Business groups warn of looming collapse
Business and industry groups have urged the government to act now to “stem the tide” as producer price inflation hits a record-high 22 per cent.
With news that the consumer prices index rose 9.1 per cent, to a 40-year high, and producer price inflation rose 22.1 per cent, another record high, in the 12 months to May, both the Federation of Small Businesses and the British Chambers of Commerce have warned businesses will collapse if the government does not step in.
Federation of Small Businesses (FSB) national chair Martin McTague said policymakers should act now to address rising consumer inflation at root, by taking pressure off the small firms that are doing all they can to absorb higher input, labour and energy costs, but can only absorb so much.
“A fifth of firms cite input costs as their main concern. Similar proportions say they are struggling to source the right goods and services or have experienced supply chain disruption. One in seven are struggling with labour shortages. One in 10 are still not fully trading,” he said.
“On top of those worries are surging energy bills, travel disruption and the need to service debt, the cost of which is rising.
“As margins are eroded, leaving less and less for firms to invest in upskilling and innovation amid labour shortages and net zero targets, the Government must use the tools at its disposal to help stem the tide.
“That means looking at reversing hikes to national insurance contributions, reductions in business rates for small firms, cuts to VAT, especially on energy, and targeted reductions in fuel duty – many businesses, especially in rural areas, have no choice but to use the roads.
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