25% jump in firms facing ‘critical’ financial distress, with property and construction sectors featuring heavily, says Begbies Traynor

More than 47,000 UK companies are on the brink of collapse after a 25% jump in the number of businesses facing “critical” financial distress in the final three months of 2023, according to a report.

It marks the second consecutive quarter-on-quarter period when critical financial distress has risen by a 25%, the latest “Red Flag” report by insolvency specialists Begbies Traynor found.

The construction and property sectors accounted for 30% of all businesses facing critical financial distress.

The quarterly rate of increase in the number of companies facing critical financial distress grew by 32.6% in the construction industry, by 41.3% in health and education, a quarter in real estate and property services and 24% in support services.

Eighteen of the 22 sectors covered by the report recorded double-digit percentage growth in the number of firms whose finances have reached critical condition.

Julie Palmer, a partner at Begbies Traynor, said the tough macroeconomic conditions had created a “perfect storm” for UK businesses.

“After a difficult year for British businesses that was characterised by high interest rates, rampant inflation, weak consumer confidence and rising and unpredictable input costs, we are now seeing this perfect storm impact every corner of the economy,” she said.

The Bank of England raised interest rates from 0.1% at the end of 2021 to 5.25% to try to tame inflation. That has significantly increased the cost of borrowing for UK businesses, preventing many from papering over the cracks with cheap debt.

“Hundreds of thousands of businesses in the UK, who loaded up on affordable debt during those halcyon days, are now coming to terms with the added burden this will have on their finances,” Palmer added. “Sadly, for tens of thousands of British businesses who should be looking ahead with some degree of optimism, the new year will bring a fight for survival.”

The report found that 539,900 UK firms were facing “significant” financial stress by the end of last year, up by 12.9% on the third quarter of 2023.

Read more at: theguardian.com

The collapse of three US regional banks – First Republic Bank, Silicon Valley Bank, and Signature Bank – marked some of the largest failures in the banking system since 2008. Central banks contained the “mini-crisis” earlier this year with forced interventions and the mega-merger of Credit Suisse and UBS. Despite the interventions, global banks still axed the most jobs since the global financial crisis.

A new report from the Financial Times shows twenty of the world’s largest banks slashed 61,905 jobs in 2023, a move to protect profit margins in a period of high interest rates amid a slump in dealmaking and equity and debt sales. This compared with the 140,000 lost during the GFC of 2007-08.

“There is no stability, no investment, no growth in most banks — and there are likely to be more job cuts,” said Lee Thacker, owner of financial services headhunting firm Silvermine Partners.

FT noted that corporate disclosure data and its independent reporting did not include smaller regional bank cuts, indicating total job loss could be much higher.

At least half of the job cuts came from Wall Street lenders struggling with Western central banks’ most aggressive interest rate hikes in a generation.

The most significant cut of any single bank was at Switzerland’s UBS.

Morgan Stanley reduced jobs by 4,800, Bank of America by 4,000, Goldman Sachs by 3,200, and JPMorgan Chase by 1,000. As a whole, Wall Street cut 30,000 workers this year.

Read more at: zerohedge.com

The typical American household must spend an additional $11,434 annually just to maintain the same standard of living they enjoyed in January of 2021, right before inflation soared to 40-year highs, according to a recent analysis of government data.

Such figures underscore the financial squeeze many families continue to face even as the the rate of U.S. inflation recedes and the economy by many measures remains strong, with the jobless rate at a two-decade low. The analysis, from Republican members of the U.S. Senate Joint Economic Committee, taps government data such as the Consumer Price Index and Consumer Expenditure Survey to examine the impact of inflation state by state.

Even so, many Americans say they aren’t feeling those gains, and this fall more people reported struggling financially than they did prior to the pandemic, according to CBS News polling. Inflation is the main reason Americans express pessimism about economy despite its bright points, which also include stronger wage gains in recent years.

The Biden administration called the analysis “flawed.” Citing federal labor data, a White House spokesman noted that per capita disposable income has risen 16% since December 2020, just prior to President Joe Biden’s inauguration.

“14 million more Americans have jobs today than when President Biden took office and household disposable income is up by almost $21,000 since December 2020,” the spokesman said in a statement to CBS MoneyWatch. “And what Congressional Republicans pushing this one-sided study won’t admit is that their proposals would raise costs on the middle class and cut Social Security and Medicare so they can give rich special interests more tax giveaways.”

To be sure, economists point to a number of pandemic-related issues as the cause of high inflation, rather than decisions from any one political party. For instance, spending bills were signed by both Presidents Donald Trump and Joe Biden that put stimulus money into the hands of millions of Americans, while global supply-chain snarls and labor shortages drove up the cost of goods and services.

But even as inflation is now cooling rapidly, many consumers say they aren’t feeling it, with a new Bankrate survey finding 60% of working Americans say their income has lagged inflation has over the past 12 months.

“On the edge”

Average hourly pay for workers has increased robust 13.6% since January 2021, although that lags the 17% increase in inflation during the same period, according to government data. The main categories requiring heavier spending for consumers simply to tread water: food, transportation, housing and energy, which together account for almost 80 cents of every $1 in additional spending, according to the Republican analysis.

“Middle- and low-income Americans aren’t doing well enough — they are living fragilely on the edge,” said Gene Ludwig, chairman of the Ludwig Institute for Shared Economic Prosperity (LISEP), a think thank whose own analysis found that the income needed to cover the basics fell short by almost $14,000, on average, in 2022.

Read more at: cbsnews.com

Although inflation is cooling, households are still feeling squeezed.

As of October, 60% of adults said they are living paycheck to paycheck, according to a new LendingClub report. The figure is unchanged from last year.

Overall, 4 in 10 consumers consider themselves worse off relative to 2022, the report found.

Shoppers expect to overspend during the holidays

As leaders of the BRICS nations-Brazil, Russia, India, China and South Africa prepare for the group’s summit from August 22-24 in South Africa, discussions of creating a new BRICS currency to offset the dominance of the US dollar are gaining momentum.

“One of the main topics on the agenda, other than the group’s expansion, is a push to conduct more trade among BRICS nations in local currencies and reduce the reliance on the US dollar,” Alarabia reported.

The bloc has been working to reduce its reliance on the US dollar for more than a decade, but after Russia invaded Ukraine, when the US imposed severe economic sanctions on Moscow, the concept of de-dollarization—or lessening the US dollar’s dominance in international trade and finance—became more popular.

“The BRICS countries are trying to accelerate the process of reducing their reliance on the dollar,” Papa, a Senior Fellow at the Fletcher School, Tufts University, told Al Arabiya English. “While Russia has always been committed to de-dollarization due to sanctions-related risks, now we see other countries, especially Brazil, becoming more vocal about acting on this agenda.”

Although the movement towards de-dollarization is gaining momentum, it is neither simple nor quick, given the numerous economic and political obstacles that still need to be overcome. For instance, the US dollar makes up 58 per cent of the world’s foreign exchange reserves and more than 80 per cent of all international trade.

Despite the dollar’s dominance, some analysts believe it is plausible to envision a new BRICS currency being used for trade.

“It (de-dollarization) might work this time because their (BRICS) ambition for an actual currency seems to have scaled down. It is no more this fanciable notion of a shared currency like the Euro; instead, they seem to be focusing more on the use of the currency in international trade, which is why it is more seriously a viable possibility,” Jo Sullivan, a former White House economist, told Al Arabiya English.

According to Sullivan’s analysis in a Foreign Policy piece, each of the BRICS countries is an “economic heavyweight” in their respective regions and can, therefore, cover all their import costs independently.

Read more at: www.khaama.com

Ahead of the August 2023 BRICS summit in South Africa, reports and commentators speculated that member countries might introduce a common currency backed by gold. The archived article contrasted those predictions with remarks from New Development Bank executive Leslie Maasdorp, who described a shared currency as a longer-term ambition rather than an immediate plan. BRICS members were exploring greater use of national currencies in trade, but the anticipated gold-backed currency announcement had not been confirmed. The debate reflected wider interest in alternatives to dollar-dominated international payments.

Read more at themostimportantnews.com

Bank of England data published in 2023 showed a net withdrawal of approximately £4.6 billion from UK household bank and building-society accounts in May, described at the time as the largest monthly outflow since records began in 1997. Analysts considered several possible explanations, including rising living costs and customers moving money toward higher-yielding investments. The figures highlighted pressure on household finances and the changing effects of higher interest rates, without by themselves establishing a widespread banking collapse.

Read more at www.zerohedge.com

The global climate cult is getting ready to kick its war on food into overdrive with 13 nations – many of them major cattle and food-producing states led by the United States, Argentina, Brazil, Chile and Spain – signing onto a commitment to place farmers under new restrictions intended to reduce emissions of methane gas.

The Global Methane Hub announced in a May 17 press release that agriculture and environmental ministers and ambassadors from 13 countries, including the United States, have signed a commitment that pledges to reduce methane emissions in agriculture. The U.S. was represented by Biden’s climate czar, John Kerry.

What does this mean and why should you care? We’ll break it down.

According to the press release issued by these nations and posted at Global Methane Hub:

“Last month (in April 2023), the Global Methane Hub collaborated with the Ministries of Agriculture of Chile and Spain to convene the first-ever global ministerial on agricultural practices to reduce methane emissions. The ministerial brought together high-ranking government members to share global perspectives on methane reduction and low-emission food systems. The gathering led to a statement in which the nations committed to support efforts to improve the quality and quantity of, and access to, finance for climate change adaptation and mitigation measures in the agriculture and food sectors and to collaborate on efforts aimed at lowering methane emissions in agriculture and food systems.”

Conference participants included the Food and Agriculture Organization of the United Nations, Climate & Clean Air Coalition, Inter-American Institute for Cooperation on Agriculture, the World Bank, the Organization for Economic Co-operation and Development, and the Inter-American Development Bank.

The World Bank, another creation of the post-World War II, U.S.-led liberal rules-based order, has been talking a lot lately, along with the U.N., about a coming famine. The World Bank issued a white paper just last week, on May 22, titled Food Security Update: World Bank Response to Rising Food Insecurity.

The director of the United Nations World Food Program has also been putting out, starting in September of last year, dire warnings about a coming global famine.

Read more at: leohohmann.com

Argentina struck a deal with Beijing on Wednesday to stop using U.S. dollars to pay for Chinese imports and embrace the yuan instead.

The measure, driven by Argentina’s leftist President Alberto Fernández, is designed to relieve the South American country’s dwindling dollar reserves, AP reports.

The deal further enhances China’s rise on the world stage and the diminished role of the U.S. on a host of fronts under President Joe Biden.

After reaching the agreement with various companies, Argentina will use the yuan for imports from China worth about U.S.$1.04 billion from next month, accelerating trade with China as Beijing seeks to gain a further foothold in South America.

In November last year Argentina expanded a currency swap with China by $5 billion in an effort to increase its yuan reserves.

Read more at: www.breitbart.com

Food prices in Britain have hit their highest level in nearly a half-century amid continued double-digit inflation, while wages fell yet again in real terms.

According to research conducted by the Office for National Statistics (ONS), the consumer prices index (CPI) remained in double digits at 10.1 per cent in March. The inflation rate — the highest in Western Europe — was slightly down from 10.4 per cent from the previous month, however, food prices remained high, hitting levels not seen in 45 years.

According to the government statistician agency, the prices of bread and cereals were up 19.4 per cent in the year to March, the highest rate recorded on record since the government began tracking such figures in 1989. Meanwhile, the sharpest price increases were recorded among food items produced with olive oil which were up by 49 per cent on the year, followed by milk products at 38 per cent, and ready-made meals, which were up 21 per cent over last year, the BBC reported.

The annual rates for chocolate, confectionery, and hot beverages also all hit their highest levels on record.

Read more at: www.breitbart.com