Claims fell by 18% in Q1/24 year-on-year, according to the latest data from trade credit insurer, Atradius. Despite this, high claims one some key sectors mean the impact of a persistently high interest rate could weigh heavy on many businesses, the insurer warns.

The UK’s second-largest trade credit insurer shows claims increases in the energy, fuel, metals, paper and packaging and food sectors. The energy and fuel sector had a 75% increase in payment defaults in Q1/24 YoY. Growing instability could be fuelled by new border controls that will come into effect on 30th April, it said, which could cost businesses up to £2bn; increase inflation; and have a knock-on impact on UK/EU trade. The border controls are the latest challenge for the sector post-Brexit, with global conflict also pushing prices up for consumers.

Food and drink, the largest manufacturing sector in the UK (bigger than automotive and aerospace combined), claims increased by 44%. Metals increased by 55% in Q1 of 2024. In March 2024 alone, there was an 83% increase YoY in payment default claims.

Despite the economic challenges faced by many UK and global industries, consumer confidence has increased by 14 percentage points in a year (36% compared to 24%) – even though 55% of consumers reported that the cost-of-living crisis had not eased for them.

James Burgess, head of commercial and insolvency expert at Atradius said: “Consumer confidence is blossoming as we approach the warmer months, which brings renewed hope and opportunity for consumer sectors. For retailers and hospitality firms, there is a clear opportunity to ‘spring’ into a more fruitful season – if they can adapt to the changing needs and expectations of hardworking families, who will continue to prioritise value for money.

“Payment default trends give us a unique insight into the frontline of business operations, which can be quite revealing in the wake of big events, like the recent dip into recession. We work closely with firms across the UK to monitor the real-world impact of economic and sector events, so we know that the UK isn’t out of the woods yet. Business leaders must take action to respond to instability in their sector and the wider economy.”

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