Yahoo Finance Energy bills and pay costs making three in four UK firms raise prices
Around three quarters of firms say they are increasing prices in response to higher costs from wages, energy, and raw materials, according to a survey.
The British Chambers of Commerce (BCC) said companies are facing a “cost-of-doing-business crisis” that will not only lead to rising prices but also lower investment and closures.
The survey of 1,000 business found that three in four firms are raising prices, while half are cutting costs and almost one in five are scaling down investment.
Around 5% of UK businesses were considering closing doors and only 9% of companies said they were not facing pressure to raise prices.
In its findings, the BCC said 63% of firms pointed to wages, salaries, bonuses and contractor costs as a driver of price rises.
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Costs of raw materials such as steel, cardboard and food were flagged as a source of upward pressure on prices by 52% of respondents, while 34% of firms blamed domestic taxes for the price hike.
The BCC has called on the government to tackle the challenges facing firms, urging chancellor Rishi Sunak to introduce a temporary energy price cap for small businesses and to extend to those firms a similar type of financial support announced for households last week.
The industry body also called for a one-year delay on planned national insurance increases, action to ease supply chain issues and labour shortages and a moratorium on any policies that increase costs for business.
BCC’s director-general, Shevaun 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.
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“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 survey was carried out between 17 January and 4 February.
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