Supply chain · 18 April 2017

Rising food and fuel costs put key UK sectors under pressure

Fuel prices are contributing to the financial turmoil of more small firms
A growing proportion of businesses in key areas of Britain’s supply chain are showing ‘significant? levels of financial distress as cost pressures mount, new statistics have shown.

Across key sectors of the UK supply chain, levels of significant financial distress a state of financial ill health that can lead to bankruptcy have risen by 26 per cent on average over the last 12 months, with expensive food and fuel costs acting as major contributors.

A report, from business recovery firm Begbies Traynor, found that in the first three months of 2017, the UK transportation and logistics sector experienced the largest increase in significant financial distress of any UK sector, up 46 per cent year-on-year.

The proportion of businesses in significant levels of financial distress in UK wholesale increased by 16 per cent, while those in food and beverage manufacturing increased by 15 per cent.

Transport costs were cited as the fastest growing cost to small business owners in the study, having increased by 6.6 per cent over the last 12 months. UK inflation, currently set at 2.3 per cent its highest level for four years is has been a major cause of the cost increases.

According to Julie Palmer, a partner with Begbies Traynor, the statistics may cause worry among business leaders in the worst hit areas of the UK supply chain.

levels of financial distress have increased significantly over the past year, and nowhere more so than in the transportation and logistics sector, which continues to be severely hit by ongoing fuel price inflation, she added.



Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.