across the pothe uk and irelandscene
wIt was visited by a Christmas ghost
though when, probably suffering from
a skeleton staff, the Financial Times
ran a truly awful feature on the sector,
quoting “experts” that were clearly clueless and resurrecting the old lender-of-last-resort chestnut that most business
finance specialists thought they had laid
to rest around the time decimal currency
was introduced to the UK in 1971.
Speaking of currency, the dramatic
drop in the value of the pound has flushed
out Europhiles as, at times, it approached
parity with a gravity-defying euro. Suggestions that the UK now adopt it have
hushed again as the euro subsided.
The Irish government, trying hard to
handle a drop in economic activity, and
a big budget deficit, has accused the
UK of allowing the pound to slip too far
and causing Ireland immense problems.
Whilst the UK, in general, and England,
in particular, is the traditional whipping
boy for most of Ireland’s problems, it is
fair to point out that the euro may not
Ireland, along with Greece, Portugal
and Spain, could have used much higher
interest rates over the last five years to
damp down unsustainable economic
booms and all are now nursing deficits
that history would suggest will be very
difficult to bring under control.
We used to talk of the difference in
bond spreads between Germany, which
has addressed structural problems very
well to sustain its massive export effort,
and the flakier euro economies. The
debate has moved to the recent failure
to sell out of a German government
bond issue. If the best quality euro paper
cannot sell, where are we going?
In the UK the 7% fall in manufacturing last year is a stark reminder that
our economic problems are deep. If
wise observers warned that a decade-long debt-financed boom in import-led
consumerism laid down few economic
foundations for the future, even the
riting this, several weeks
before publication, I am
always conscious that my
copy could look dated but,
with that said, it has been
more of the same for several
months now as far as UK
commercial funding goes.
smartest look bewildered as they seek
a concrete path out of the mire of
uncertainty that prevails today. Ben
Bernanke’s speech to the London School
of Economics brought a great mind, but
no magic wand, to town.
It does look, though, that bad banks
may arise to shoulder toxic assets, something for which our children may never
I shut myself away in February to write
my twelfth Receivables annual review
when the whole UK invoice finance sector sends me their figures so I may pen
my annual, independent review of the
sector. Maybe some positive news here?
As I close, I am watching the miraculous story of the Airbus landing in the
We must applaud the skill of the pilot
and his team; the composure and courage of the passengers; and the wit and
compassion of the boat crews that sped
to the rescue. Nobody lost: an American
triumph in adversity.
Just as we wondered when all of the
lousy news will come to an end, a shaft
of sunlight pierces the gloom.
Next time I fly, I promise to pay attention to the safety briefing. TSL
That said, the ban on short selling of
bank shares here has just expired and
they have nosedived.
Banks are being urged to lend to ail-
ing businesses but not only refusing, one
third of UK companies have had unused
headroom on their facilities pulled back.
The ABL sector is mostly sitting on
its hands, though there are stirrings of
activity and this might include a comeback story.
Invoice finance is doing well and providers are securing better margins with
the once-nearly-extinct personal guarantee making a robust comeback. The industry now finances over 50,000 companies
in the UK, financing sales of £17bn in the
12 months to September 2008.
Robert LeFroy is editor of Business Money,
the first dedicated commercial finance
journal in the UK. He can be contacted at