I don’t know about you, but I am ready for the Easter break.
The Office for National Statistics (ONS) inflation figures coupled with the labour market statistics for April are both breaking records for the wrong reasons.
You can view the latest figures here: Home – Office for National Statistics (ons.gov.uk)
On Wednesday inflation data was released and as expected figures confirm that the UK is in the midst of an unprecedented inflationary surge amid accelerating global price pressures, including those from Russia’s invasion of Ukraine, leading to inflation figures we haven’t seen for 30 years.
Unsurprisingly March’s rise in inflation came from the increasing cost of housing and household services, including higher utility bills, rising fuel prices and more costly second-hand cars.
We are likely to see even worse in April, with the increase in the energy price cap and the reversal of the VAT reduction for hospitality likely to push inflation above eight percent.
The upward pressure on energy and commodity prices from Russia’s invasion of Ukraine will drive consumer prices higher for longer with inflation forecast to peak close to 10 percent later this year, following the expected energy price cap rise in October.
Soaring inflation has therefore raised the prospect of a notable slump in economic output in the near term by weakening consumer spending and damaging firms’ finances and their ability to invest and grow.
The Government must provide urgent financial support, through the expansion of the energy bills rebate scheme, to include small firms and energy intensive businesses, and an SME energy price cap to protect smaller firms from some of the price increases.
Now, on to the employment figures which are highlighting the nationwide hiring problems that firms are facing.
While payroll employment rose slightly and the unemployment rate continues to fall, the headline figures continued to be flattered by significant underlying factors, including a shrinking workforce.
The increasing number of vacancies highlights the historic hiring crunch facing firms. With rising economic inactivity confirming that lots of workers have seemingly quit the jobs market completely, severe staff shortages may hamper economic activity.
Although there was a rise in earnings growth, with inflation soaring, wages are still comfortably lagging behind price increases. If this continues as expected, real household incomes will be damaged further, stifling consumer spending, a key driver of UK economic output.
Weakening consumer confidence may limit households’ willingness to support spending by running down savings built-up during Covid to offset declines in real pay.
The deteriorating economic outlook and the financial squeeze on businesses from soaring energy bills and the national insurance rise risks weakening labour market conditions by dampening recruitment and limiting firms’ ability to increase wages and invest in their staff.
More must be done to help people access rapid retraining opportunities for in-demand jobs, including assisting older workers to turn to more sustainable jobs. Introducing a new skills tax credit to incentivise employers to invest in training for workers would help to revitalise employer-led training.
You can be assured that Staffordshire Chambers, along with the British Chambers of Commerce (BCC), will be keeping up the pressure on ministers to act to offset rising costs and invest in the jobs market.
And finally, a reminder that entries for the 2022 Staffordshire Chambers Business Awards close at 5pm on Friday 6th May.
Our awards showcase and celebrate the best business talent in Staffordshire with a variety of award categories that cover everything from new start-up businesses to multinational corporations – as well as awards for individual employees.
It’s a great opportunity for you to spotlight your business and get recognition for your work during the last 12 months. Shortlisted businesses receive invaluable coverage in local press and across social media and will be invited to a gala evening celebration on 14th July. The entry process is simple and streamlined and you can enter as many categories as you like.
There are 15 award categories and one of the winners will also be crowned as overall Business of the Year.
For entry details and a full list of award categories and sponsors click here: www.staffordshirechambers.co.uk/awards
If you want to talk to us about any business issues, including funding, you can call our switchboard on 01782 202222 or call the Stoke and Staffs Growth Hub Helpline on 0300 111 8002 or email: info@staffordshirechambers.co.uk
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