Small UK businesses drown in swelling costs

Small British businesses are drowning in swelling costs and are struggling to fulfil orders.

Unit costs in the three months to October rose at the fastest pace on record, research by the Confederation for British Industry (CBI) has found.

Eight in 10 small firms think costs will accelerate over the next quarter, indicating consumers may be stung by a nasty bout of sustained inflation. Meanwhile, the CBI recorded the lowest proportion of businesses having enough resources to meet demand ever.

Supply chain snarl ups triggered by a resurgence in global demand and elevated spending on goods has generated shortages of key materials, putting upward pressure on prices.

Alpesh Paleja, lead economist at the CBI, said: “The optimism of summer has given way to an uncertain autumn for SMEs in the manufacturing sector, as firms struggle with persistent supply challenges and acute cost and price pressures.”

Business activity growth slowed sharply from the summer’s record high of 36 per cent to 14 per cent in October, highlighting the scale of the impact shortages and higher costs are having on the UK’s recovery from the pandemic.