Small and medium-sized firms struggling with ‘a hat-trick of hurt’
Britain’s army of more than a million small and medium-sized businesses are stockpiling raw materials and ordering components six months ahead to overcome supply shortages that prevent them from meeting customer demands.
With construction costs reaching fresh record highs and import prices surging following a fall in the pound, businesses reported that much of their cash was tied up in securing the basic raw materials and components needed to supply customers.
Simon Grey, head of business at the accountancy body ICAEW, said companies were suffering “a hat-trick of hurt” that was forcing them to limit production.
“Businesses are reporting that things are so bad they cannot plan for the future. There is a breakdown in confidence and the uncertainty is changing their behaviour, making them take no risks and cut investment,”
Business groups have urged the prime minister to agree a rescue plan to support companies clobbered by rising energy and fuel costs, wage inflation and the surging price of imported goods and raw materials.
Diesel prices have rocketed to above £2 in many areas, increasing transport costs, while the 10% fall in the pound this year has raised import prices.
Brexit trade restrictions have also deterred firms from exporting to the EU and made it more difficult to import goods from the continent, according to a report last week by the Resolution Foundation.
The manufacturer’s organisation, Make UK, said its members reported widespread stockpiling to secure increasingly scarce supplies from countries like China, and to protect themselves against the prospect of even higher prices later in the year.
“Our recent reports have found that investment cash and expansion plans are being shelved because more funds are tied up
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