A leading credit insurer is reporting an ‘uplift’ in the number of credit limit requests being made as UK businesses aim to capitalise on the positive mood resulting from the Diamond Jubilee celebrations, and it hopes to see greater confidence with the upcoming Olympic Games.
The increase in requests, which is indicative of increased trading activity, is mostly originating in consumer related areas, according to David Smith, Euler Hermes’ Head of Risk Underwriting: “Despite concerns from business figures and economists over the impact of the Diamond Jubilee – in particular the fall in output as a result of a lost working day – the extended bank holiday weekend and celebrations have boosted the national mood, and with it consumer confidence at least in the short term.”
Figures from the Bank of England’s May Inflation Report show that it expected the double bank holiday to knock 0.5 percentage points off the second quarter Gross Domestic Product (Q2 GDP). However, there have been some positive announcements following the Jubilee – figures from the British Retail Consortium show UK total sales were up 3.4 percent against a 0.3 percent decline in May 2011, and the Confederation of Business Industry says more than four in 10 retailers saw sales increase in the first two weeks of June compared to the same period last year.
“There are obvious winners when it comes to ‘stay at home’ events,” says David, “but there is also a knock on effect in leisure and tourism sectors for consumers who do venture out, and it is also worth considering a possible increase in online sales for other retailers as consumers increasingly shop from home.”
As momentum builds with the upcoming Olympic Games, Euler Hermes predicts that the current ‘feel-good’ factor will be extended: “Often events lead to a short-lived boost to confidence but we expect this to continue through the summer,” he says.
“It is critical that retailers grasp this opportunity, and capture the imagination of the consumer with their offering – and strive to translate any uplift in consumer optimism into money at the tills,” he concludes.