- 1 in 4 Brits use savings for holidays instead of homes
- Number of first-time buyers aged 16-34 decreased by 49% since 1981
- 41 per cent of 35-44 yearolds not earning enough to consider saving for a deposit
- 21% of over 55s rent instead of owning their own home
New research by leading price comparison website MoneySuperMarket today reveals that the true extent to which the face of a first-time buyer in the UK is changing, with the number of first-time buyers overall dropping by 24% since 1994, and the number of lone first-time buyers seeing a significant 45% decrease. 
When looking at the changing face of home ownership, the data finds that a large portion of Brits are putting their dreams of buying a home on hold, instead using their savings for short term commitments such as holidays or travelling (43 per cent). In fact, only one fifth of Brits (20 per cent), would put their savings towards home ownership, with 22% preferring to put money away for a rainy day rather than buying a home and 27% saving for a holiday.
This could be a result of the fact that home ownership has become increasingly more difficult over the last 20 years, with the average yearly salary accounting for only 11 per cent of the average house price in 2018, compared to 23 per cent in 1999. In fact, the demographic of a homeowner has dramatically changed over the years, with 16-24 year olds particularly affected as the amount of homeowners within this age bracket has seen a dramatic 68% drop between 1981 and 2016.
Due to the rise of house prices, larger deposits and increased rental costs, Brits are finding it increasingly harder to save. In fact, 25-34 yearolds now pay an average of 39 per cent more on rent than those aged 55 and over did before purchasing their first home. The data also reveals that there has been a 54% increase in the amount of those renting in the 34-50 bracket from 1996 to 2016, with 60 per cent of 35-44 year old renters citing a preference for renting over home ownership and 41 per cent stating that they weren’t earning enough to even consider saving for one.
Brits also found themselves compromising on many aspects when looking at purchasing home. Most commonly, first-time buyers found they had to compromise on the size of their property, with 36 per cent finding this to be the case, while 29 per cent of those surveyed found they had to settle for a less preferable location.
Specifically, those in the West Midlands had to make the most concessions when purchasing their first homes. In fact, more first-time buyers in the West Midlands (42 per cent) found they had to compromise on location when buying their first home than those in London (40 per cent). 48 per cent of West Midlanders also found they had to compromise on their budget, the most of any region in the UK. On the other hand, for Londoners the biggest issue was found to be space, with 51% stating the size of the property to be their biggest compromise. 
Kevin Pratt, consumer affairs expert at MoneySuperMarket, commented:
“It can be very disheartening for prospective buyers, especially younger ones, to look at the cost of buying a house. What used to be affordable twenty years ago is now proportionally double the investment, and accordingly we’re seeing a move towards favouring renting and even a lack of interest in saving towards a deposit.
“In a positive change, insurance costs have actually dropped slightly since 2013 across building and contents, but consumers still need to make sure they’re looking for the best deals every time they choose a provider – especially with 57 per cent already concerned about the high costs of saving for a house.”
For more information on how conditions for first-time buyers have evolved you view the full research on the MoneySuperMarket website here.
What Does 2021 Look Like for Corporate Treasurers?
By Mathilde Sanson, the Chief Customer Officer at GTreasury, a treasury and risk management platform provider.
2020 proved just how quickly a crystal ball can get shaken like a snow globe and, unfortunately, the resulting upheaval is expected to affect treasury teams throughout 2021. But even as conditions begin to stabilize and the pandemic wanes, some seismic shifts are on tap for corporate treasurers. Here are five predictions of what is to come for corporate treasury in 2021:
1) Ongoing economic uncertainty will accelerate treasury teams’ pursuit of improved efficiencies.
The pandemic has largely enhanced the treasury team’s stature (and visibility) within their organizations. Treasury serves as the sharp-eyed lookout for companies navigating choppy financial waters and, at least in recent years, that role has never been more important than early on in the pandemic. As treasurers provided cash forecasting and risk assessments at a faster clip, companies consolidated global cash positions to the U.S. at an unprecedented scale and, at the same time, tapped lines of credit. Survey results from Strategic Treasurer’s Global Recovery Monitor continued to show this year that treasurers acted swiftly at the moment of peak uncertainty. The frequent cash visibility reporting that treasury teams provide proved essential in empowering executives to pursue data-driven courses of action capable of curtailing liquidity risks.
The new year will see this state of play continue – albeit with some key adjustments. The ongoing uncertainty is forcing treasury teams to become leaner, yet no less crucial. Organizations will necessarily respond by implementing solutions that offer greater automation and integration; in other words, enabling treasury to do more with less. The distributed workplaces resulting from the pandemic will also endure, even in its aftermath. To adapt to this new reality, companies will require treasury systems that provide seamless and remote 24/7 access to real-time information.
Expect treasury teams to increasingly adopt technology strategies that can provide a stronger and more integrated foundation for all treasury activities, including fast, accurate, and in-depth cash visibility. Companies with active digital automation projects will accelerate progress on those initiatives as well, in some cases introducing new capabilities in stages where appropriate. Regardless of the how the pandemic timeline plays out in the coming year, treasury automation and process optimization will be particularly high-value targets in 2021.
2) Cash visibility and forecasting remain an elevated priority.
Expect cash visibility and forecasting to be at the top of many treasury team agendas as sales and production continue to work toward full recovery. The frequency of cash forecasting will remain elevated, with many treasurers shifting from traditional quarterly or monthly reports to weekly or even daily forecasts to better account for volatility. Treasury departments with the desire to increase forecasting frequency will seek new tools and technology, and AI-based capabilities are expected to now be at the center of many implementations. In fact, many have already begun. As one director of treasury operations told me, “Introducing AI into treasury forecasting lowered our variances from 30% down to 3%; we’re believers and plan to continue to expand the role AI plays in our treasury operations throughout 2021.”
On balance, most corporate treasurers were early in predicting and preparing their organizations for the protracted pandemic recovery timeline they are now experiencing. Treasurers will continue to execute and iterate on those existing strategies for the duration of COVID-19 uncertainty. On a company-by-company basis, the impact of new pandemic spikes will depend on the preparedness and capabilities that treasury teams have previously implemented. Treasury teams that lack robust automation capabilities and effective treasury and risk management systems (TRMS) will be less likely to keep pace with required frequent cash reporting if the effects of the pandemic worsen. Teams in this position will also find it harder to transition away from manual processes, as cash visibility and forecasting demands absorb the extra bandwidth that would be necessary to successfully implement automation solutions. Expect treasurers to pursue relationships with software partners and adopt add-on tools that quickly introduce automation to help the treasury team continue to meet new demands.
3) Treasurers will pursue more cohesive technology ecosystems.
For treasurers, the ultimate technology objective is establishing frictionless data management and payments workflows. These processes must be enabled by a treasury and risk management system strategy capable of seamlessly integrating component cash, risk, and payments technologies into a single platform. Treasurers are also careful to select platforms that integrate harmoniously with all fintech solutions used across their ecosystems, from payments, FX, and fraud prevention tools to ERPs, business intelligence tools, and beyond.
Specifically, look for more treasurers to put these systems into place in 2021 as they pursue simplified connectivity to global banks and accounts, bank transfer automation, and the capabilities to send and receive information alongside payments. In the coming year, treasurers will similarly implement solutions that deliver strategic gains. This will include the abilities to drive CFO and treasurer decision-making, flexibility in adding new features, and ease-of-use and user experience improvements. By first eliminating friction among the various technologies crucial to treasury functions, these in-demand treasury system features will allow treasury teams to operate far more capably and efficiently in 2021.
4) Benchmark rate reform will be a top priority, with the deadline to switch to new rates looming after 2021.
After several years of news and headlines about the end of LIBOR, treasury professionals must pay close attention in 2021. Even with the LIBOR phase-out deadlines in flux, treasury teams need to accelerate their preparedness for the transition during the coming year. Companies that have already begun the process of aligning their existing loans and contracts with new benchmark rates will be strongly positioned for an easy transition, while those off the pace (perhaps delayed in their planning due to pandemic-fueled priorities in 2020) will need to increase their efforts.
2021 will see treasury teams reviewing their existing loans, credit, and investments connected to LIBOR, and negotiating with lenders and servicers to establish post-LIBOR replacement rates and fallback provisions. They will stay busy with training, as operating in an environment defined by new benchmark rates will require that all new contracts still incorporate adequate fallback provisions.
5) Mergers and acquisitions will increase in the pandemic’s aftermath.
As the effects of the pandemic begin to ease, the low cost of cash and the extra equity many companies have available to them will spur a surge of merger and acquisition activity. Treasury teams will need to play a crucial role in these efforts, ensuring the necessary cash is available to complete what is expected to be a flurry of transactions. Treasurers will be responsible for accurately vetting the cash positions, financial instruments, and risk profiles of the companies being acquired. Or on the flip side, if being acquired, the treasury team will need to provide the necessary data and reports to ease the transition.
Taken together, these predictions anticipate an active and demanding year for treasury teams, but also one in which those teams have the technologies in place to meet demands efficiently and effectively.
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Why You Should Take On Debt To Stop Dilution
By Blair Silverberg, CEO of Capital
Imagine an exciting space dominated by two major companies, each growing and developing at about the same pace. To get ahead, they keep raising more money, but interest rates are low and the global stock of wealth is at an all-time high, so there is unlimited money to raise. Soon enough, their employees are dealing with substantial dilution because each round of equity wipes out the growth in valuation between rounds. Both companies become unicorns and announce their IPOs, but employees are hardly seeing the payoff.
This is happening right now in SaaS, meal delivery, ridesharing, and dozens of other spaces that you and their employees might not even realize.
What if it didn’t have to be like this? What if one company could get ahead without diluting their employees’ shares?
This is why most companies raise debt — and it’s only a matter of time until venture-backed companies do, too.
Why Dilution is Bad for Your Company
When the venture industry was small and companies like Google and Amazon went public after raising less than $50M, dilution was miniscule and thus not often a top concern for executives. The world has changed, with some companies raising billions before ever going public, but mindsets haven’t caught up.
The impact dilution can have on employee morale and retention can be substantial. When employees are first hired, they’re often excited to receive shares as part of their employment. But after repeated dilution, they’ll be asking HR, “Why aren’t my shares worth as much as they used to be? When will I get more?” Some companies start giving out bonuses and extra shares to placate everyone, but this can only go on for so long. Giving out more shares to combat dilution leads to more issues; those shares have to come from somewhere. Usually, these shares come from the founders, who eventually give up so many that they might only own 1% of their own company. That’s a major blow to those who worked so hard to get the company off the ground.
For employees, dilution means they may leave the company if they decide their shares are worth too little, especially if the competition can offer them a better deal. And if employees determine that this problem is industry-wide, they might leave the space entirely. The downside to tech becoming mainstream is that dilution has become unsustainable to employees and founders alike.
The Solution: Raise Debt
Companies are generally funded in one of two ways: equity financing or debt financing. Equity requires giving up a share of the company in exchange for capital. The biggest benefit is that this money doesn’t have to be repaid. Debt, on the other hand, does have to be repaid with interest. But while debt comes with a repayment obligation, it doesn’t come with dilution. Once the debt is repaid, the lender has no further involvement in your business. You aren’t selling a part of your business to get funding.
Understanding your capitalization options can be essential to getting ahead of the competition. When your competitors are raising equity to finance their business, they’re giving employees one fewer reason to stick around. If you raised debt instead, you could still offer employees valuable shares while receiving much-needed financing. You could also stand out from the pack by creating a candidate-friendly brand around prudent wealth creation. Once you start using debt intelligently, your access to credit capital expands, giving you a permanent head start over the competition.
Why don’t more companies raise debt?
Outside of tech, most companies do. It’s normal to raise debt once a company has a working concept. But the tech space hasn’t always looked the way it does today. Early on, it was so inexpensive to start technology companies that raising debt wasn’t necessary; equity financing was miniscule compared to the ultimate market value of these companies at liquidity events. Over the years, it’s become ingrained in tech culture to pursue equity funding, with such a heavy focus on raising the next round that many founders forget you even can raise debt.
But times have changed, and financing will, too. We saw this shift before with Mike Milken, who was a major player in the development of the high-yield bond market. In the early 1970’s, Milken noticed that risky turnaround businesses could be financed with “junk bonds” — bonds with higher interest rates than those offered to more creditworthy borrowers. He famously calculated that despite their higher default rates, the higher interest rates on these bonds produced sufficient compensation for the higher risk. This opened up financial capital to a group of companies previously financed only by equity and created a market that today is worth more than $2T. From the emergence of the high-yield bond market, we know how powerful access to debt financing can be. It gave rise to legendary investors and operators from Carl Icahn to T. Boone Pickens as well as iconic companies from Time Warner to Hilton Hotels and Safeway. For companies who have a kernel of a working business model, the benefits of debt financing are massive. Eventually, tech will go the way of all other industries, leaning on debt as a major source of financing.
Debt financing is one of the best alternatives to taking on equity, especially when trying to mitigate dilution. If you want to attract and retain top talent, then ensuring you don’t dilute their shares will go a long way. The transition to debt financing is coming. Soon, it’ll be common practice across the entire tech space. If you start using debt intelligently now, you’ll have a competitive advantage. You’ll be able to get one step ahead of the competition with access to capital that others refuse to utilize. This not only benefits your employees today, but also your entire organization in the long run.
Britain to publish new weekly consumer spending data
LONDON (Reuters) – Britain’s statistics office said it would publish new weekly consumer spending data from Thursday, based on credit and debit card payments information collected by the Bank of England.
The figures come from Britain’s CHAPS high-value payments data and cover the proceeds of recent credit and debit card payments made by payments processors to around 100 major retailers.
The ONS said the figures would provide greater insight into spending on social activities and other consumer services that are not captured by its monthly retail sales data.
(Reporting by David Milliken, editing by Elizabeth Piper)
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