Data from the latest Office of National Statistics (ONS) Business Insight and Conditions Survey (5 May 2022) shows 61% of businesses have increased costs in just one month due to rising costs with 30% of businesses impacted by the increased price of materials. ONS data published as fresh challenges await businesses with interest rates rising by 0.25% to 1%
Ed Rimmer, Chief Executive Officer, Time Finance:
“Today’s data from the Office of National Statistics puts into black and white some of the major challenges businesses are currently facing. This is especially the case for some of our major sectors, with the ONS’ data showing that nearly 50% of manufacturing businesses and 60% of accommodation and food service businesses have been affected by rising costs of materials. These challenges are further compounded by the announced increase in interest rates. No sooner are businesses adjusting to soaring costs, do those costs rise once again, making financial planning almost impossible. This isn’t just putting strain on day-to-day cashflow, it is also curtailing businesses’ investment in growth and that will have a much greater economic impact further down the line.
“Our research has shown that due to soaring costs, inflation and supply chain issues, many business owners are having to increase their own costs. Some by up to a staggering 30%. For those businesses, this is a necessary move if they want to remain afloat but it will only serve to amplify the domino effect this has on our economy and perpetuate the cost of living crisis. The cost of living and cost of doing business crises are intrinsically linked and you cannot address one without addressing the other.
“Ultimately, the Government must look at both immediate and long-term support for businesses to overcome the challenges they are facing and in doing so, they will stimulate economic growth, which in-turn will enable businesses to increase their wage bills to help combat the rising cost of living. The lending industry is working tirelessly to provide finance solutions that inspire growth and confidence, but we alone cannot solve the problem.
“In the Spring Statement, the Chancellor promised a lot to businesses in the coming Budget. At the time, much was said about weak private sector investment hampering our global productivity. Through our own research, we have found that one in 10 businesses are planning to reduce personnel, scale back on investments and pull out of certain markets as a result of rising costs. So the reality is that in the short time since the Spring Statement, the problems surrounding a shortfall in private sector investment have worsened. We all wait with anticipation to hear in October exactly what the Government intends to do to support skills and innovation, but it is clear that action is needed right now. Waiting until the Autumn Budget will only serve to stunt economic growth further. Supporting businesses now is a necessity.”