The British Chambers of Commerce (BCC) has revealed
the Red Sea crisis has led to increased costs and delays for 53% of UK
manufacturers and retailers.
February 27, 2024
The
BCC report, which surveyed 1,087 businesses found some firms saw a 300% hike in
prices for container hire, and others experienced logistical delays that added
up to three to four weeks to delivery times.
Knock-on effects of these impacts included
cashflow difficulties and component shortages on production lines.
William Bain, head of trade policy at the
BCC admitted that certain sectors within the economy are “obviously more
exposed” than others and added the UK government’s new customs checks and
import procedures is placing extra cost and delays on businesses.
Bain shared the UK economy saw a drop in its
total good exports for 2023 and with global demand weak, he believes there is a
need for the government to look at providing support in the March Budget.
He has called for the establishment of an
Exports Council to hone the UK’s trade strategy and a review of the
effectiveness of government funding for export support.
“Overseas trade is vital to growing our
economy. We must do everything we can to see businesses through these tough
times, and then set a laser-sharp focus on expanding exports for the future,”
stated Bain.
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He did point out there has been spare
capacity in the shipping freight industry to respond to the difficulties, which
has bought us some time. And recent ONS data also indicates the impact has yet
to filter through to the UK economy, with inflation holding steady in January.
But, he continued: “Our research suggests
that the longer the current situation persists, the more likely it is that the
cost pressures will start to build.”
The BCC Business outlook survey was
conducted online between 15 January and 9 February 2024.
