In this edition:
The U.S. introduced trade tariffs of a minimum of 10% with additional tariffs for a number of countries and products being deferred for 90 days. The exception being China, who reacted by imposing tariffs on U.S. goods resulting in trade tariffs between the two countries reaching 125%.
In a recent publication, Coface examines the possible impact of a trade war on the two economies. The U.S. will see dramatic increases in the price of manufactured goods and supply chain disruptions affecting key sectors such as automotive, chemicals and electronics, which could push the country into recession. In the worst-case scenario, there could be a flight of capital and a collapse in the U.S. dollar.
Atradius examines the impact a trade war would have on insolvencies worldwide. While worldwide insolvencies were expected to remain stable in 2025 and drop by 5% in 2026, a trade war is anticipated to lead to a 6% increase in 2025 and 5% in 2026.
Company Watch have published a whitepaper reviewing the retail sector. They rank the top 20 retail companies in terms of sales and profit, highlighting strengths and areas for improvement. They go on to give an in-depth examination of three of the companies with a high-risk score: WD FF Ltd (owners of Iceland), ASOS Plc and Superdry Plc.
The outlook for the sector is seen as challenging, with increasing inflation and households saving post-Covid rather than spending. Following the Autumn Budget, retail sector costs have increased due to higher national insurance contributions and an increase in the minimum wage. There were 1,921 insolvencies in the sector in 2024, up 47% on 2019 (pre-Covid) levels.
Owners Modella Capital are proposing a company voluntary arrangement to restructure Hobbycraft. Under the plans, nine stores would close with the loss of 100 jobs. Another 18 stores will only remain open if landlords agree to rent cuts. Modella Capital are also reported to be planning to restructure The Original Factory Shop.
The high street stores of WH Smith were recently purchased by Modella Capital, who specialise in taking over troubled retailers.
Atradius reports that U.K. trade stands at 88% of pre-Brexit levels, while exports are at 82%. Meanwhile EU trade volumes have recovered to January 2020 levels. The picture is mixed across different trades. Agriculture for example has suffered labour shortages, while in the automotive industry 10% tariffs between the U.K. and the EU, planned for January 2024, have been postponed for three years.
Sectors with a high exposure to Brexit such as steel, logistics and constructions face uncertainty while aerospace, paper and packaging, and renewable energy are predicted to show more resilience.
Tokio Marine are expecting GDP to grow and interest rates to fall but at a slower level than initially expected. Increased wage costs and higher national insurance contributions, and the phasing out of business rate relief will increase companies’ cost base. Unlike many European markets, the U.K. saw a fall in insolvencies in 2024 but higher costs, and the uncertainty regarding a potential international trade war, could see company failures rise in 2025.
We are delighted to announce the appointment of Ian Watts as Growth Leader for our Trade Credit business in the U.K. Ian joins from credit insurer Mercury after nearly two decades of experience at Marsh. He also held key roles at Allianz Trade from 1992 to 2004.
There were 5,998 insolvencies in England and Wales in the first quarter of 2025. This was an increase of 8% compared to the previous quarter and by 4.4% compared to the same period last year.
If you’d like to discuss these topics further, please do not hesitate to contact me.
