UK CFOs fear supply chain slowdown for at least a year

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Amazon trailer trucks are seen in the port of Cherbourg, France, January 21, 2021. REUTERS / Gonzalo Fuentes / File Photo

LONDON, Oct. 18 (Reuters) – Supply chain problems weighing on the recovery of the economy after the lockdown will persist for at least a year, according to a survey released Monday of chief financial officers of major UK companies.

As the Bank of England tries to estimate how long a recent surge in inflation is likely to last, more than half of CFOs surveyed by Deloitte accountants believed consumer price inflation would still be greater than 2.5% in two years.

In August, the BoE predicted inflation to just over 2% in two years after hitting 4% in the next few months.

Since then, the UK economy has been hit harder by the kind of supply shortage affecting other economies around the world, as well as a staffing shortage that has been made worse by the country’s immigration rules after Brexit.

The BoE is now expected to raise interest rates for the first time since the start of the pandemic, either later this year or in early 2022.

Deloitte said CFOs expected operating costs to increase the most in the 14-year history of the investigation over the next 12 months.

A record share of CFOs are also planning to increase capital spending, a welcome welcome addition to Prime Minister Boris Johnson who this month berated employers for favoring migrant labor over investment boosting growth. productivity.

Ian Stewart, chief economist at Deloitte, said the increase in investment plans was driven by the impact on the UK economy of the pandemic and Brexit, as well as the shift to renewables.

The survey of 92 CFOs, including 18 from FTSE 100 member companies and 32 from FTSE 250 companies, was conducted between September 20 and October 4.

Meanwhile, the head of the manufacturers’ body Make UK called on Prime Minister Boris Johnson’s government to stop treating companies as “the enemy within” after Brexit tensions.

“Right now the industry feels that the government is still fighting the last war and sees business as the internal enemy,” said Stephen Phipson, Managing Director of Make UK. “Business has changed and the government must do the same. “

Make UK urged Finance Minister Rishi Sunak to announce a new industrial strategy in its October 27 budget, including an extension of its investment tax incentives for two years and more measures to boost digital and green investments.

Written by William Schomberg; edited by David Milliken

Our Standards: The Thomson Reuters Trust Principles.


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