Bibby Financial Services (BFS) has warned that a rise in bad debt among small and medium-sized enterprises (SMEs) shows the UK is heading for an economic downturn.
In its ‘SME confidence tracker’ report, the funder reported that the value of unpaid invoices written-off by each business increased by 70% year-on-year to £20,403 in the second quarter of this year.
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BFS also reported a slowdown in investment, finding average planned investment falling to £65,782 in Q2 2017 compared with £101,920 in the same period in 2016.
David Postings, global chief executive officer at Bibby Financial Services, said SMEs were often an indicator of wider economic performance.
He said: “Right now we are seeing signs that businesses are delaying investment decisions. Furthermore, data showing rising bad debts among SMEs could indicate a build-up of pressure in supply chains throughout the country.
“It is possible that this is a sign that the UK is heading for a recession, but it’s still too early to call. We will know for sure over the coming months.”
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By GlobalDataPostings said SMEs and larger businesses were unsure about the future economic landscape, and urged the UK government to provide clear direction on Brexit negotiations.
He added: “Once a greater degree of political stability emerges between the UK and the EU, SMEs will begin to regain their confidence.
“However, for the time being, the UK’s 5.4m small and medium-sized businesses are sensing that there could be tough times ahead.”
