China Covid-19 case surge and Brexit disruption worry UK firms most, survey finds
A surge in Covid-19 cases in China gumming up supply chains threatens to snag the UK economy, a survey out today reveals.
Trade flows hobbled by workers in China being too sick to work after contracting the virus or Beijing reimposing lockdowns in response to a rise in cases ranks as the top concern among UK businesses, according to consultancy BDO.
More than half of firms are worried about being unable to source materials over the next six months to produce goods and services as a result of supply chains being strained.
China dismantled its zero-Covid policy at the beginning of the year, resulting in a big uptick in cases as citizens returned to normal daily life.
The move is expected to boost Chinese GDP this year, but not before the economy is disrupted by a wave of people staying at home after contracting Covid-19.
Trade disruption caused by Brexit is also expected to continue, according to more than a third of firms surveyed by BDO, most of which are small companies.
“Medium-sized businesses are battling rising costs, supply chain problems and difficulty accessing labour amid a nationwide skills shortage. Whilst they are striving to remain resilient, existing resources can only go so far to help drive growth or investment in skills and innovation,” Ed Dwan, partner at BDO said.
Damaged supply chains have squeezed supplies of raw materials, raising the cost of doing business. More than one in three companies have had to pay more for basic inputs, while nearly a third of firms say the cost of imports is higher.
A quarter of companies cannot get their hands on materials needed to make products, BDO said.
A worker shortage that has failed to unwind since the beginning of the pandemic is also hampering firms’ capacity to grow.
There are around 900,000 fewer available workers in the UK compared to before the Covid-19 crisis.
BDO said companies are responding to recruitment difficulties by investing in improving existing staff skills.