How Barclays Employs Client Data to Gauge the Economic Landscape in the UK?

Introduction

Barclays introduces its Business Prosperity Index, which integrates market research with proprietary data from one million business customers. A quarterly business performance tracker has been created by Barclays. This tracker integrates lending, liquidity, and international payments data from approximately one million UK business customers with external market research to assess economic confidence. The Business Prosperity Index, which was created in collaboration with the Centre for Economics and Business Research (Cebr), assesses the current performance and development prospects of the UK business sector by utilizing quarterly surveys of 1,000 business leaders and anonymized transaction data. The index endeavors to offer a comprehensive perspective on business sentiment by integrating forward-thinking survey responses with actual financial data. The inaugural index indicates that UK businesses intend to increase investment by 1.4% in Q3 2024 compared to the same period last year, a 0.7% increase from Q2. The data indicates that businesses are prioritizing staff training and research and development, with 44% of firms concentrating on workforce development and 35% on product enhancement.

Transaction data from Barclays business accounts suggests that financial resilience improved in Q3 2024 compared to Q3 2023. Although cash inflows decreased by 3% year-over-year, a more substantial decrease in outflows resulted in a 17% increase in net cash flow, which is the difference between the amount of money that enters and exits business accounts. The value of drawn loans, which is the total quantity borrowed against available credit facilities, increased by 4.8% annually in Q3 2024, a significant increase from the 3.6% increase in Q2.

46% of firms had previously suspended investment plans but now intend to proceed, according to a supplementary survey of 500 business executives conducted following the UK government’s recent budget. The research suggests that 37% of businesses are more inclined to pursue additional funding to invest in development, while 61% are confident in the budget’s economic impact. Barclays has implemented a £22bn ($27.8bn) Business Prosperity Fund for its corporate and business banking clients, both existing and new, in response to these discoveries. Supporting both new lending and refinancing of existing facilities is the objective of the fund. The index underscores the current workforce challenges in the United Kingdom, with 62% of business executives reporting that they are having difficulty obtaining skilled labor.

Of these, 77% say that the shortage has a detrimental effect on their growth potential. The issue is most severe in Scotland, where 92% of businesses report skills shortages, followed by Yorkshire and the Humber at 90% and the West Midlands at 88%, as evidenced by regional variations. The data also indicates that consumer behavior patterns are evolving. Businesses are reporting that customers are scrutinizing value propositions (20%), pursuing lower-cost alternatives (25%), and extending purchase decision timelines (25%). Retention strategies, such as supply chain restructuring and product modifications, have been implemented by 84% of firms in response. The index indicates a period of post-peak inflation, during which inflation rates have decelerated but businesses continue to encounter elevated production costs.

In order to preserve customer relationships, 65% of organizations have implemented price reductions, either throughout their entire product line (31%), or through targeted promotions (41%). 52% of businesses have committed to expanding their product and service offerings in response to the budget announcement, despite the pressures they face. 42% of organizations prioritize staff development as an investment priority, indicating that the emphasis on training remains robust.