Inflation fears for firms in our region

INFLATION poses a huge risk to Midlands businesses in the coming months, with many unprepared for the highest level in 30 years.

According to accountancy and business advisory firm BDO LLP, more than half of regional businesses have only planned for a three to five per cent level of inflation this year – well below the current seven per cent rate.

The Office of Budget Responsibility (OBR) has suggested the impact of the war in Ukraine could push inflation to a 40-year high of 8.7 per cent in the final three months of 2022.

BDO’S “Rethinking the Economy” survey has revealed that more than a third of Midlands companies are planning to seek additional finance in order to counteract rising inflation.

Andrew Mair, partner at BDO and head of the East Midlands, said: “It’s very clear that rising inflation is having a profound effect on businesses in the region. Businesses have done the right thing, and planned for higher levels of inflation this year.

“However, forecasts are well below the current and expected rate of inflation and, as such, businesses need to respond quickly and reassess their business plans for the remainder of 2022 in order to accommodate the record increases – whether that’s through additional financing, raising the price of goods or services, or working alongside lenders and suppliers to agree more beneficial terms. When you couple rising inflation with significant global uncertainty and soaring costs, regional businesses are facing yet more pressure after two years hampered by the global pandemic.”