February: Confidence at all-time low in manufacturing sector; economic activity set to drop, and more

Confidence low
The
British
Chambers of Commerce (BCC) reports that confidence among the
manufacturing and services sectors in Q4 was the worst since its records began
in 1989, dropping to -32% from +46% the same time in 2007. Its quarterly survey
measured the responses of nearly 6,000 businesses on issues from the domestic
market and investment to prices and exports. BCC director-general David Frost
labelled the results “frightening”, noting that the scale and speed of the
economic decline was moving at an unprecedented rate.

It’s not cricket
The Centre for Economic and Business Reform
(CEBR)
expects the steepest single-year drop in economic activity in 2009 since 1946,
according to a report detailing its top ten predictions for 2009. CEBR forecast
a 2.9% fall by year end compared to 2008 and forecast borrowing by HM Treasury
could reach almost £1bn over the next three financial years. However, it is not
all doom and gloom: A section in its report predicts England will win the Ashes
against Australia 2-1 this year.

Pension brain teaser
Most finance directors are not up to date with risk and regulation around their
company’s defined benefit pension scheme, because schemes are “too heavily
regulated”. According
to
HSBC Actuaries and Consultants, just 4% of FDs fully understand all
the issues surrounding pension risk, while 19% have a partial understanding of
the schemes and do not view it as a top priority.

Pensions hurt dividends
UK companies are increasingly concerned about the impact on cashflow from rising
funding commitments to their pension schemes amid falling revenues, says
PricewaterhouseCoopers. Of around 100 companies surveyed, 80% were concerned
about this and 45% said it could affect their ability to pay dividends. Within
the FTSE-100 group surveyed, 86% registered concern about cashflow being
impacted by rising pension fund commitments, and 69% worried about paying
dividends.

Pension assets wiped
Around £65bn in value was wiped from the assets held by pension schemes among
FTSE-100 companies in 2008,
Deloitte
reports. It also says that FTSE-100 pension schemes are currently in deficit to
the tune of £130bn. However, these figures contrast with those from
Pension
Capital Strategies, a defined benefit pension adviser, which
estimates that those same schemes are actually in surplus to the tune of £12bn.

Crunch bites on
Companies are seeing a reduction in trade because of the effects of the credit
drought, says insolvency practitioner
Harris
Lipman. Thirty-six percent of respondents to a poll it ran agreed
with this statement, while 26% said they are finding it harder to obtain credit.
Forty-eight percent are concerned about their personal investments and 38% are
finding their customers are taking longer to pay.