Prices have risen sharply over the last few months and according to the Think Tank, The Resolution Foundation, a typical household will see its income fall by about £1000 this year.
Many will begin to feel a pinch from April when the energy price cap jumps, and National Insurance contributions rise. In addition, as nations turn away from Russian gas as a result of the ongoing conflict with Ukraine, prices are likely to rise further as pressure for alternative supplies of gas increases.
New research1 conducted by Cynergy Bank, found that almost half (45%) of UK SMEs feel that they have been negatively affected by inflation, increasing to 68% for medium enterprises. Only 22% of UK SMEs disagreed with this statement.
Medium enterprises were the least likely to predict a loss of profits due to inflation with only 22% of businesses citing this as a possibility. Despite this, medium sized businesses were the most likely to lay off employees or reduce recruitment due to inflation. Overall, a reduction in profits was cited as the most significant impact of inflation with 28% of SMEs listing this as an issue.
Since pandemic restrictions were eased last year, companies have faced higher wages, shipping and energy costs which they have passed on to customers.
According to figures from The Office for National Statistics, electricity bills were up 19% in the year to January and gas bills up by 28%. Government data from January also revealed that 11.7% of SMEs said their production, or supplier’s production, has already been affected by increased gas prices.
Nick Fahy, CEO of Cynergy Bank commented, “As the economy continues to recover from the pandemic, prices are being driven up by a number of factors causing pressure on small and medium sized businesses. As we move into 2022 it is more important than ever that banks support the growth and stability of scaleup SMEs, ensuring they are able to emerge from the pandemic in a strengthened position. As demonstrated by the research, inflation will, at least for the short term, continue to be a concern for SMEs but I am proud of the support we have given and will continue to give these businesses. At Cynergy Bank, we understand how important scaleup SMEs are to the fabric of the economy and we stand ready to support our customers across the UK.
1 Research conducted by Cynergy Bank surveying 500 Senior Decision Makers at small and medium sized businesses in November 2021