UK supply chain crisis is affecting trust; Nobel Prize in Economics awarded – business live | Business
Hello and welcome to our continued coverage of the global economy, financial markets, UK supply chain crisis and business.
The UK supply chain crisis is affecting business and consumer confidence, as concerns about inflation, the energy crisis and shortages of heavy truck drivers rise.
Output growth in UK firms slowed for the fifth consecutive month in September, hitting its lowest levels since the lockdown in March, according to the accounting and business consulting firm BDO LLP.
BDO The latest Business Trends report shows that supply chain disruptions and staff shortages are jeopardizing prospects for economic recovery, with manufacturing and service companies signaling a slowdown.
And in a worrying sign for households, BDO’s consumer inflation index jumped to a 10-year high in September, driven by the surge in energy and fuel. This suggests that consumers will face higher prices over the next several months as businesses pass the costs on to customers.
Kaley Crossthwaite, partner at BDO LLP, says severe labor shortages and supply chain disruptions in the UK are weighing heavily on productivity:
Ultimately, that could mean consumers end up paying more for less this winter.
Many businesses are caught between a rock and a hard place. Long-term planning for a post-pandemic and post-Brexit economy is crucial, but the significant challenges at their doorstep make it increasingly difficult to focus beyond these short-term issues. The Chancellor’s fall budget will be closely watched later this month to see if the government steps in to restore the confidence felt throughout the summer.
Consumer confidence has fallen to its lowest level this year, PwC reports this morning.
PwC’s latest morale indicator found that rising inflation and concerns about supply chains and stockouts lowered optimism last month.
Sentiment has fallen across almost all age groups, regions and demographics, showing that people are starting to feel uncomfortable about their financial security.
This brought the index back to pre-pandemic levels (at +3, a few more respondents thought they would be better off over the next 12 months than worse.).
The majority of those polled said they saw empty shelves in supermarkets and expect stockouts to worsen as Christmas approaches.
The survey also found lower spending intentions on big ticket items, such as furniture and appliances, as the number of people expecting to spend less being optimism eased.
Lisa Hooker, consumer markets lead to PwC, warned that the next few weeks will be “make or break”:
Inflationary factors that triggered sentiment to wane are not expected to ease in the near term, especially for groceries, utilities and gasoline. Combined with the current issues these industries face with regards to supply, we are starting to see it affecting the daily lives of consumers and, in turn, sentiment and demand.
“For the retail and entertainment industries, the timing couldn’t be worse. After last year’s disappointment, retailers and hotel operators are in desperate need of a good run until Christmas. Even without a lockdown, they will have to convince consumers to part with the savings to have any hope of returning to pre-pandemic levels.
For many, the coming weeks will be pivotal: Can driver shortages be addressed and supply chain pressures eased? When will the gasoline pump crisis be resolved? And will rising energy prices lead to more widespread inflationary pressures and consumer reluctance to spend? “
Yesterday, the Treasury rebuked Business Secretary Kwasi Kwarteng after suggesting he consult with Chancellor Rishi Sunak over support for companies struggling with soaring energy prices.
Representatives of companies in key industries, including steel and paper, reportedly told Kwarteng at a meeting on Friday that many were “days away” from having to shut down production due to soaring costs. A source said the business secretary asked his team to help him work on an agreed list of proposals that could be sent to the Treasury in the coming days.
However, Treasury sources have denied that the department has yet to receive any proposals or even discussions on support for struggling critical industries, despite claims Kwarteng made to broadcasters on Sunday morning.
Also coming today, the Nobel Prize in Economics will be awarded. The AFP press wire say macroeconomics, health and labor markets are some of the topics that could be awarded, with a number of women having a chance to win the traditionally male-dominated award:
The American Anne Krueger, former number two and briefly managing director of the International Monetary Fund (IMF), as well as the former vice president of economics and research at the World Bank, is one of the possible winners.
Her compatriot Claudia Goldin, whose research has focused on inequality and the female workforce, is another favorite to become the third woman to receive the award.
Other potential winners are fellow American Janet Currie, known for her work on the impact of government anti-poverty programs on children, or Belgian labor economist Marianne Bertrand and American micro-economist Susan Athey, who was the first woman to win the prestigious John Bates Clark. Medal in 2007.
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