UK's Construction and Food Industry Exhibitions Show Resilience Amidst Unbalanced Economic Rebound
In the current economic climate, businesses are advised to reassess financial risks, strengthen credit control processes, and ensure trade credit protection measures are in place, according to credit insurance provider Atradius. The company's June 2022 insurance claims data reflects the vulnerabilities facing UK sectors, particularly those exposed to consumer spending and global supply chain variability.
Subdued Consumer Spending Growth and Confidence
Despite some personal financial resilience, broader consumer confidence remains below pre-pandemic levels, limiting discretionary spending and impacting sectors dependent on consumer demand, such as retail, hospitality, and leisure. About 16% of consumers still report not spending due to financial pressure, showing a persistent constraint on spending power.
Rising Business and Labour Costs
UK businesses face increasing labour costs and higher input prices, pressuring profit margins in consumer-facing sectors. The second quarter of 2025 showed a slowdown in GDP growth with a clear impact from rising costs and global trade turbulence affecting output and investment.
Global Supply Chain Volatility and International Trade Uncertainty
Sectors reliant on imports/exports are pressured by geopolitical and trade policy uncertainties, causing delayed investment decisions and contributing to supply chain disruptions. This results in increased insurance claims as businesses face order cancellations, defaults, and delivery delays.
Softening Consumer Demand Amid Inflation
Inflationary pressures weigh on household budgets, especially with rising essential costs like energy and housing, contributing to polarised consumer behavior—some cut back on discretionary spending, others manage through budgeting but remain cautious.
Sector-specific Impacts
The service and construction sectors show some resilience, but weaker industrial output and business investment point to fragile conditions especially for manufacturing and trade-exposed firms tied to global supply chains.
Insurance Claims on the Rise
The increase in claims comes against a backdrop of stubborn inflation (currently at 3.6%) and a base interest rate of 4.25%, conditions which continue to strain margins, especially for SMEs. However, James Burgess, Head of Commercial at Atradius UK, commented that the rise in claims raises a flag but also shows encouraging signals in sectors like construction and food.
Improvements in Certain Sectors
The construction industry has seen improvements, with a decrease of -22% in claims since January. Similarly, the food sector has shown steady improvements since the start of the year, with a decrease of -34% in claims since January.
The Importance of Insurance in a Crisis
In the wake of the COVID-19 pandemic, the majority of the population realized the importance of insurance. The cost of borrowing remains high, and supply chain disruptions continue to impact import-heavy sectors like electronics and transport.
GlobalData, a leading data and analytics company, reported that the top 20 Asia-Pacific (APAC) public insurance companies reported an aggregate premium of $908.6 billion in 2021. The preliminary consolidated net result of Unipol Gruppo S.p.A. in 2022 is around 9% higher than in 2021, primarily driven by a strong performance in the Non-Life business segment. Proactive credit management is increasingly vital in this challenging economic climate.
[1] Source: Office for National Statistics (ONS) [2] Source: Atradius UK [3] Source: GlobalData [4] Source: Confederation of British Industry (CBI) [5] Source: YouGov
Motor insurance claims could potentially rise as businesses face financial challenges and strain, given the current economic climate and the impact on consumer spending and global supply chain variability. In the process of reassessing financial risks, businesses might consider motor insurance as an essential tool to mitigate unforeseen events and protect their finances, particularly in sectors susceptible to increased insurance claims, such as construction and food, where improvements have been noted.
