The cost of doing business in the UK is rising at the fastest rate on record, hampering firms’ recovery from the pandemic, a new survey has found.
The latest IHS Markit/CIPS’ Purchasing Managers’ Indexes identified what they described as a ‘toxic combination’ of failing supply chains, huge demand for goods and raw materials, and a chronic shortage of staff.
These have all propelled costs for businesses, many of whom are struggling to recover following the pandemic, as reported here.
The November increase in costs is the fastest since IHS Markit/CIPS started tracking the data in January 1998.
Growth seen across multiple industries despite cost increases
Despite mushrooming costs, both the UK’s services and manufacturing industries saw good growth, with each PMIs reading for the respective industries coming in at 58.6 and 58.2 for November. A reading above 50 indicates growth.
The elevated growth figures led experts to predict that the Bank of England will raise interest rates in December, according to the City AM website.
This gives the ‘green light’ for interest rate rise
“A combination of sustained buoyant business growth, further job market gains and record inflationary pressures gives a green light for interest rates to rise in December,” said IHS Markit’s chief business economist Chris Williamson.
City AM reported: “The record cost rise indicates inflation could be much more entrenched in the UK economy than first thought, particularly if businesses hike consumer prices to offset expected future margin pressure.”