Companies are facing a “cost-of-doing-business crisis” that will lead to rising prices, lower investment and firms shutting down, a leading business group says.
A survey of 1,000 businesses by the British Chambers of Commerce (BCC) found that almost three out of four are raising prices, while half are cutting costs and almost one in five are scaling down investment.
One in 20 respondents to the BCC poll said they are considering ceasing to trade.
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The BCC has called on the Government to tackle the challenges facing firms, with director-general Shevaun Haviland writing to Chancellor Rishi Sunak to warn of the dangers facing firms.
Her intervention has come just a few days after CBI director-general Tony Danker used a visit to the North East to call on the Government to boost the UK’s business community as official figures point to low growth in coming years once the bounceback from the pandemic settles down. Following its poll, the British Chambers has called for action to ease supply chain issues and labour shortages, a moratorium on any policies that increase costs for business and a temporary energy price cap for smaller businesses.
Ms Haviland said: “Without help from the Treasury to weather this storm, many businesses, especially smaller ones, will be faced with a nearly impossible situation that will leave them with little choice but to raise prices.
“Our research has shown that businesses were drowning in rising costs even before the energy crisis began to bite. This latest data reveals that companies are now also under extreme pressure from spiralling gas and electricity bills as well as increased wages.
“The majority are having to raise prices in response, though many are also being forced to scale back planned investment or cut other costs from their balance sheet.
“Unabated, the surging cost pressures produced by the cost-of-doing-business crisis will continue to lead to increased prices and fuel the cost-of-living crisis currently being faced by people across the country.”
The British Chambers poll echoes findings from the North East England Chamber of Commerce in recent weeks, with a survey showing that the number of businesses facing cost pressures from pay settlements and the cost of raw materials had increased significantly.
Meanwhile, CBI director-general Tony Danker dismissed Government claims about the UK having the fastest-growing economy of top nations. He instead pointed to official forecasts of sluggish growth in 2023 and 2024 and asked: “What’s the growth plan?”
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