Ten trillion dollars is an incredible sum, but that’s how much taxpayers have subbed the global financial sector in the recession. It’s US$1,660 for everyone on the planet.
While we may blame the banks for landing us in this mess, few dispute that governments had to underpin them with our cash. Most of us probably also take comfort from seeing the Barclays and HSBCs returning healthier profits. But there’s also a growing chorus, not least in the timber trade, calling for some payback. The finance industry has to restore its capital position but, as we backed it when it needed support, it must now loosen the credit strings to help industry get back to growth.
This also applies to the credit insurance sector (CI). It may not have had the same direct cash support as the banks, but by rescuing the latter, taxpayers effectively saved CI businesses too. In addition the UK government introduced a CI top-up scheme which was designed to help companies get insurance, but also effectively gives the CI industry added security. However, so far, with some honourable exceptions, credit insurers are not playing ball and, according to various sources, it’s actually getting tougher for timber traders and their customers to get CI. Insurers are accused of taking a sectoral approach to business, assessing the risk of an industry rather than individual companies. Due to its reliance on construction, timber seems to have been written off as too hot to handle and, as the government top-up scheme only kicks in where some commercial insurance has already been secured, it mainly helps firms in industries that credit insurers would insure in any event.
Timber companies are now calling on the government to take firmer action on CI and business credit generally. Some, like Nigel Williams of Premier Forest Products, are also urging businesses to explore CI alternatives, with his company using facilities from a more helpful bank instead. If more follow this route, maybe credit insurers will realise that they’re the ones who will suffer long term for not supporting the timber trade.
