Chief Economist’s reaction to BofE monetary policy committee announcement

In line with the BoE’s Monetary Policy Committee announcement, Markus Kuger, Chief Economist at Dun & Bradstreet, said: “It’s been widely anticipated that the Bank of England would maintain interest rates given continued uncertainty in the UK market. And although the UK’s long-term economic potential exceeds that of most other European economies, Dun & Bradstreet is maintaining its ‘deteriorating’ country risk outlook based on latest data and analysis.

“In an uncertain environment, businesses can use payments performance data as one indicator of financial health to help them make decisions. Analysis of Dun & Bradstreet trade payment data shows a marked decrease in prompt payment performance since the first lockdown in March 2020, with the percentage of UK businesses paying bills on time down from 47.3% in March to 41.8% in December 2020. Despite the immense government support, we expect a further deterioration in Q1 as many businesses continue to face cash flow challenges in the midst of the current lockdown.

“Even though vaccinations are well underway, in a turbulent economic climate businesses can use data to assess the impact of certain scenarios on their operations. For instance, Bounce Back Loans will need to be repaid, which could disrupt business cash flow indefinitely. It’s therefore more important than ever for businesses to have a comprehensive view of their suppliers, customers and prospects to identify risk while also capitalising on opportunities where possible. While the BoE has said today that it expects a rapid recovery towards pre-pandemic levels this year, this could well be overly optimistic. Dun & Bradstreet does not expect a return to pre-pandemic GDP per capita levels until 2023.”