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Monday 05 December 2022 at 6:00 AM
UK businesses are worried that the supply chain chaos and rising costs that have punctuated this year will spoil the lucrative Christmas trading period, a new survey released late last night revealed.
According to consultancy BDO, almost half of British companies are concerned about the rising cost of sourcing materials to manufacture products, with businesses sweating the most common problem.
UK businesses have suffered this year due to shortages of key materials such as semiconductor chips, supply chains struggling to regain full strength after the pandemic and labor shortages.
Putin’s invasion of Ukraine has fueled strained trade flows, fueled by rising energy costs and rising inflation fueled by consumer spending.
“2022 was a year of recovery for both businesses and the wider economy. Instead, they continue to face tough challenges such as the energy crisis, political uncertainty and record levels of inflation,” said Ed Dwan, partner at BDO.
Retail, leisure and hospitality companies are skeptical about reaping the rewards of big-spending shoppers over the festive period. Many of these companies make most of their profits during Christmas.
One in three pubs, bars and restaurants believe Brits will downsize this year, BDO said. Many of these companies are still yet to recover from the Covid-19 lockdown wreaking havoc on their balance sheets.
Prices rose 11.1 percent in the year to October, the fastest acceleration in 41 years, outpacing wage growth, putting a strain on household finances.
The Bank of England has raised interest rates eight times in a row to curb high inflation in the UK. However, this aggressive tightening cycle is putting pressure on businesses’ bottom lines.
Nearly a fifth of businesses taking on new debt are worried they will be unable to pay back lenders due to high borrowing costs, despite nearly a third worrying.
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