CBI @10am: Where next for cashflow and finance?

Speakers:

• Rain Newton-Smith, Chief Economist, CBI
• Amanda Murphy, Head of Commercial Banking, HSBC
• Ian Watts, National Practice Leader, Marsh
• James Harding, Editor and Co-founder, Tortoise Media (chair)

In this session:

• Rain Newton-Smith kicked us off with an update on re-opening and the roadmap: hospitality venues now open for indoor bookings as well as cinemas, indoor play centres etc.
  - Some restrictions on International travel have now also lifted but still extremely restrictive.
  - The Indian variant of the virus is however casting doubt on 21 June for full re-opening.
  - And there is ongoing frustration around some of the outstanding covid questions, including with the social distancing review - still now sure what the options are. This is particularly pertinent for office-based workers – is the guidance to continue to work from home if you can or return to the office?
  - Rain also mentioned that there were some emerging concerns on inflation now than before, highlighting the hope is supply will keep up with demand so we don't see inflation across the economy. Bank of England need to be monitoring and say they're ready to act if needed.

• Amanda Murphy highlighted that there are hundreds of thousand companies who have accessed loans and finance in the last year who never have before. Ongoing confusion for some on grants versus loans and while banks are signposting best they can, until we embed the loan schemes it's a difficult time for many firms.
  Looking at the Recovery Loan scheme – one of the key differences between this and Bounce Back Loans is around eligibility criteria. In order to assess viability for the loan, the Recovery loan scheme asks banks to look at trading and prediction for the year ahead using forecasting - which can be really hard to do. This is because of a lack of trading data for the previous year.
  Pay as you Grow – some companies given option to payback or move from 5 year to 10 year loan as almost a year since scheme was introduced.
  Please talk to your bank or HSBC as want to help firms.

• Ian Watts covered an update on trade credit insurance. Now heading into a time when sectors are opening up, scheme due to end at the end of June, those sectors most impacted are now less inclined to support continued cover. Plays into cashflow ‘squeeze’ is those impacted sectors.
• Ian explained that credit insurers look at data sets on whether a business/sector is viable. Even though there is pent up demand for hospitality etc, insurers will struggle to justify lending based on the data in front of them especially as it’s difficult to get and forecasting /data sets for hospitality/leisure.
• There is a willingness on part of the insurers to listen but needs full transparency and engagement with all parties – which is a big shift – particularly as things can change very quickly.

• Rain highlighted that CBI continued focus is on sector-specific support and for firms in distress and supply chains, and for businesses do get in touch with your finance providers – don’t delay. It’s definitely ‘crunch time’.