of England (BoE) governor, Mark Carney, has recently warned of growing inflationary pressures and potential interest rate rises sooner than was previously expected.

At the moment the UK’s inflation rate is at 1.9%, unchanged from the previous month and well below the ceiling of 2% after which the BoE would have to take action.

However, although the core basket of prices that influence the inflation rate is not seen as the problem, the rising cost per barrel of crude oil may be behind Carney’s latest warning.

The current price of Brent crude oil as of April 29, 2019 is $71.22 per barrel, although the monthly average so far this year has been calculated as $64.98. (Figures courtesy of https://www.macrotrends.net )

The idea of a direct correlation between oil price rises and inflation was cemented in the 1970s when the UK economy was hit by an oil embargo by the 1973 by Arab oil producers in response to Western support for Israel in the Yom Kippur war.

The 1970s inflation rate of more than 24% that toppled the government of Edward Heath and forced the BoE under the subsequent government of Harold Wilson to prop up Burmah Oil was arguably determined by oil prices. The resulting “stagflation” also c9ntributed to global food shortages and escalating Trades Union demands for wage increases to cope with the rising prices.

The link between crude oil prices and inflation was fixed in the minds of economists and central banks although it seems to have been forgotten.

So, should the current rising Brent crude oil prices be reason for concern?

This chart (again courtesy of macrotrends) shows the oil price picture over the last decade:

Brent Crude price fluctuationsThe chart highlights the volatility of oil prices with a 10-year high of £128.14 in 2012 and low of £27.88 in 2016.

At today’s price the future trend would seem upwards although most economists now argue that the direct link between price and inflation is no longer relevant because the world has changed significantly.

Firstly, the economists cite the many other oil producing countries outside of the OPEC cartel and why OPEC is no longer dictating prices. These include Iran, Russia, Brazil, China and Canada, with the US being self-sufficient now it produces its own oil.

Secondly, consumer demand for petrol when the oil prices rise does not reduce and some industries do not pass on the rises to consumers via their products.

Thirdly, they argue that the crude oil pricing model is not simply one of supply and demand because the price of oil is actually set by the oil futures market, which is determined by traders and market sentiments.

So where is the BoE warning of inflationary pressures coming from?

According to the Observer’s business leader at the weekend, the BoE latest quarterly review of the economy sees a combination of a reviving global economy and the UK’s ever-increasing workforce –increasing demand and keep up the pressure on prices. This is contrary to other evidence of a global bubble that is growing.

However, the BoE says: “the only reason that economic activity has picked up in the US, the eurozone and China is because their respective central banks have promised to tear up plans for interest rate rises”.

Despite the positive forecast, supply concerns may prop up oil prices due to the USA’s continued embargo on Iranian oil and its re-imposition of sanctions on countries that buy from Iran. It also has an embargo on Venezuela.

Also, concerns about contaminated oil coming via a pipeline from Russia have prompted European customers Poland, Germany and Ukraine to halt imports via the Druzhba pipeline are all contributing to the currently high price of crude oil.

Whether this will feed into rising inflation and the knock on effect of rising interest rates remains to be seen.

Alas, each generation tends to forget history and the 1970s seem a long time ago!

UK business insolvencies and distress indicators continue to rise

UK business in stormy watersAn alarming number of businesses are in either significant or critical financial distress, according to the latest Begbies Traynor Red Flag Alert, issued just the day before the Insolvency Service revealed the figures for Q1 (January to March) 2019.

484,000 UK firms, or 14%, are in “significant financial distress” while the numbers of those in “critical financial distress” have risen by 17% in Q1.

Begbies Traynor partner Julie Palmer said: “Many UK businesses are currently in limbo and deferring major investment decisions. This combined with consumers holding back on big ticket purchases has resulted in increasing significant distress across many sectors.

“Capital intensive sectors – such as construction and property – are suffering as both business and consumers have taken a cautious approach and limited their exposure.”

These figures would seem to be borne out by the Q1 Insolvency statistics, which showed a continuing upward trend, primarily in CVLs (Company Voluntary Liquidations) and CVAs (Creditors Voluntary Arrangements). Administrations, too, had reached their highest quarterly level since the same quarter in 2014.

CVLs increased by 6.2% compared to Q4 2018, administrations were up 21.8%. and CVAs increased by 43.1%.

Top of the list, as they have been for some time, were the wholesale and retail trade’s repair of vehicles industry sector, which saw the largest increase in underlying insolvencies, with 67 extra cases compared to the 12 months ending in December 2018. This was closely followed by the administrative and support services sector. Next highest were Manufacturing and accommodation and food services.

However, it is possible that the pressure to meet rent and rates, and the continued struggles of High Street retailing account for some of the significant rise in CVAS in the first quarter of 2019 when compared to the last three months of 2018.

No end in sight to the pressures facing UK business

While it would be easy to blame the continued uncertainty over Brexit, Begbies Traynor executive chairman, Ric Traynor, said although this was “the main driver” there were other factors involved, including the combination of faltering European economies and a potential trade war between the US and Europe.

To this list I would add the decline in trade with China which is down to these same factors combined with last year’s slowing growth there.

With the economy being predicted to flatline for the rest of the year and investment sluggish, it seems that UK businesses are facing a perfect storm in their struggle to survive and grow.