Businesses still hit by inflation and labour supply problems

By Barrie Hudson - 14 October 2021

  • Business West Managing Director Phil Smith says complex challenges must be addressed

    Business West Managing Director Phil Smith says complex challenges must be addressed

A new Business West survey suggests firms feel economic recovery is at risk of delay.

More than 250 businesses took part in the business advocacy group's poll, and many cited growing inflationary pressures and yawning worker shortages. 

Business West Managing Director Phil Smith said: “The third quarter of the year maintains the positive outlook from quarter two, albeit with more moderate results. Businesses in the South West are on the path to economic recovery. 

"Nevertheless, this is not without a set of complex challenges that must be addressed, such as labour market misalignments, skills shortages, inflationary pressures and trade constraints.” 

Skilled manual or technical and semi or unskilled roles are reported to be the most difficult roles to fill. 

Emma Carter of Smarter Media in Swindon, who took part in the survey, said: “We have four roles currently available. There is a lack of candidates and those that are applying have none of the skills required. 

"This is an industry wide problem and as a result, we are seeing significant increases in salaries, which only bigger/corporate companies can accommodate.”  

Prices continued to rise in the third quarter of 2021, with a third of respondents reporting having to increase their prices due to rising input costs.  

In addition, 76 percent of manufacturers said they were under pressure to raise prices as a result of the soaring costs of raw materials, and more than half voiced alarm at the increasing cost of imports. 

Rising inflation looks like a trend that is set to continue, with half of respondents - and 62 percent in manufacturing industries - expecting to increase prices in the next three months.

Labour shortages, according to the survey, are having a widespread detrimental impact. Some 60 percent of respondents had tried to recruit in the last three months, and 74 percent of these said they had experienced difficulties in finding the right candidates. This is the highest percentage of businesses facing difficulties in the last four years – only followed by Q4 2018, when 71 percent of businesses recruiting said they faced difficulties finding suitable staff. 

One anonymous respondent, a Wiltshire farm shop and café owner, said: “We have two chef jobs with no applicants to running from April onwards. No suitable applicants for waiting staff and shop floor staff either.”

Although retail, leisure and hospitality are clearly affected, labour shortages are hitting the broader services sector hard, with 77 percent of service sector businesses reporting recruitment difficulties - eight points higher than in the manufacturing sectors. These figures represent a quarter-on-quarter rise of 11 and 16 points respectively, suggesting the problem is only getting worse. 

Business West says that, due to the unique set of challenges businesses are facing, business confidence has stabilised after peaking following the reopening earlier this year. While there are a number of growth hurdles to overcome in the short, medium and long term, 37 percent of respondents feel confident or very confident of the prospects of the UK economy for the next 12 months and 60 percent are feeling confident or very confident in their own business’ potential over the same period. 

The findings can be viewed in full at  


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