If there is a word that aptly describes the current economic conditions, it’s caution. Caution among businesses when it comes to making decisions regarding investment; caution among shoppers when walking the high streets; caution among Europe’s governments when making policy decisions that could shape the economic recovery.
One instance where caution is perhaps most warranted is when referring to the eurozone economy. Between April and June of this year, the eurozone finally exited its 18-month recession after posting higher-than-expected growth of 0.3%. In September, the European Central Bank even upgraded its forecast for overall GDP growth in 2013.
Yet it’s hard to get too excited following such a torrid period. More than 19 million people remain out of work in the eurozone, with president of the ECB, Mario Draghi, admitting: "I am very, very cautious about the recovery. I can’t share enthusiasm. Let’s see, these shoots are still very, very green."
Nonetheless, it does indicate that things on the continent are moving in the right direction, a direction that could lead to better prospects for British businesses. As European companies grow in confidence and spending power, UK exports are only likely to increase. Although the Office for National Statistics has reported the trade deficit increased during July, exports to the EU actually grew.
While the UK government has made several efforts to facilitate overseas trade through its UK Export Finance arm, businesses have been benefiting greatly from the cash flow solutions provided by the asset-based finance industry.
New statistics from the Asset Based Finance Association shows that businesses using export finance solutions are dramatically growing their sales. Export factoring clients, for instance, registered a 29% annual increase in total sales during the second quarter of 2013. Sales among export invoice discounting clients, meanwhile, rose by 20% over the same period.
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The figures provide further proof of the benefits provided by asset-based finance in the current climate. While total advances to UK clients increased by 10% to £17.5bn (€20.8bn) in that time, and clients’ sales grew by 16%, the sector continues to assist businesses of all sizes across Europe.
In July, the EU Federation for the Factoring and Commercial Finance Industry reported that, despite the turbulence witnessed in the eurozone during 2012, €170bn of working capital was advanced to 160,000 businesses across the continent last year. This enabled clients to increase their sales by 5% to €1.2trn.
With businesses using asset-based finance evidently equipped to seek and secure growth, we might just have found a group of companies who are full of confidence and low on caution.
Evette Orams is managing director of Hilton-Baird Financial Solutions