Rishi Sunak is being asked to help businesses struggling with “maddening” cost increases – which they say are now being passed on to customers at record highs.
A survey by manufacturing organization Make UK found that the number of companies paying their fees reached an all-time high of 58%.
The figure was up from 52% at the end of last year and just 5% at the end of 2019 before the pandemic hit and Britain left the European Union.
Soaring raw material and energy costs were the biggest pressures facing businesses – becoming a “matter of survival for many”, according to the latest survey.
It was carried out before the invasion of Ukraine by Russia, since the world prices of the products of oil and gas for nickelcopper and wheat surged again, adding to inflation fears.
Make UK is asking the Chancellor to provide help when he delivers the spring statement next week by delaying the planned National Insurance rate hike, restoring corporate rate relief for small businesses and by making permanent the “super deduction” tax incentive for investments.
Stephen Phipson, Managing Director of Make UK, said: “Businesses are now facing staggering cost increases which are becoming a matter of survival for many.
“The most immediate priority for the short-term Chancellor must be to use his statement to do whatever it takes to support businesses through this difficult time.
“The alternative is to leave many companies facing a tipping point that some simply won’t recover from.”
A separate IHS Markit Business Outlook poll found a net balance of 62% of private sector companies planning to raise prices in the coming year, the highest level in its 12-year history.
The survey, conducted between February 10 and February 25, highlighted “severe cost pressures”, including wage demands leading to record personnel cost projections.
Meanwhile, Martin McTague, new national chairman of the Federation of Small Businesses (FSB), also called for help for businesses, although he urged a move away from the ‘super deduction’ which he says mainly helps large companies.
Instead, he asked the Chancellor to “prioritize reducing government-imposed overhead costs to free up funds for local level investment”.
Mr McTague said: “The Chancellor has a choice: continue with damaging tax hikes or take action to protect the most vulnerable and empower small businesses to deliver on his vision of ‘enterprise culture’. “
The business calls come after Mr Sunak was warned last week by a leading think tank that he must choose between borrowing billions more or seeing UK households face a cut in the cost of living that could be the worst since the 1970s.
Further business price hikes could add upward pressure on consumer inflation – already at its highest level in three decades and forecast by the Bank of England at 7% this spring, even before taking into account account the impact of the war in Ukraine.