Inflation fears hit record as energy bills surge

INFLATION fears among businesses are the highest on record as corporate Britain braces for a further surge in energy prices.

Price rises show no sign of slowing as a weaker pound, supply chain disruption and labour shortages force up costs, the auditor BDO said.

Its monthly index of business surveys found the labour market still buoyant in July, as companies scrambled for staff, but BDO warned a slowdown looks likely as a recession looms.

Employment activity was the highest in two and a half years with a workforce restricted by post-brexit immigration restrictions and departures during Covid.

Kaley Crossthwaite, a BDO partner, said: “Reports of a less optimistic outlook are by no means surprising as the economy now faces the prospect of a recession … it’s encouraging to see recruitment intentions remain strong, we know that talent shortages are an issue.”

The Bank of England warned last week that Britain is heading for 13pc inflation and a 15-month recession driven by the pandemic and stoked by the war in Ukraine.

Officials warned the contraction would begin in the final quarter of this year and run through all of 2023.

BDO’S output index suggested a slowdown has already taken hold, with the gauge – which indicates long-term growth expectations – suggesting output is falling for the second month in a row.

Inflation is expected to hit a 42-year high in the coming months as Ofgem reviews its energy price cap. Analysts at Investec say this could lead to a cap of more than £4,000 a year.