Firms warn of ‘unprecedented’ cost pressures as inflation fears grow | Business News

A business group warned of the impact of the « unprecedented » rise in inflation on its members, but said that companies are concerned about another rise in interest rates, fearing that it will lead to a recovery from the emerging Corona virus.

The British Chambers of Commerce (BCC) said there was already strong evidence of an economic slowdown in the last quarter of 2021 ahead of the Bank of England. raise interest rates In December to combat rising inflation expectations.

Borrowing cost has been adjusted from Corona virus disease Crunch low from 0.1% to 0.25%, despite the elephant in the room, and energy costs, being out of the bank’s control.

Then, policymakers also raised their expectations for inflation, warning that it is set to hit 6% this year, led by a sharp increase in energy bills after wholesale gas costs rose at unprecedented rates in the latter half of 2021.

unless Government talks with energy suppliers Putting in place a plan to cushion the increase, the industry has warned households and businesses that their bills will skyrocket.

Energy UK has estimated that domestic customers will incur a 56% increase from April, when the price cap – which currently halts billing – is adjusted again.

Companies are already beginning to deal with sharp increases on top of a host of other cost increases, from raw materials to wages.

The survey showed that one in four of the 5,500 companies questioned were concerned about rising interest rates. A record three in five expect their prices to rise in the next three months.

Supply chain disruption has also been an ongoing topic in many sectors.

BCC Head of Economics, Soren Theroux, said: “Our latest survey indicates that the UK’s economic recovery slowed in the last quarter of 2021 as rising headwinds increasingly limited leading indicators of activity.

“The continued weakness in cash flow is worrisome as it leaves companies more vulnerable to the economic impact of Omicron, rising inflation and other potential restrictions.

“Rising raw material costs, higher energy prices, and the reversal of the value-added tax cut for the hospitality sector are likely to push inflation over 6% by April.

« The marked rise in concerns about rate hikes underscores the need for the BoE to proceed cautiously on rate increases to avoid undermining confidence and an already fragile recovery. »

« With companies now having to grapple with the impact of Omicron and further changes to the rules for the import and export of goods to the EU, there are significant hurdles for companies in the coming months, » added Sivon Haviland, director general of the organisation.

The BCC survey was released hours after the inflation issue took hold of PMQs in the House of Commons.

Boris Johnson tells MPs it will « undoubtedly be a difficult period » after Labor deputy leader Angela Rayner ran Sir Keir Starmer infected with Covid – He accused the government of negligence.

« The prices of daily commodities are rising dramatically out of control, the hard-earned savings will be damaged and workers’ wages will not go that far, » she said.

Rayner said « serious solutions » were needed to prevent people from « falling into poverty or debt » as a result of inflation.

Johnson also denied that he called inflation fears « unfounded » – Even though Sky News made him say exactly that on camera.