Category: Financial News

Turner Little on the financial support package for UK exporters

The Secretary of State for International Trade Dr Liam Fox has announced the Government’s plan to support UK businesses that export products, and the companies in their supply chains.

This financial support package is specifically aimed at small and medium sized enterprises (SMEs) in the UK and is being hailed as a ‘gamechanger’ by the Government.

Financial support for UK exporters

Dr Fox was speaking at a celebration of 100 years of the UK Export Finance (UKEF) on 5 June 2019 and its financial backing for international trade. This is the first Government support package that will be made available to SMEs exporting to emerging markets from the UK.

The financial package will include:

  • The General Export Facility – this covers costs for exporters in general, not limited to costs arising from a specific export deal.
  • The Small Deal Initiative – this will go towards the high number of exporting companies taking on small contracts that form the backbone of British trade.
  • The extension of financials support to companies in exporter businesses’ supply chains, in addition to the support the exporters themselves receive.

In announcing the package, Dr Fox says: “These… are potential gamechangers for our export industry and will help us to tap a fresh vein of potential from within our economy.”

 

The importance of UK business in global supply chains

The Small Deals Initiative is the part of the package will involve UKEF guaranteeing loans made to potential overseas buyers of UK goods. The idea is that this will make export bids from the UK more competitive and more popular.

The General Export Facility will mean the UKEF supports the overall needs of exporters, and not just for those needing support for a specific deal. On this Dr Fox says: “Recognising that it takes more than one business to deliver an export contract, UKEF has extended eligibility for its support to companies in exporters’ supply chains.”

The latest information available to the Government shows that more than 23% of UK exports that took place in 2015 were embedded within the supply chains of other nation’s exports. This shows how vital the UK is within the global supply chain. It’s hoped that the more flexible approach from UKEF will give SMEs more access to working capital and bonds.

 

UK SME exporters increasing year on year

Small businesses are showing growing confidence in their ability and willingness to export. In 2018, 5% of UK SMEs that weren’t exporting reported plans to do so in the future. This was an increase on 3% in 2017.

Around 400,000 businesses in the UK could export but choose not to, and the Government hopes that this financial incentive should help their productivity levels in the export space.

Since 2009, UKEF has provided more than £30 billion of support to UK exporters. More than 600 companies that export from the UK have been able to use this support to grow their businesses overseas. Just over three-quarters of the businesses assisted and supported by UKEF in the year 2017-2018 are SMEs, showing just how vital this sector is to the country’s performance in the global supply chain.

 

Where does the UKEF fit in?

The UKEF works alongside the Department of International Trade and is the export credit agency for the UK. It began in 1919 to encourage exports following the end of World War 1, and its mission remains to help any viable UK export succeed through financial assistance.

Latest information from the Office of National Statistics shows that the 2018/2019 financial year was the most successful for UK exports since records started. This means the UK is up to 36 consecutive months of growth in exports. Separate information shows that UK exports increased faster than Italy, Germany and France between 2016 and 2018.

James Turner, Managing Director of Turner Little Limited says: “This financial package is described as a ‘gamechanger’ by Dr Fox, and it is certainly very encouraging. Post Brexit the UK will rely more than ever on exports, and businesses need assistance in ensuring this sector continues to grow year on year.”

“The recent figures shown are also encouraging, and the help from the Department of International Trade is likely to strengthen UK exporters even more. The global economy is heading for a slowdown, and there is no doubt at all that the UK is experiencing a difficult time in the run up to Brexit. Building a global UK needs this kind of investment, and this investment strategy is welcome news for UK SMEs. It can be hoped that Britain will become an exporting superpower, with more influence on the world stage in the future. Investment like this will help the country to achieve investment overseas and remain strong into the future.”

About Turner Little
Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

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New £12 billion lending fund for UK SMEs launched by HSBC UK

Good news for SMEs – HSBC UK has doubled its original SME Fund, boosting it to £12 billion. The money helps companies to grow, and this is the fifth year this cash is being made available to SMEs.

Total funds committed to SMEs by the bank between 2014 and 2018 now reach £46 billion.

Overseas funding boost for SMEs

The fund also incorporates £1 billion ring-fenced to help UK SMEs grow their businesses overseas. As the UK heads towards a potentially drastic split from the EU, overseas business is becoming more crucial for small and medium sized businesses. The bank’s research shows that more than 72% (over two-thirds) of businesses in the UK are anticipating cross-border trade to increase over the next 12 months.

In addition, it includes a minimum amount of £300 million specifically for agricultural businesses in the UK. It’s allocated to different regions across England, Scotland, Northern Ireland and Wales, to ensure the fund remains country wide.

Head of Commercial Banking Amanda Murphy says: “British companies are optimistic about their trade growth prospects but it’s important they can get the finance they need to achieve it. With this in mind, we have set aside £1 billion of the fund to support international businesses in the UK. We cover more than 90% of global trade and capital flows and are uniquely placed to help these businesses trade overseas.”

Keeping SME’s afloat

BiFunds like this are especially important in light of research that shows 30% of SMEs actually need them just to survive. A report from finance provider Liberis finds that just under a third of small businesses need funding just to keep their heads above water.

The research looks into a range of criteria and records that ‘keeping afloat’ scores as one of the highest. Other in the top five reasons for business owners requesting funding include ‘purchasing new equipment, ‘general operating costs’ and ‘keeping up-to-date’.

The most common amount requested by SME owners is approximately £30,000. This is the amount of money needed to take a small business through to the next level. Despite initiatives like the HSBC UK fund, there is resistance from major banks to lend to small businesses. There is a perception among business owners that UK banks are reluctant to invest in innovation.

Economic backbone

According to Kelly Tolhurst, the Government’s Small Business Minister, more than 1,000 SMEs start up every single day. The 5.7 million small businesses in this country are its economic backbone and will continue to increase in significance post Brexit. She says: “Through our modern Industrial Strategy and industry-led initiatives such as this [HSBC UK fund], the Government and industry are building an environment in which businesses all over the country can thrive.”

SMEs contribute in excess of £200 billion a year to the country’s economy. Forecasts expect this to increase by around 20% by 2025. However, without enough cash going to the right places, this vision could be limited.

Almost two-thirds of small businesses in the UK see funding as a way to help them grow. And yet, 55% find it impossible to access the cash they need. This is leading increasing alternative providers, which reduces the pressure on banks and mainstream financial providers.

James Turner, Managing Director of Turner Little Limited says: “We’re experiencing an uncertain economic and political climate, with no real idea of what comes next. This means there is a greater need for the Government to support small businesses and ensure they can access the capital they need.

“While it’s becoming more difficult for small businesses to access funds from traditional channels such as business loans and funding, it’s encouraging to see new channels forming. Research by UK Finance regarding bank loans and overdrafts provided to small businesses over the past five years show that there is a drop of almost £6 billion. FinTech is filling this gap and providing new ways for SMEs to access funding.

“Combined with traditional funding options, we’re hopeful that the future of funding is strong. The Government must provide stability and support for the SME sector in the UK. Its importance is only going to increase as we leave the EU, and reform is essential. In particular, SMEs need encouraging to export outside of Europe and expand overseas.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

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The Business Priorities of Global Banks, 2018

Banking in 2018 is a minefield. Consumers are disenchanted, emerging FinTech technologies are disrupting the industry leaving traditional banks contemplating their place in an ever-changing, modernising field. Turnerlittle.com took to investigating the business priorities of global banks in 2018, to better understand what our banks are doing to restore customer faith – and the sector.

To sculpt their findings, Turner Little analysed the report ‘Global Banking Outlook 2018’ released by Ernst and Young (EY). Comprising a survey of 221 financial institutions, across 29 markets, the report reveals bankers are positive about their ability to improve their financial performance this year. To achieve this, banks and bankers alike will prioritise five main categories: protect, control, grow, reshape and optimise.

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Observing each of these priorities will allow effective change to take place over the course of the year.

Clearly, we can see from the infographic above, to ‘protect’ comes out top. In fact, the highest priority in every category is to ‘enhance cyber and data security’ – at 89%, plainly indicating this is an urgent focus.

Other high priorities include to ‘implement a digital transformation program’ (85%), to ‘recruit, develop and retain key talent’ (83%) and to ‘gain efficiencies through technology adoption’ – at 82%.

Lower priorities include, to ‘optimise the balance sheet’ (78%), to ‘meet compliance and reporting standards’ (77%) and to ‘improve risk management’ – at 77%.

Delving further into detail, it is found, within the next three years, 40-60% of companies will choose to purchase a variety of technologies to help them achieve their goals. Some of the most favoured technologies include artificial intelligence, augmented and virtual reality, cloud technology, cryptography/cybersecurity technology and identification software based on biometrics.

Turner Little also pulled the top five reasons banks will invest in technology this year, with interesting results.

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To ‘strengthen competitive positioning and build market share’ is the number one reason banks will look to invest in technology – at 70%. Followed by ‘expand ability to acquire, engage and retain customers’ (67%) and to ‘generate cost savings and operating efficiencies’ (62%.)

Closely followed, was to ‘mitigate growing cybersecurity threats’ (58%) and to ‘drive digital transformation program’ – at 51%.

James Turner, managing director of Turnerlittle.com, comments:

“It’s clear traditional banks need to embrace digital advances, such as those under the FinTech umbrella, to drive opportunity. Not only will this improve efficiency and help to manage risk; it’s critical to sustainable success.

In fact, it is understood embracing digital innovation will provide banks with the key to reach their goals in 2018 and to appease fed up consumers. It’s time to move with new advances, rather than wasting energy, money and custom fighting the tide.”

Feature image credit: Sittipong Phokawattana/Shutterstock

 

 

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How FinTech Can Help Banks Reach Goals in 2018

A lot has been written about the relationship between traditional banking and FinTech. The most common thought? The astounding rise of the world’s FinTech market and how it will affect the banking industry. The general opinion is that the constant progress of FinTech will one day spell the end of the banking system as we know it.

What is FinTech? It’s defined as ‘computer programs and other technology used to support or enable banking and financial services.’ Advances in its technology include mobile functionality, simplicity, big data, accessibility, cloud computing, contextuality, personalisation and convenience.

Traditional banks have few of these qualities and therefore rely on something FinTech start-ups haven’t yet mastered – trust, security, significant capitalisation and customer indifference. But according to Starling Bank’s report, traditional banking consumers are fed up. The top frustrations with current UK banks being:

  1. Unclear and complicated language and charges.
  2. Complicated products that don’t fit with lifestyle.
  3. Processes and technology that takes too long.
  4. A superior or unhelpful attitude.

From this, it is understood that the technological innovation FinTech provides could help traditional banks reach their goals and appease fed up consumers. Indeed, in 2018, a partnership of the two presents boundless opportunity.

The top business benefits of partnering with FinTech technologies, per ACI’s FinTech Disruptors Report*. include the ability to generate new revenue streams (64%), the ability to enhance customer experience (59%) and the ability to offer new applications – at 56%.

Chris Skinner, Chairman of the Financial Services Club, comments:

“Start-ups have no existing structure to change so they can change everything. The challenge is how to convince customers to change. Incumbents (traditional banks) have millions of onboarded clients and so to change anything takes time.

Most have the time though, as customers are slow to change. Fundamentally, both are facing two very different challenges – FinTech’s are creating while the incumbents are converting.”

By embracing themes, like openness, collaboration and investment, banks can afford to disrupt their own business model rather than waiting for challenger models to do so. However, traditional banks are anticipating this by creating new businesses within their existing structures that adapt and collaborate to meet these challenges and to make better, faster use of customer insight. A key competitive advantage.

A FinTech and Bank Partnership

Further to ACI’s Report, more than three quarters of banks, and a similar proportion of FinTech groups, identify partnership with the opposite camp as an essential ingredient to meeting the challenges of institutional inertia.

In fact, 80% of banks agree with their FinTech peers that FinTech is a viable, even essential path to the future. The top three ways embracing technologies can help banks meet their goals, according to ACI, include engaging in partnerships with FinTech (78%), expanding existing partnerships vendors (57%) and leveraging cloud technology – at 44%.

In 2018, banks’ new approach to FinTech is more about seizing opportunity and changing customer needs than defensive strategies to mitigate risk. Turnerlittle.com observed statistics from the same ACI report, to outline the exact areas where banks want to partner with FinTech:

  1. Payments – 68%
  2. Banking infrastructure – 43%
  3. E-Commerce – 40%
  4. Remittances – 37%
  5. Security and fraud management – 32%
  6. Consumer banking – 29%

Financial institutions see the greatest opportunity in payments – with nearly 70% identifying this as a key area of interest – followed by 43% interest in banking infrastructure.

Equally, e-commerce is a focus for 40% of banks and remains a major focus for FinTech too, suggesting that the current period of development is proving productive in terms of aligning interests and establishing goals between the two industries.

*ACI’s report considers findings from an industry-wide survey of banks and established financial institutions, FinTech start-ups and ecosystem participants alongside insights from over 20 interviews with financial institutions across Europe, FinTech founders, investors and enterprise-level technology firms.

Feature image credit: whiteMocca/Shutterstock

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The Value of UK Foreign Direct Investment Assets Rises

Foreign direct investment assets capture the investments made by UK-based companies abroad and per the newly released GOV report, UK FDI Investment, Trends and Analysis: 2018 these assets have been on an upward trend since comparable records began in 1987. However, the value of UK FDI assets saw little growth from 2011-15, at the time suggesting that this upward trend may have flattened.

Yet, the value of UK assets increased considerably in 2016, extending to £1,564.2 billion – a rise of 11.4%. For foreign direct investment assets, this is the fastest annual growth rate since 2008 when asset values increased by 25.2% over that year.

Comparably, foreign direct investment liabilities (investments in the UK made by foreign companies) grew by 14.7% the same year, totalling £1,551.7 billion. This growth is the highest in UK liabilities since 2012, when the value rose by 25.8% over the year.

It is the higher growth of UK FDI liabilities that has seen the UK’s net FDI position fall from £494.2 billion in 2008 to £12.5 billion by 2016.

However, to better understand the current position of our FDI assets we must consider where they exist and how they benefit industry – and this is something Turnerlittle.com has investigated.

Currently, total UK foreign direct investment assets in 2016 include a gargantuan £645.1 billion in the EU – the highest total; £357.7 billion in the North Americas and £171.4 billion in Asia. Elsewhere, £139 billion exists in Non-EU Europe, £147.1 billion in Central and South Americas and a total of £103.9 billion in the Rest of World.

Most regions saw an increase in the value of assets 2015-16, except for the Central and South Americas. The largest of these increases occurred in the EU, where assets increased by £94.3 billion to £645.1 billion just last year. It has been noted that the broadly upward increase in asset values is likely to reflect the upward pressure applied from the depreciation in sterling over 2016.

Industry

Investigating more broadly, total UK foreign direct investment assets by industry 2016 include:

All UK industries abroad show higher asset values in 2016 compared with 2015, most notably in manufacturing where assets increased by £44.7 billion – a percentage increase of 15.7%.

Other high rises include information and communication where assets increased by £27.6 billion, an increase of 15.8%, and professional and support where assets increased by £21.8 billion, an increase of 17% on 2015.

Finance and Insurance Sector Breakdown

Shining a spotlight on the industry they know best, Turner Little found the percentage total of financial and insurance sector assets by continent, whereby it is Asia (19.8), Rest of the World (18.9) and the EU (11.3) who hold the highest number of assets.

Marginally lower is Non-EU Europe and the North Americas, at 10.4 and 10.3 respectively. Last, Central and South Americas – with a total of just 2.2 financial and insurance sector assets.

These figures demonstrate a need for the finance and insurance sector to maintain strong ties with Asia, Rest of the World and Europe to continue – and maintain – a healthy number of assets abroad. Indeed, if UK FDI assets in finance and insurance grew by 9.1% in 2015-16, with the right input, this can be expected to continue to expand and flourish in 2018.

Feature image credit: Mirexon/Shutterstock

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Top Sectors for Foreign Direct Investment in the UK, 2016-17

The newly released Gov report UK FDI Investment, Trends and Analysis: 2018 dictates growth in the value of foreign direct investment (FDI) positions held in the UK by overseas investors (FDI liabilities) exceeded that of UK FDI positions held abroad (FDI assets) in 2016.

In turn, the UK’s net FDI position falling from £50.8 billion in 2015 to £12.5 billion by 2016, the lowest net position since comparable records began in 1997.

In analysing the report, Turnerlittle.com took time to consider the projects and jobs created by FDI in the UK, identifying the 6 sectors benefitting from this type of investment the most.

To achieve this, the Inward Investment Results 2016-17 report released by the Department for International Trade was used as supplementary research, revealing total FDI projects in the UK rose by 2% in 2016-17, from 2,213 (2015-16) to 2,265. This comprises projects by “existing investors” in the UK (1,212) and projects by “new to the UK” investors (1,053.)

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New Investments (up by 9%), Expansions (down by -5%) and Mergers and Acquisitions (down by -6%) are the forms of foreign direct investment taking place in 2016-17. Further, the USA remains the UK’s largest source of inward investment – with 557 FDI projects. The rest of Europe, Middle East and Africa follows (261) as China and Hong Kong slide in third place, at 160.

Yet, the increase in total FDI projects is not mirrored in total jobs, with roles suffering a -7% fall; decreasing from 115,974 in 2015-16 to 107,898 in 2016-17. New roles fell from 82,650 in 2015-16 to 75,226 in 2016-17.

However, we can see where FDI projects are feeding a healthy workforce by comparing total projects and total new jobs in regions across the UK as noted in the table.

Turnerlittle.com found that excluding London, the South East (217), West Midlands (151) and the North West (147) hold the highest number of foreign direct investment projects. This equates to 5,432 new jobs in the South East, 6,570 new jobs in the West Midlands and 6,501 new roles in the North West, 2016-17. Evidencing FDI as an asset to the UK.

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Comparably, Turner Little also considered the sectors benefitting from FDI in the UK.

It was found the Software and Computer Services sector is number one for foreign direct investment, with 418 projects in 2016-17.

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This total is tailed by the Financial Services industry (217) and Business and Consumer Services (211.) Next, Environment, Infrastructure and Transportation, with 184 FDI projects in the UK, Creative Media (151) and Advanced Engineering and Supply Chain – with a total 146.

Lastly, the three sectors with the least FDI projects: Chemicals and Agriculture (50), Extraction Industries (49) and Aerospace (47.)

 

Feature image credit: g0d4ather/Shutterstock 

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Over 90% of UK Cities Exceed the Average National Debt Per Business

The UK saw an alarming increase of borrowing in 2017, compelling the Bank of England to issue a warning about the risk of rapidly rising debt to the UK economy. But this warning was related to consumer borrowing and so far, the UK economy seems to be unaffected. Moreover, there has been a higher-than-expected growth in the last quarter of 2017. However, the issue of debt prompted Turnerlittle.com to investigate the levels of lending by UK businesses.

SMEs Borrowing in 2017 Stable but Regional Distribution of Business Debt Extremely Uneven

To find out how and whether the country’s debt crisis affected UK businesses, Turnerlittle.com analysed the latest data on SME borrowing levels from UK Finance which includes statistics on SME lending by the leading UK banks including Barclays, Lloyds Banking Group, Nationwide Building Society, HSBC and other lenders. This data excludes large businesses with more than 250 employees, however, since SMEs make up over 99% of all businesses, it is a good indicator of the overall debt levels for UK businesses.

Analysis of the UK Finance data on bank support for SMEs reveals that unlike consumer borrowing, SME borrowing in 2017 remained stable. Furthermore, the statistics reveal that there has even been a decrease in SMEs demand for bank finance compared to a year ago. Tunerlittle.com also analysed the UK Finance data on the geographic distribution of SME lending and found that regional distribution of business debt is extremely uneven, with 7 out of 12 regions exceeding the average national debt per business – £33,840.

SMEs in Northern Ireland Owe More than Four Times as Much as Their Counterparts in East England

Comparing the data on business lending from UK Finance and the number of active businesses from the ONS dataset on Business demography, Turnerlittle.com discovered a significant regional difference in the levels of SME lending. With a debt of £98,192 per business, SMEs in Northern Ireland owe more than four times as much as their counterparts in the East of England – £22,472 per business.

With a debt of £26,049 per business, the South East is the second least indebted region after the East of England, followed by the East Midlands at £28,290 per business and surprisingly –London with a debt of £30,410 per business. The highest debt per business after Northern Ireland was observed in the South West (£44,838), followed by Scotland (£41,975) and Wales (£41,972).

The Difference Between the Most and Least Indebted City Per Business Nearly than 20-Fold

Turnerlittle.com also looked at the UK Finance data on business lending by cities and towns and instantly noticed a major difference in the levels of business debt across the UK. But since towns and cities with a higher concentration of businesses were expected to have high levels of SME borrowing, the data on SME lending by postcode was compared with the number of active businesses in that area, again using the ONS dataset on Business demography. In total, 71 cities and towns across the UK were analysed.

With a staggering debt of £357,770 per business, Exeter is deemed the worst city for business debt in the UK, followed by Gloucester (£296,110), Ipswich (£233,171) and Norwich (£229,074). The difference between Exeter and Sutton, which has the lowest debt per business – £18,825 is thus nearly 20-fold. The second lowest levels of debt per business after Sutton was observed in Wigan (£21,812), Sunderland (£24,576), Luton (£27,391) and Leeds (£30,425).

The National Average Debt per Business is Exceeded by More than 90% of Analysed Towns and Cities

The level of SME lending doesn’t necessarily indicate the financial health of the borrowers nor the local economy. Looking at regional and sub-regional productivity in the UK, no direct correlation between the level of SMEs debt and productivity was observed. Despite that, Turnerlittle.com didn’t expect to see such a difference in the levels of business debt between the most and least in debt cities. They were also very surprised to discover that as many as 65 cities and towns out of a total 71 or 91.5% exceed the average national debt per business.

James Turner, MD of Turnerlittle.com commented:

“Even though we didn’t find any direct correlation between the level of business debt and economic productivity, abnormal deviation from the national average in either direction probably isn’t a good sign. While excessive borrowing often goes hand in hand with financial hardships, extremely low debt levels may indicate that businesses are perhaps not investing enough in innovation, research and development. Either way, it’s bad news for the economy.”

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How Open Banking is Changing the Way We Bank

Open Banking is the new digital innovation sweeping UK banking services, which could contribute more than £1billion annually to the UK economy. Open Banking is the UK’s implementation of the EU’s Revised Directive on Payment Services from 2015. There will be various measures introduced, but the main one being banks will now be able to provide financial information such as your spending habits, regular payments and the companies you use with you permission. Measures such as this will subsequently improve competition in the sector, as it will allow savers to compare rates between banks and switch in minutes online.

The new reforms have only just come into force in the UK last month, and also allows customers to see all their money on one screen, also enabling them to better access budgeting tools. The changes have been enforced by big banks by the Competition and Markets Authority, however, news only recently emerged that six of the major lenders – HSBC, Barclays, RBS, Santander, Nationwide and Bank of Ireland, all missed out on the opportunity to implement the new digital tool back in January, and have now been allowed more time to comply with the innovation.

Banks such as Danske, Lloyds and Allied Irish Bank all transitioned on time, and data suggests that a small number of transfers have been made since the new rules, as lenders continue the trial the new service. It is said that a more comprehensive and detailed trial will take place in the next month, eliminating any issues as quickly as possible.

Researchers at the Centre for Economics and Business Research (CEBR) claim that despite only a few small transfers made, the impact on the UK economy will ultimately give the GDP a £1 billion lift, as well as creating more than 17,000 jobs, further prospering the chances for the UK economy to grow and to flourish in such an uncertain time post Brexit. The CEBR report, which was commissioned by Trustpilot has found that a greater transparency on customer credit risk is more than likely to reduce risk premiums and therefore expand credit access. However, the Open Banking changes could make customers more prone to scams, as customers have repeatedly said they are reluctant to share financial data with third parties. Further to this, a recent survey by Accenture has found that 69% of banking customers will not consent to sharing their financial data with any company.

So, if you are interested in Open Banking and how it works, you will be asked to agree or to decline for open banking when you subscribe to a product or service with a bank. The company you’re subscribing to will only ask for the data it needs to provide the service. They will also infer exactly what data they need, how long they need to gather the information, and what they are to do with it. At any given time, you can revoke your permission for them to use your own personal financial data.

But what’s most important is knowing who to share your data with. You must remember to be vigilant and not give out your data to just anyone. You will only be protected by your bank if something were to happen. Providers who have been authorised and regulated by the FCA will offer two types of services:

Account information services – this will allow you access different bank accounts you may own, in one place, so you can thoroughly learn how to budget as effectively as possible where all your money may sit.

Payment initiation services – this service will enable you to pay companies directly from your bank account and not using a third-party service such as Visa or MasterCard. This could expand to tech giants such as Amazon, where purchasing an item is a quick and convenient process.

If you’re interested in learning more and whether open banking is right for you, have a closer read into the initiative plans and gain as much advice and information before agreeing to sharing your personal financial data.

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The Highest “Death Rate” in Business, REVEALED

Per the Business Demography release, published by ONS in November 2017, there were approximately 2.85 million active businesses in the UK in 2016; an increase of 135,000 on 2015.

The research details the number of business births continued to increase from 383,000 to 414,000 between 2015-16, a birth rate of 14.6%.

“Birth rate” definition: New business registrations are referred to as business births. The birth rate is calculated using the number of births as a proportion of the active enterprises.

In 2016, the highest rate of business births continued to occur in business administration and support, at 23.1%, compared with a rate of 20.4% in 2015. The second-highest rate occurred in transport and storage, at 23%, compared with 20.3% in 2015.

London had the highest business birth rate, at 17.5% – followed by the East (15.8%) and West Midlands (15.5%.) Northern Ireland has the lowest birth rate, at 10.2%.

Image Credit: Sergey Nivens/Shutterstock

Since 2011, the rate of business births has continued to exceed the rate of deaths and the gap in rates has continued to widen in recent years – until 2016. This may reflect the uncertainty around the economic outlook towards the end of 2016, following the UK’s EU referendum’s results.

Indeed, the number of UK business deaths also increased from 283,000 to 328,000 between 2015-16, a death rate of 11.6%.

“Death rate” definition: Businesses that have ceased to trade are referred to as business deaths. The death rate is calculated using the number of deaths as a proportion of the active enterprises.

The highest business death rate, at 17% is seen in finance and insurance, compared with 13.3% in 2015. Followed by business administration and support, at 15.4% – compared with 10.1% in 2015. Turnerlittle.com sought to identify the top 10 businesses with the highest death rates:

From the infographic created by Turner Little, we can see that whilst finance and insurance (17%), business administration and support (15.4%) and property (15.2%) hold the top 3 highest death rates, exceedingly low death rates can be found in transport and storage (10.9%), production (20.8%) and retail (10.5%.)

The region with the highest business death rate was London, at 14%, followed by Scotland at 11.8%. Northern Ireland had the lowest death rate, at 9.2%.

Furthermore, it was found the UK five-year survival rate for business born in 2011 and still active in 2016 was 44.1%. By region, the highest five-year survival rate was seen in the South West, at 47%, while the lowest was in London, at 41.7%.

By broad industry, some notably high five-year survival rates include health, with a survival rate of 54.1% and property, with a survival rate of 51.1%.  Accommodation and food services had the lowest, with only 34.6% of businesses surviving for five years.

Image Credit: Rawpixel.com/Shutterstock

Certainly, in the creation of new business, no matter the industry, there is huge risk. Entrepeneur.com highlights risk to be accredited to 5 key areas:

  1. Product Risk

If you can’t explain what you sell, why you’re selling it and why people should invest – you won’t secure interest and sales.

  1. Market Risk

Knowing your customer and why, how and where they buy related products is arguably the most important risk factor to assess before launching a product.

  1. Financial Risk

Make sure to identify key business milestones and schedules that clearly identify the points in time when equity or debt investments are necessary to reach the next major milestone.

If you can articulate your business plan, growth path and reach each milestone successfully, this builds confidence in potential investors.

  1. Team Risk

Invest in people who believe in your company and instil a sense of confidence that they can help get your company across the finish line – and maintain it.

  1. Execution Risk

Many entrepreneurs can become so mired in the details that they completely lose sight of the overall company trajectory and strategy. Participate, evaluate the risks and don’t be afraid to pivot.

Managing director of Turnerlittle.com, James Turner notes:

“It is obviously, incredibly important to evaluate all types of risk when thinking about starting – or investing in – a business. Financial loss can be devastating.

However, the potential for failure should never put you off trying. My advice would be to research, thoroughly, read case studies, speak to people who have both achieved success and faced loss, and always tread with awareness.”

Image Credit: Sergey Nivens/Shutterstock

Feature Image Credit: Sergey Nivens/Shutterstock

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American Attitudes Towards Cryptocurrencies

Over the last few years, cryptocurrencies have been all the rage. This year particularly, their popularity has not only spiked, but the price of certain cryptocurrencies has gone through the roof. For instance, one Bitcoin in 2010 was worth a mere $0.08, now it’s above an eye-watering $6,000. Etherium, the next biggest cryptocurrency after Bitcoin, has seen its value rise by more than 2,500% over the course of 2017.

So what exactly are cryptocurrencies you ask? Cryptocurrency is essentially just digital money designed to be secure and in many cases, anonymous. Unlike normal currency – pounds, euros, US dollars etc – cryptocurrencies are not regulated nor controlled by any banks, governments or financial establishments.

With regards to one of its biggest unique selling points, cryptocurrencies are secure because every small or big transaction that takes place is stored and verified on a database (known as a blockchain) which is shared on hundreds of computers across the world. This makes transactions visible to everyone and therefore a matter of public record.

The research

Interested in what the public think of cryptocurrencies, Turnerlittle.com analysed findings from YouGov, who surveyed over 1000 American adults (18+), to identify their attitudes towards the phenomena of cryptocurrencies.

The Findings

The research revealed that 66% of Americans have heard of bitcoin but just 13% of them have used it. Etherium, the next biggest cryptocurrency after Bitcoin, was far less known -with only 24% of Americans having heard of it. Out of those aware of Etherium, 21% said they had used it before.

With respect to what Americans thought people used cryptocurrencies for, the majority seemed unsure or unaware, as 40% stated they “don’t know”. Interestingly though, 29% of Americans did think people used cryptocurrencies mainly for “purchasing illegal goods/services through the dark web”. Gaining a deeper insight into this belief, 24% of Americans do firmly believe cryptocurrencies are primarily just for illegal purchases as opposed to 19% who either think it is for legal purchases only or equally for both (legal and illegal purchases).

When asked if they would be interested in using a cryptocurrency instead of US dollars, an overwhelming 64% of Americans said they would not be interested. Contrastingly, 18% of Americans did say they would be interested in making the switch.

Looking into the future, 35% of Americans do believe there will be a wider acceptance of cryptocurrencies as a means of transaction in the next 10 years. Though, 28% don’t consider this to be the case and 37% simply have no idea. Moreover, 51% of Americans don’t think cryptocurrencies in the next 10 years will replace traditional currency. A minority of 18% felt the opposite, with the view that cryptocurrencies will put traditional currency into extinction.

Photo credit:  Wit Olszewski/Shutterstock 

James Turner, of Turner Little:

“The emergence of cryptocurrencies has been nothing short of extraordinary. With the current value of established cryptocurrencies surging and with many more emerging, they are certainly here to stay. What’s truly going to be interesting is how cryptocurrencies evolve as they become more and more prominent. Looking ahead, if they have greater transparency and do not become subject to aggressive regulations, they have the characteristics and desirability to be adopted by a wider array of stakeholders including well-known merchants and mass consumers”.

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The New Era: Cryptocurrencies

Over the last few years, cryptocurrencies have significantly grown in prominence. Despite their rise, many still don’t know or fully understand what cryptocurrencies really are. With this in mind, Turnerlittle.com decided to provide a clear starter guide on cryptocurrencies including their potential pros and cons.

What is Cryptocurrency?

Cryptocurrency is essentially a digital currency which is used to make payments of any value without any fees. Unlike fiat currency (e.g. Euro, US Dollar etc) – cryptocurrencies are not regulated nor controlled by any banks, centralised financial establishments or governments. Instead, users on a network validate every transaction to primarily make sure that the same digital ‘coins’ are not being spent twice by the same person.

Who created Cryptocurrencies?

Bitcoin, the first cryptocurrency, was created by Satoshi Nakamoto in 2008. Despite many efforts to identify Satoshi, he or she remains anonymous but is credited with inventing the concept of cryptocurrencies.

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How do Cryptocurrencies Work?

Cryptocurrency runs on something called a ‘blockchain’, which is a decentralised ledger run by “miners”, whose powerful computers keep a record of all the transactions made and held by currency holders as well as solving complicated maths problems to generate more coins. To avoid a blockchain being vulnerable to any potential exploitation from opportunistic hackers, data is therefore stored across a network.

What are the Main Benefits of Cryptocurrencies?

Transparency

With the blockchain monitoring all transactions – once a transaction is completed and recorded on the open ledger it cannot not be changed. Transactions are available for authentication for anyone at any time. No person, organisation or body – regardless of stature and authority can manipulate – thus providing an added dimension of security.

Inflation

Traditional currencies are prone to experiencing the effects of inflation as economies prices fluctuate (per their ‘Retail Price Index’ and Consumer Price Index’) and central banks print more money. Certain cryptocurrencies such as Bitcoin are less likely to experience this as there are a finite number to ‘mine’.

Greater Control

Users of cryptocurrencies can make payments and store money without the requirement of using their name or going through a bank – this beneficially protects individuals from identity theft. Transactions also cannot be faked or reserved.

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What are the Main Drawbacks of Cryptocurrencies?

Mistrust

Despite their growth over the last few years, cryptocurrencies are still in their infancy with regards to public awareness. Those that do know about cryptocurrencies, there seems to be mistrust amongst them as they do not fully understand how it all works.

Not Recoverable

Whereas banks and building societies have their customers covered in the unfortunate scenario of a security issue such as having their details stolen or account compromised – cryptocurrencies cannot be recovered as there are currently no mechanisms to do so.

Untraceable

For those seeking to engage in criminal/illegal activates, the untraceable nature of cryptocurrencies can make them a very attractive proposition. This association highlights the ‘dark’ nature of cryptocurrencies whereby unscrupulous individuals and groups can use it to avoid detection.

Conclusion

As with physical currency, cryptocurrencies has flaws. With the price of Bitcoin hitting a record high early this year and as other cryptocurrencies grow in importance – they will actively improve them to make them more attractive to a wider audience. This includes further education on its function and competitive advantages over traditional currencies.

Photo credit: Yeexin Richelle/Shutterstock 

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New jobs created from Foreign Direct Investment in 2016-17

Before Brexit was decided upon, numerous commentators, experts and financial professionals expressed their concerns on what a calamitous decision ‘Brexit’ would be for the country. One of the reoccurring worries among these individuals was the impact uncertainty from the vote would have on the future of foreign investors and multinational businesses when looking to invest in the UK.

As it so happened, on 23rd June 2016, 52% of UK’s electorate voted to leave the European Union compared to the 48% wanting to remain. A shock result. Before getting into the true consequences Brexit has had on foreign investment a year on, here at turnerlittle.com, we decided to assess why foreign direct investment (FDI) is so vital to a country’s economic prospects.

The Importance of Foreign Direct Investment (FDI)

FDI can be significant towards any country’s growth. Its primary benefits include the creation of new jobs as well as notable increases in tax revenues. Additionally, FDI is also a great facilitator of knowledge transfer – especially towards improving business infrastructure, processes and technologies. Overall such positive outcomes from FDI can surge a country’s productivity and competitiveness on a global scale and set up valuable long-term ties between different countries.

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FDI and UK’s Job Market

Turner Little sought to find out how many new jobs had been directly created as a result of FDI for various sectors of business in the UK. We analysed the latest data from Gov.uk to reveal the following:

Overall, foreign direct investments made in the financial year of 2016-17 are projected to create 75,225 new jobs within three years. FDI projects in business and consumer services are set to create the highest number of new jobs at 13,603 – the equivalent of 262 new jobs per week. Thereafter, FDI projects in software and computers are expected to create the second highest number of jobs at 10,971. The third highest number of new jobs from FDI projects will be created in the financial services sector at 8,847.

On the other end of the scale, FDI projects in the extraction industries will create the least number of new jobs (642) – the equivalent of just 12 jobs per week. Only slightly higher with more new jobs (787) predicted from FDI projects made in 2016-2017, was the chemicals and agriculture sector.

The Effect of Brexit on FDI

According to a report released by one of the big four accounting firms EY at the start of 2017, Brexit had decreased the UK’s attractiveness for foreign investors by 34%. The report which consulted 254 senior business executives from investment companies around the world with investments in Europe, found that the ‘impact of Brexit’ ranked as the third highest factor which would have an impact towards their next investment decision in Europe. Although, other research from EY surveying 505 international decision-makers, did find the UK reigning supreme as one of the most desirable destinations for foreign businesses to invest in new projects over the course of the year.

The findings from the latter of EY’s reports were supported by figures released from the Organisation for Economic Co-operation and Development (OECD). The OECD showed that UK FDI inflows had soared to £197 billion in 2016; an increase of 20% from the previous year (2015 – £164 billion) and signified the highest level of recorded inflows since 2005. In fact, even in a post-Brexit United Kingdom, it has still managed to attract big investments.

Just a month (July 2016) after the EU referendum, pharmaceutical juggernauts GlaxoSmithKline stated they were investing £275 million in three of its manufacturing sites in the UK. Three months (September 2016) on from the EU referendum, Apple announced their intention to create new headquarters at London’s Battersea Power Station. Even in 2017, large scale investments showed no alarming signs of stagnating, such as Boeing who confirmed their plans to invest £20million in their first UK manufacturing plant in Sheffield (February 2017). More recently, Rolls-Royce announced a huge £150 million investment in UK aerospace facilities. All these ‘investments’ affirming the UK’s ability to continually attract FDI, even in the backdrop of a challenging Brexit environment.

As it stands, EU countries currently account for 45% of the FDI stock in the UK (£431 billion out of a total of £950 billion), compared with 27% for the USA and 28% from all other countries.

Photo credit: rawpixel.com/Shutterstock 

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