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90% of firms have witnessed rise in business costs – FPB

Mi Zhang

The Forum’s latest Cost of Doing Business survey showed that over 90 per cent of companies have seen an overall increase in their business costs.

The most prevalent growing business cost was for energy use, which was reported by 87 per cent, followed by transport (83 per cent), marketing (78 per cent) and raw materials cost (69 per cent).

Alexander Jackman, the forum’s head of policy, said: “The economic outlook may be better, but costs still remain an issue for our members, and a key focus of our lobbying and support services.

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“Unfortunately, it doesn’t look as if there is going to be any respite from energy hikes any time soon, despite the ongoing political pressure to take action to introduce more competition in the market, with many of the major players recently announcing significant increases and others expected to follow suit.”

The research also revealed that prices have continued to rise faster for micro, small and medium-sized employers at six per cent. The majority of firms (81 per cent) indicated that rising business costs have been detrimental to their business, with 51 per cent of firms also reported that it has had a negative effect on employment levels, while 63 per cent feel that it has inhibited their plans for growth.

The survey showed that despite the recent positive news on the economy, rising business costs could continue to restrict the ability of many SMEs to take full advantage of the signs of recovery, with 83 per cent of business owners surveyed expecting prices to continue to increase, and 16 per cent expecting a significant hike.

Adviser view:

Tony Larkins, managing director of Beacon Wealth Management based in Cambridgeshire, said: “The main natural increases in costs for us this year are the rates and rent, which have trebled. However, this has been due to moving premises. The main increase to us as a normal going concern has been salaries and benefits. There has been a need to take on better skilled staff and thus salaries are higher. This has also resulted in existing staff having increases where necessary.”