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Businesses fear Christmas trading disruption

The bi-monthly survey of 500 business leaders from accountancy firm revealed that a third of businesses surveyed expect to increase the prices of their goods and services as a direct result of rising inflation with the same number concerned about increasing energy prices and a third also concerned about supply chain disruption.

Overall, 80% of medium-sized business leaders expect their end of year trading to be impacted by at least one of these three factors with 34% also citing Covid-19 restrictions as an issue likely to impact the availability of products and services.

Meanwhile, despite warnings around higher living costs in the next few months, almost a fifth, 17%, of business leaders said they would not be able to increase pay, which  BDO stated ‘could bring challenges’ in attracting new staff at a time when competition for is fierce.

Diving deeper into the impact of inflation, BDO‘s survey revealed that 32% of businesses plan to cut the number of products and services they offer as a direct result of inflation. This, in particular, was an issue for manufacturing businesses, with 39% planning to decrease the number of products on offer and a similar number set to increase prices.

Around a quarter of businesses, 26%, see rising inflation and potentially higher interest rates as the issues that will have the biggest impact on their business in the next year.

Ed Dwan, partner, BDO said: ‘Following a year of disruption, many businesses will have been hoping for a strong finish to 2021 and a fresh start for 2022. The harsh reality is that continued supply chain issues, rising energy prices, and increasing costs mean that many are taking further drastic measures to stay afloat. These issues could also be further exacerbated by the new Covid-19 variant.

‘The speculation around interest rate rises is only set to increase, and it’s fair to say all eyes will be on the Monetary Policy Committee when they make a decision later this month.’

Going forward, nearly half of respondents, 45%, are prioritising managing their domestic or international supply chains in the next three months, above other business operations, and as businesses look to the longer term.

However, despite ongoing issues 62% of businesses expect to return to pre-pandemic revenues in the next 12 months.

 

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