Experian UK Business Credit Trends Index: Q1 2024

Spring growth likely, but beware late frosts

Today’s lenders will do well to heed this traditional gardener’s mantra as we head towards the summer. There has been an almost audible sigh of relief from businesses – and no doubt the government – that the shallow recession in the second half of 2023 did not last into 2024 Q1. Instead, the tentative signs of growth we noted in our January index are continuing.

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In this report, we cover:

SME credit trends to watch
We look at demand and supply, the role of alternative lenders, and credit performance highlights.
Macroeconomic outlook
How economic trends are shaping SME resilience.
SME demands
How demand for credit is reflected into lending and SME delinquency rates.

A sneak peek into...

Experian UK Small and Medium-Sized Enterprise (SME) Credit Trends Index

John Griffiths, Market Engagement Director, Experian

Foreword

GDP grew by 0.3% in January, 0.2% in February, and 0.4% in March, with growth primarily driven by the service sector.

Indeed, service is the only sector to have made any real progress since the pandemic, having risen to 4.5% from pre-pandemic levels while other sectors continue to stagnate; goods are up just 0.7% while construction actually fell by 1%.

Inflation, meanwhile, continues to fall from its October 2022 peak, and while February’s figures bucked this trend, the general movement is downwards, with the rate falling to 3.2% in March. Forecasts suggest that inflation is likely to drop to the government’s 2% target in the coming months. Adding to the sunnier picture, unemployment remains low and real wages are growing, giving more people more money in their pockets. All of which continues to point to likely cuts in Bank of England interest rates.

Risks remain, however. As global conflicts continue to develop and, at the time of writing, campaigning for the general election is in full flow, there are still uncertainties to the direction of travel that could cool the economic outlook and jeopardise growth in the months ahead.