SMEs will bear brunt of supply chain crisis until 2023

Small businesses will have to cope with supply chain problems, worker shortages and rising inflation until at least 2023, MPs are told

MPs have been told small businesses will bear the brunt of the supply chain crisis and worker shortages until at least 2023.

Business leaders from a range of sectors told the House of Commons business, energy and industrial strategy committee that small businesses would bear the brunt of labour shortages and price rises that have hit swathes of the economy this year.

“Six months ago our businesses all thought this was transitory, now every business I know expects this to last into 2023 and 2024. Every single one,” Ian Wright, chief executive of the Food and Drink Federation, told MPs.

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Wright said in addition to the supply chain crisis, inflation in the food and hospitality sector was running at a “terrifying” 14 to 18 per cent.

“I remember inflation going to 27 per cent under the Callaghan government in 1977, and I remember a lady going around Sainsburys with stickers twice in the same hour to change the prices. We cannot go back to that.”

Rising prices would inevitably be passed on to consumers, Wright said, adding: “If the Prime Minister is – as I know he is – serious about levelling up, inflation is a bigger scourge than almost anything because it discriminates against the poor.”

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Stephen Phipson, chief executive of Make UK, the manufacturers’ organisation, warned it was a “matter of months, probably six months, before we start seeing failures in business”, particularly among small and medium-sized enterprises (SMEs) which served big manufacturers.

Meanwhile, the Road Haulage Association (RHA), which previously warned of a shortage of around 100,000 drivers, said the problem has not improved despite Government efforts.

The committee heard that about 1.4m EU workers are estimated to have returned home during the pandemic, leaving the UK economy short-staffed just at the moment that free movement of labour with the EU ended as a result of Brexit. Another 500,000 UK-born workers have either retired or remained in education.

Further reading

One third of small businesses are highly in debt

Related Topics

Logistics
Supply chain

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