Insurer data reveals positive outlook for UK businesses moving into 2025
One of the UK’s largest credit insurers, Atradius, has reported a 10% drop in claims from UK businesses in November 2024 compared to the same month last year.
The latest data on payment default trends signals resilience among UK firms, despite the ongoing cost-of-living crisis and the Autumn Budget’s impact earlier this quarter. With the festive season in full swing, businesses have a critical window to maximize economic opportunities before the typically sluggish first quarter of 2025.
While sectors like finance, transport, and electronics are thriving, challenges persist for industries like food and chemicals, which saw payment defaults spike by 107% and 50%, respectively, over the past year.
Finance sector: Claims plummet by 75%
The financial sector led the recovery, with claims dropping by 75% in November 2024 compared to the same month in 2023 – the sharpest decline across all UK industries. This improvement reflects a rebound for banks, insurance firms, and fintechs following stabilising interest rates (4.75%) and inflation nearing the government’s 2% target.
With promising conditions and strategic moves from the Chancellor to bolster financial services, the sector’s outlook remains strong, especially for private equity and financial services trade.
Transport sector: Defaults down 39%
Payment defaults in the transport sector fell by 39% year-on-year, with a 31% drop from October to November 2024. Despite geopolitical headwinds such as the Red Sea attacks and Panama Canal disruptions, the sector has demonstrated resilience.
Lower fuel costs, driven by declining interest rates since August, have further boosted performance while enabling sustainable practices.
Electronics sector: Defaults down 35%, buoyed by Black Friday Sales
The electronics sector saw a 35% year-on-year decline in payment defaults, bolstered by a strong Black Friday. Sales of headphones and smartwatches surged by nearly £8m compared to 2023, driving market growth.
The popularity of smart home devices also contributed, with 39% of UK households now owning such devices – a figure expected to reach 50% within three years.
Food sector: Payment defaults surge by 107%
In stark contrast, the food sector reported a 107% year-on-year increase in late and failed payments. Although defaults fell by 50% from October to November, the sector remains heavily impacted by the cost-of-living crisis and supply chain disruptions.
Revenues in the food industry dropped 9% over the past year, putting pressure on firms to capitalise on the Christmas season, traditionally a period of higher consumer spending.
James Burgess, head of commercial and insolvency expert at Atradius, says: “Our data shows a positive end to 2024, with most sectors seeing a drop in payment defaults despite this year’s economic and political hurdles. Businesses are starting to benefit from festive season revenues and signs of economic recovery.
However, caution is key. With high prices still challenging consumers, businesses must prepare for a tough Q1 2025 by focusing on customer needs, leveraging technology, and adopting sustainable practices to stay resilient.”
Burgess also highlights how businesses can protect themselves against the risk of insolvency in the New Year: “Businesses are certainly ending the year on a high, but companies need to be aware of how to protect themselves against the domino effect of insolvency.
It remains crucial for businesses to protect themselves with trade credit insurance, enabling them to trade with confidence and explore new markets or products.”
