Lancashire business groups worried as inflation hits ten year high

The Office of National Statistics said the rate was the highest since September 2011 and a bigger leap than feared. Supply chain problems and rising fuel costs were said to be the main drivers and economists see no fall in the first quarter of next year.

Geoff Mason, policy manager at North and Western Lancashire Chamber of Commerce said: “Rising costs have been a concern for businesses in Lancashire for most of the year. With huge increases costs of raw materials, shipping and energy it was inevitable that inflation would rise significantly.

"Businesses are finding these rises difficult at a time when recruitment problems are driving up wages. This was the time the economy was meant to be recovering and businesses rebuilding, however, these inflationary pressures, coupled with new restrictions due to the Omicron variant, could pose a serious hinderance to growth.

“Despite surging inflation, a December interest rate rise remains improbable given concerns over Omicron.

“While interest rates will rise sooner rather than later, with the current inflationary spike mostly driven by global supply constraints and price pressures, higher rates will do little to curb further price rises.

“Greater support is immediately needed for those businesses impacted by Plan B, including making additional grant funding available and reverting the VAT for hospitality and tourism back to its emergency rate of five per cent.”

Federation of Small Businesses National Chairman Mike Cherry said: “It’s not only Plan B restrictions that small firms in England are having to grapple with as we commence the 10-day countdown to December 25th.

"Surging operating costs, labour shortages and supply chain disruption are adding to the nightmare before Christmas being experienced by millions of small business owners.

"To directly assist firms with the spiralling costs of doing business, the current 66 per cent business rates discount for hardest-hit firms should be increased to 100 per cent. Coupling that adjustment with an increase in the targeted Employment Allowance to £5,000 would make a real difference.

Policymakers also need to accelerate delivery of the £1.5bn business rates relief .fund. It was launched many months ago, but is yet to pay out a penny.

“Firms need greater clarity – both in terms of exactly what’s expected of them in relation to Plan B as well as transparency around what Plan C would look like – so they can plan ahead.

“Small business confidence dropped every quarter this year, and we’ve lost 400,000 small businesses over the pandemic to date.

“As we hurtle towards the introduction of import checks in January and a hike in the jobs tax that is national insurance contributions in April, the government needs to act now to prevent further long-term scarring of the small business community.”

Gary Smith, GMB union general secretary, said: “Today’s inflation figures are no surprise to people across the country who are seeing their bills go through the roof.

“As prices climb ever higher, workers in both the public and private sector are facing real terms pay cuts, with many struggling to keep their families fed and clothed.

“People everywhere are being hit with this cost-of-living crisis, but the lack of any credible energy and industrial strategy from this Government is making things worse."