GDP rising 2.1% in March, the fastest monthly growth since August 2020, Douglas Grant, Director of Conister, part of AIM listed Manx Financial Group, said: “The estimated rise in UK GDP for March is positive, falling in line with what we’d expect as restrictions are lifted and the economy reopens. However, we must remember that the UK’s SME debt burden is ballooning, and we are in serious danger of seeing a relentless flow of weak zombie-like companies falling off a loan default cliff. By the end of this year, it is expected that companies will have borrowed more than £60 billion to help them to survive the pandemic, according to the EY Item Club, and bank lending to businesses, including through the government schemes, could also increase by 5.4%, equating to an extra £26 billion net of repayments. It is imperative that we avoid compounding this cycle by focussing solely on supporting sectors and businesses that are resilient and agile enough to adapt to the new economy.

"We believe the introduction of the recovery loan scheme (RLS) will certainly help. We are pleased to see the Government look beyond the initial triage phase and instead identify, prioritise and protect our most resilient individual business sectors and segments. However we must also acknowledge that default rates across the country will increase significantly over the next three to six months and unfortunately there is more pain to come. Demand for appropriate debt collection and management services for SMEs will grow as the business sector recovers from the damage caused by the pandemic. 

"At Conister we have delivered upon all of our initial objectives. We have allocated our full CBIL and BBL allocation and have applications which we hope can be accredited under the newly launched government support initiative, the Recovery Loan Scheme. We will focus on lending this to robust business sectors that we believe will thrive in the future. Conister will continue to do all it can, working alongside Government and traditional lenders, to support British businesses."