Weekly roundup: 11 Sept 2020

More details continued to emerge this week to illustrate the economic pressure, that is underway and growing across the economy.

• Many consumers appear to have gone into money-saving mode over lockdown – 3.6m are worried about how they are going to pay bills… more hard data on the stress some households are under.
• Two-thirds of businesses are reportedly been suffering from cash flow problems, with 1 in 10 expected to cease trading, due to COVID.
• Cash usage is down, card usage is up as consumers seem to have shunned physical money. Credit card spending has also bounced back in June/July… hopefully, better news for the retail sector too.
• FinTechs, which have had their dash for growth business models challenged recently, are starting to introduce more fees, or changing their business model… a sector under focus as mentioned before
• Looking at other markets, many of whom have different government support models that the UK, delinquencies are starting to rise… is this potentially a view into the future for the UK? (it is expected, unfortunately)
• Controls were in the news again with a story on Bank signature forgeries… it seemed to disappear as soon as it was reported… but obviously important for the industry that everything is done to ensure this sort of thing does not happen

There were also some interesting statistics from ONS on the impact of COVID on the economy. They really show the polarised impact of lockdown on different sectors in society.

Food and Accommodation, the impact has been dramatic, hard and sustained, but other sectors seem to have been only lightly impacted…. Public sector hardly at all, with minimal impact in financial services.

All of this points to a lopsided impact and recovery. This is against a background of rising cases again remember too.

Of course, economic doom and gloom is not the only news going on and the topic of Brexit was back in the news this week… with the UK government seemingly appearing to want to tear up its previous agreement with the EU… all of which does not bode well for the future relationships, both with the EU and internationally, which are largely built on trust… one to watch closely through the end of the year.

The return to the office discussion also continued with some companies proudly announcing they are permanently office free. However I have also been hearing stories of businesses asking people to return, it will rumble on I suspect.

Lastly a few other stories of interest

• Self cooling microchips – could lead to smaller, lighter phones
• Detailed data analysis on COVID virus, with a model study of its impact – could lead towards new avenues for treatment… an interesting read
• and… will the heavy use of hand sanitizer, lead to resistance in bacteria and virus’s as they evolve to survive… like anti-biotic resistance….scary stuff
• An exploration of the use of public webcams to analyze society’s adherence to social distancing… my ‘lean out of the window and have a look method’ says not very well…I am afraid 🙂
• Lastly, there was n interesting video of an Airbus flying wing model demo – it could lead to more efficient planes… with the cheap seats will be at the end of the wings I suspect!

Have a good weekend everyone… @chris_w_tweet

Gradually over the last few weeks, there has been a gradual return to school and with Labour day in N. America this weekend, the summer will be ‘officially’ over….. this really is another milestone in the return to ‘normal rules’ and it has started to flow through the newscycle this week too.

The Economy

In the UK the furlough scheme is now starting to wind down, and gradually starting to flow through to employment levels with an acceleration of job losses in August. It is not doom and gloom in all some sectors mind you, notably this week Amazon annouced the hiring of 7,000 new roles.

The motor industry and housing market have also seen a strong bounceback, with car sales strong somewhat on the back of a perceived need to avoid public transport to get to work. Similarily housing has seemingly lots of demand build up during the lockdown period (and no doubt helped by the stamp duty tax cut too).

Industries such as retail and food/accommodation however have been hit hard and with each industry having different levels and speed of return it really does feel like a complete resizing and reshaping of the economy is upon us.

A lending bounce back?

Some of this has translated through to a bounce-back in lending, with consumer borrowing returning to pre-COVID levels; Mortgage demand and credit card spending increased…

… and although the demand is higher from consumers, the other side of this equation is of course the lender and this is where it becomes more complicated.

Lenders are now starting to become more cautious, conscious of what may lay ahead. We are starting to see credit card limits being reduced and restrictions on mortgages increasing.

• HSBC curbs sales of low deposit mortgages
• Limits on borrowing from family members for deposits (at a time when this is increasing in need too)
• Curbs on mortgage lending to furloughed applicants

It is becoming a tale of two halves

• If your industry was impacted, you were on furlough, not in a role or struggling; economically things are tough, money is being saved and people are concerned. How will bills be paid and where will the next paycheck come from.
• If your industry has been minimally impacted, and you were in a job, (such as in financial services or public sector – not that it has not been busy mind you), economically some folks are actually better off.

How we navigate all this will become apparent in the next 4-6 weeks, but this is shaping up to be an uneven recovery and credit crunch for some.

Lastly, The Return of the office – part 2. The bun fight over the return to the office still continued this week, with business on one side saying it is not practical (and employees voting with their feet) and the government on the other saying you should go back. In what appeared to be any attempt the referee, the Bank of England stepped into the argument… the debate continues, and I don’t see us back in offices, en mass anytime soon.

That was the week that was…. have a good weekend everyone…. @chris_w_tweet