THE rise in inflation since the Brexit vote has been singled out as the biggest immediate pressure facing businesses across the UK.
British Chambers of Commerce (BCC) underlined the threat to growth from the rising cost of overheads and raw materials as its latest survey found the manufacturing and services sectors grew solidly in the first quarter of the year.
Both sectors reported an expansion of domestic and export sales compared with the previous quarter, the Chambers’ Quarterly Economic Survey, based on the responses of more than 7,300 businesses, found.
However more than three-quarters of manufacturers reported an increase in the price of raw materials, up from 65 per cent, while 38 per cent saw the cost of other overheads increase, up from 23 per cent. The proportion of services firms reporting an increase in the price of raw materials held steady at 17 per cent. Nearly 30 per cent of services firms said the cost of other overheads had risen, up from 24 per cent.
BCC director general Adam Marshall warned that, while many businesses are proving to be resilient at present, the “medium-term picture is far from clear”.
He said: “The rise in inflation seen since last year’s EU referendum is the biggest immediate pressure facing most firms. While manufacturers have enjoyed a good quarter, they are facing higher costs at the factory gates, which increasingly translates into companies having to raise their own prices. With inflation already above the Bank of England’s target, this squeeze on firms looks set to continue in the medium term.”
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