The UK's household finances are in a terrible state.
The Markit Household Finance Index, out this week, is at its lowest level for two and a half years. There has been a record fall in the amount of cash available to spend, as fast-rising prices and bills have offset very low mortgage rates for most families.
However, there is also evidence that these same families are expecting something of a "break in the clouds". They are slightly less concerned about job stability than they were a few months ago, their incomes from employment have stabilised in nominal terms at least, and they have lowered their inflation expectations a little.
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On the face of it, it is hard to see this as anything other than wishful thinking (particularly on the inflation bit, given the renewed calls in the US and the UK for more quantitative easing). But another survey also out this week suggests some hope.
According to Investec Specialist Private Bank, the UK's entrepreneurs are in a pretty buoyant mood. Less than a year ago, they were all so irritated about our rising taxes that 16% of them said they were formulating plans to drop their UK residency.
Now only 4% of them are making the same threat. Why? Because they reckon that the payback for coming up with the taxes is living in an economy where they can make money. 42% think things are so good that they are likely to launch new businesses or products over the next year. 54% think their revenues will rise by 10% or more over the same time period and 26% are optimistic enough to think that even their profitability will "rise dramatically" in the near future.
But the most important thing they think in terms of what matters to the rest of us is that they are going to need more people: 68% of the successful entrepreneurs interviewed said they plan to increase the number of people they employ.
This survey may be slightly over optimistic in that all the companies interviewed were "contacts" of Investec's. And if you want to raise money from a specialist bank at some time in the future, you aren't that likely to tell them that you expect revenues, profits and employee numbers to fall ever, let alone in the near future.
Nonetheless, the numbers are all up significantly since the last of these surveys and the very fact that Investec is doing these surveys at all is interesting in itself. Why? Because the reason for it is to advertise the fact that, as its press release on the matter says, "Investec Specialist Private Bank is proactively looking to lend more to its core audience of mid-sized companies who wish to raise between £5 million and £50 million to support organic or acquisitive growth strategies. The bank's integrated finance offering means it is able to create debt structures combining revolving, amortising, senior and mezzanine lines of credit. This includes asset-based lending where the bank will provide leverage against receivables, inventory, plant and machinery, property and cashflow/acquisition finance loans."
Recovery from financial crises is generally a horrible decade-long slog thanks to the fact that the necessity of balance sheet repair among big banks means there is little credit available for small and medium-sized companies to use for expansion. We've written before about the rise of non bank lending in the UK but if specialist banks such as Investec are expanding into the market as well, perhaps the mild optimism of today's households (albeit coming from a very low base) is not as misplaced as the history of banking crises would have one believe?
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