Firms across Britain’s services and manufacturing industries are under pressure to raise prices, a survey has found.
The Quarterly Economic Survey by the British Chambers of Commerce found an uptick in growth seen in the third quarter in the manufacturing sector continued in the final quarter lats year.
Also more service sector firms were expecting growth than just after the EU referendum.
It also suggests confidence in future turnover, hiring expectations and investment in plant and machinery have improved for both manufacturing and services firms.
But it found firms in both sectors are facing pressure to raise prices, principally as a result of the cost of raw materials and other overheads.
Adam Marshall, director general of the BCC, said: “Our findings suggest that business communities across the UK remain resilient, and many firms are expecting continued growth in the months ahead.
“Inflation has emerged in our survey as a rising concern for many businesses.
“Both manufacturing and services firms say they are under pressure, particularly from the rising cost of inputs, which is squeezing margins and may weaken future investment.
“Overall, our findings suggest growth will continue in 2017, albeit at a more modest pace.”
More firms in both sectors are reporting confidence that their turnover will increase.
Meanwhile confidence in profitability remained static among manufacturers since the third quarter.
It rose in the services sector but both profit and turnover confidence were still low compared to results from the past three years.
Suren Thiru, head of economics at the BCC, said: “There is further evidence that rising prices will be a key challenge to the outlook for the UK economy over the next year, with the significant rise in the cost of raw materials increasing the pressure on firms to raise prices in the coming months.
“While growth is likely to have remained on trend in the quarter, the UK’s growth prospects in the near-term are expected to be more subdued, weighed down by rising inflation and the uncertainty surrounding Brexit.”
The survey was completed by 7,250 businesses across the UK between 7 and 28 November.
