UK’s mid-size businesses fear supply chain disruptions and rising costs
Rising costs, particularly for energy, and instabilities within supply chains are now front and centre for UK businesses
Supply chains dominate the concerns of mid-size UK businesses heading into the winter period says an October survey from accountancy and business advisory firm BDO.
In the survey, 29% were worried about missing revenue targets as a result of supply chain disruptions, and 35% were concerned that these issues could potentially prevent them from fulfilling contracts, but this was an even higher 38% among retailers and wholesalers.
Sitting within these wider supply chain concerns are fears around the rising cost environment for most UK businesses. Even though the worst of the energy crisis has likely passed now, with European gas storage at record highs and unlikely to run down this winter, 79% of UK mid-size manufacturers said that they are more concerned about higher energy bills this winter compared to last.
Consequently, energy efficiency was being prioritised by 48% of all businesses in the survey, but 40% also said that they have already, or expect to, pass on further cost increases to their customer bases.
This may continue to build up inflationary pressures, which have already created problems for both businesses and consumers. For example, some 57% of respondents are worried about rising material and labour costs both in the UK or overseas, while nearly one in four mid-sized firms (24%) are anticipating lower consumer spending as a result of the rising cost of living in the run up to this year’s peak period.
The UK economy was stagnant year-on-year in the third quarter of 2023, but wage growth has now surged well above inflation, hitting a record high in September, in a welcome boost to spending power. Nonetheless, the overall economic picture remains subdued and although there are signs of inflation continuing to come down, energy prices will remain elevated for the foreseeable future.