Four in five of the businesses also admit they are expecting disruption in their supply chains, rising production costs and problems from Covid curbs. The research by leading accountancy firm BDO follows a raft of downbeat forecasts from trade bodies including the British Retail Consortium. Ed Dwan, partner at BDO, said many businesses had been hoping to rescue a year of disruption with a strong finish and optimistic start to 2022.
But he added: “The harsh reality is that continued supply chain issues, rising energy prices and increasing costs means many are taking further drastic measures to stay afloat. These issues could also be exacerbated by the new Covid-19 variant.”
The survey showed 80 percent of those questioned were pessimistic about trading conditions over this crucial month.
About 32 percent of retail and wholesale firms planned to raise prices and the same proportion of all firms expected to cut production because of inflation.
Manufacturing businesses were having the worst time, with 39 percent expecting to charge more and a similar proportion planning to cut output.
Around 45 percent of those polled said their priority for the next three months was to shore up their flagging national and international supply chains.
Just over a quarter of firms said inflation and higher interest rates were likely to have the biggest negative impact on trade and growth in the next 12 months.
The report comes days after the retail consortium’s chief executive Helen Dickinson warned Christmas shop prices may be higher. She spoke after the trade group’s monthly inflation measure, the BRC-Nielsen IQ Shop Price Index, revealed a year-on-year rise of 0.3 percent last month.
Fresh food inflation was 1.2 percent in November – the highest rise since August 2019 – and overall food inflation was 1.1 percent.
Ms Dickinson said: “With food prices rising, and particularly fresh food we may find some of our Christmas shopping a little more expensive this year.”
Blaming “labour shortages and rising costs of transport and commodities”, she continued: “We expect the rate of inflation to accelerate over coming months.” She added: “Retailers are doing all they can to mitigate the impacts for their customers.
“Government also must play its part and work with industry to find long-term solutions to the labour shortages as this will help to relieve cost pressures and protect the pockets of the British public.”
The Confederation for British Industry said last week that the number of firms looking to pass on production costs had risen to its highest level in 30 years. Senior economist Ben Jones added: “Cost pressures remain a very real concern.”
In other sobering economic news yesterday, Tesco warehouse workers and drivers announced strikes in the run-up to Christmas in protest over a four percent pay offer.
Britain’s biggest union Unite said more than 1,000 of its members at the store’s depots in Doncaster, South Yorkshire, Didcot, Oxfordshire, Belfast and Antrim, in Northern Ireland, would take action.
General secretary Sharon Graham said: “Unite always prioritises the jobs, pay and conditions of its members and it will be giving its full and total support to our members at Tesco until this dispute is resolved.”
The union’s national officer Adrian Jones said: “Unite is taking strike action as a last resort having exhausted all other options.
“Even at this late stage Tesco could still avoid severe disruption in its stores by returning to the negotiating table and making a greatly improved offer.”
But a spokeswoman for the store insisted: “The offer we have made is one of the highest awards made within our distribution business in the last
Meanwhile, the Fed-eration of Small Business warned that its members expect delays caused by next month’s new paperwork requirements on goods imported from the EU.
At the moment, full customs declarations for Euro products can be deferred, but from January 1, documentation will have to be completed on arrival.
FSB chairman Mike Cherry said research showed only one in four small importers who are affected and aware of the changes are ready to deal with them.
He said: “Given the turmoil of the last 18 months, new concerns about Covid and this being the busiest time of year, it’s understandable few firms are fully prepared. We’re urging the Government to raise awareness.”