By Max Clarke
Research carried out by Aldermore, a newly launched British bank with a focus on SME lending, shows that businesses are increasingly concerned that their margins will be squeezed by rising goods prices without them being able to pass on those increases to their customers.
80% of SMEs surveyed said they were concerned that their suppliers were going to force above inflation cost increases on them. At the same time, only 45% of SMEs felt that they would be able to increase their own prices.
Phillip Monks, CEO of Aldermore, said: “Small businesses are worried that the lack of negotiating clout with both their suppliers and their customers means that they are going to come off worst from the current spate of inflation.”
“Big businesses with dominant market shares are going to find it easier to pass on price increases to their customers and wring concessions out of their smaller suppliers. Unfortunately many small businesses don't have that kind of negotiating power.””
“Few businesses like inflation but small businesses probably least of all.””
Phillip Monks explains that small businesses have worked incredibly hard over the last year to repair and improve their margins so they will be particularly worried if the current levels of inflation do not fall.
Adds Phillip Monks: “Obviously these are not the inflation rates of the 1970s and 1980s but for some sectors, such as transport or food manufacturing, inflation is already causing serious problems.””
The FSB (Federation of Small Businesses) has been calling for the Government to put in place a fuel duty stabiliser, this would cut fuel duty when oil prices rise and increase fuel duty when prices fall. Increases in fuel prices are particularly significant as they can cascade through the economy.