- UK economic rebound slows as consumers cut back spending
- But Brits are still buying pizza, which is good news for Fulham Shore
- “Zombie" companies see problems ahead as insolvency protections are loosened
Economic recovery slows
The UK economy is catching its breath.
After several months of steady growth propelled by the loosening of lockdown restrictions, the rebound in GDP slowed to barely a crawl in July, as consumers started to cut back on spending and a shortage of raw materials hit the construction sector. Output rose just 0.1 per cent compared with the previous month, the Office for National Statistics said today, significantly lower than the 0.6 per cent forecast by economists polled by Reuters.
This represented the weakest expansion since January, meaning the UK economy was still about 2.1 per cent smaller than it was before the pandemic. But there is one area at least where consumers are not tightening their purses... OT
Extra topping, please
Punters are back into pizza: Franco Manca owner Fulham Shore (FUL) said in a trading update that sales in recent weeks at the pizza chain and its other restaurant line, The Real Greek, were sitting a quarter above the same period in 2019. The company added tourists and office workers returning to city centres had boosted footfall, even before many people flocked back to their desks after the end of the school holidays.
This comes not long after Fulham Shore released a dire-looking set of full-year results, covering the 12 months to 28 March, when it revealed sales fell over 40 per cent compared to the year before, with workers on furlough as recently as June.
The company said its city centre and West End restaurants had been improving rapidly week-on-week, but sales at these venues were still down on the same period in 2019. The new trading update does not include this week’s numbers, however, which would have been bolstered by the big return to offices. AH
Government starts to ease insolvency protection
The debt collectors are coming.
The UK government said yesterday that it will start to roll back measures protecting companies from insolvency next month, after it initially prevented creditors from pursuing indebted businesses during the pandemic.
In a temporary move to help smaller companies, however, creditors will only be able to enforce repayment of debts totalling £10,000 or more. A ban on pursuing commercial rent arrears will also be extended to March.
The government says the protections can be loosened now the economy is returning to normal trading conditions, but the easing of these measures could add to the pressure on businesses as consumer spending slows and the Delta variant continues to spread. As Arthur Sants explained recently, up to 14 per cent of the UK’s publicly-listed companies may have been hanging on by a thread even before the pandemic.
If any of these so-called "zombie" businesses are finally wiped out in the wake of the Covid crisis, shareholders will be last in line to get paid. OT
