UK firms most worried about energy prices and supply chain risk

The UK’s Office for National Statistics (ONS) has released an analysis of leading business concerns that finds supply chain problems, inflation and rising energy prices are top of the pile.

The key findings of the snapshot report show that 28% of all firms surveyed with ten or more employees experienced supply chain problems during the last month.

It also finds that 52% of businesses with ten or more employees within the manufacturing industry reported global supply chain disruption in March.

Input price inflation (23%) and energy prices (20%) were the two main concerns among companies late last month.

Susannah Streeter, senior investment and markets analyst at UK financial services firm Hargreaves Lansdown, commented: “There were high hopes that by now the supply chain headaches induced by the pandemic would have eased, but instead firms are still in the grip of uncertainty, with the conflict in Ukraine and lockdowns in China leading to fresh stock fulfilment issues.

“Well over a quarter (28%) of businesses have experienced global supply chain problems in the last month, creeping up again from February’s level of disruption (26%). Manufacturing is the worst-affected sector, with more than half of all firms experiencing disruption at a time when they are also facing the double whammy of soaring energy costs. Rampant inflation is increasingly a bugbear for business, with almost a quarter (23%) of firms reporting input price inflation a major concern. There has been a marked jump in the number of firms that are anxious about energy prices, with a fifth of businesses (20%) citing them as a main concern, up from 15% in February,” she added.

Streeter said it is unlikely that concern over rising costs will dissipate any time soon. But she said the planned release of 60 million barrels of emergency stocks by big oil-consuming nations, on top of the 180 million set to be dripped in daily from US oil reserves, have helped assuage some supply worries.

“But this was shortlived relief as with Russian troops reported to be regrouping in Ukraine, and no breakthrough in sight for the stalled Iran talks, worries about global supply show little sign of fading. The UK’s newly unveiled energy strategy offers scant relief from the financial pain of higher prices in the short term, with its focus on the longer-term switch away from a reliance on oil and gas, to nuclear and renewables,’’ added Streeter.