Table of Contents
- 1 ‘Anxiety is at its maximum level’
- 2 ‘I’ll probably have to increase prices again before April’
- 3 ‘We went in really bullish after lockdown, but now the spectre of inflation is kicking in we’re really nervous’
- 4 ‘I’m a pretty laid back guy, but I’ve been shocked’
- 5 ‘It took the shine off what otherwise should have been a great year last year’
The UK’s cost of living crisis escalated in December, as inflation jumped to its highest level in almost 30 years at 5.4%.
The Bank of England expects the consumer prices index will climb to about 6% by April, and the International Monetary Fund warned inflation and Omicron will dent global growth in 2022.
As inflation climbs the chancellor, Rishi Sunak, is under pressure to rethink April’s hike in National Insurance as business large and small face spiralling costs.
Five businesses speak about how inflation and rising energy costs are affecting them.
‘Anxiety is at its maximum level’
Davide Angeletti, coffee shop owner
When the gas bill arrived Davide Angeletti assumed it must be a mistake. His supplier told him it was correct.
“It’s terrible, in the space of three months the energy price doubled,” said Angeletti, the 51-year-old owner of Ovenbird Coffee roastery in Glasgow. He sells mostly to other businesses and, during the early pandemic, was supplying free coffee to hospitals.
Angeletti was hit by surging energy costs when his supplier People’s Energy went bust in September. He was switched over to Scottish Gas. “I used to pay in a peak time £500 a month, which was manageable, and now I have £1,100 or £1,200 – we don’t know what to do.”
The company’s energy rate jumped from 16.52p to 30.972p per kilowatt hour, plus a 139.330p pKWh standing charge during the handover. It wasn’t just energy; raw materials from Europe have soared, such as a pallet of raw coffee climbing from £90 (“before Brexit”) to £300-350 now.
It means Angeletti must weigh up layoffs from his eight staff. “I want to keep them, we are a big family,” he said. Staff have rent to pay and are applying for mortgages. “To tell them, ‘Sorry guys I can’t afford you’ is one of the worst things I could say’.”
Angeletti feels the government should do more to support small companies, perhaps an energy cap for SMEs. But, he said, “we know exactly what this prime minister thinks about business”.
Angeletti frets over bringing the stress home to his family. “Anxiety is at its maximum level,” he said.
‘I’ll probably have to increase prices again before April’
Dawn Gill, jeweller
“In just two years I’ve had to put my price up by £7 for some items,” said Dawn Gill who makes and sells silver jewellery and crochet gadgets in Exeter. “The cost of raw materials like sterling silver has meant I’ve had to refine my costs.”
Gill, who is a sole trader and started her business in 2014, said it costs bullion dealers more to ship and import gold and silver into the UK since Brexit, with prices also fluctuating because of the pandemic. At the beginning of 2019 it was about £378 per kilogram for silver and now it’s about £550. “It’s been a bit of a nightmare,” said the 50-year-old. “At least the rise in energy prices won’t directly affect me as we generate most of our own electricity using solar panels and I tend to use just a hydrogen powered torch.”
As a result she has had to adjust the prices of her items and passes the increase in cost on to her customers. “A hooker ring that requires no soldering or hallmark, because it falls under the exemption weight, was £21 in November 2019 but now sells for £24. I’ll probably have to increase the price again before April.
“Then there’s the cost of packaging and consumables like burrs and blades, but one of the major concerns is the cost of sales due to Brexit – directly in the form of sales tax and allied Etsy fees, and indirectly because of paperwork and customs official registrations.
“About 80% of my export pre-Brexit was to the US and Europe, with the latter making up around 40% of that.’’ said Gill. “Now I only export around a third outside the UK and even then my European exports are only around 5% of that figure.”
Most of her UK customers are understanding about price increases but she has concerns about the future. “It’s been difficult during the pandemic as I normally sell at fairs and we haven’t had many,” she said. “The cost of bullion is such a volatile market that I’ve learned now to just suck it up. I’m not trying to stress about it as there’s nothing I can really do.”
‘We went in really bullish after lockdown, but now the spectre of inflation is kicking in we’re really nervous’
Andrew Hilliard, recruitment firm owner
This year was supposed to signal a bold new future for AJ Chambers, Andrew Hilliard’s specialist recruitment firm in Southend. After 12 years operating, the 40-strong company planned to move out of leased offices into its own renovated digs.
Due to inflation pressures however, “we had to scale down”, Hilliard said, and lengthen the building process “to rebuild our war chest”. A wellbeing and collaboration area, with a gym, was erased from the blueprints. “Inflation has been creeping up for sometime now,” he said. “It’s completely transformed the budgets.”
There’s no way to cancel the move, which involves the revamping of an old supermarket, its new home. “We’re in too deep, we have to go ahead,” Hilliard added. His supplier for the renovation said glass prices have risen by 30%, twice, plywood prices have climbed from £7 to £36 a sheet since 2019 and Hilliard’s staff salaries have risen about 10% in the past year, forcing it to scale back hiring.
Hilliard’s expansion plans were drawn up amid the post-lockdown bounce-back of last year – a time of growth optimism. “We went in really bullish, but the spectre of inflation is kicking in,” he said. “We’re really nervous about that now.”
‘I’m a pretty laid back guy, but I’ve been shocked’
Tim Haddock, construction company owner
Just weeks ago, Tim Haddock, owner of a construction company in Derby, said he could buy a bag of backing-plaster for just over £8. This week he said it’s up to about £11.
“I just keep looking at prices and thinking, that’s ridiculous, it’s insane,” he said.
Haddock, 56, is director of a small building company, Kay and Haddock, employing three people and working on extensions, conversions and domestic refurbishing. He said the garage revamping business boomed during the pandemic; people wanted to elevate their homes during lockdowns. But the start of 2022 feels uncertain.
“I am seriously worried about price increases,” he said. “I seriously believe we’re rapidly heading to a point where customers will just balk at the cost and stop having work done,” which would raise the grim prospect of layoffs.
Softwood tongue-and-groove timber cladding cost about £30 for a few square metres before Covid, he said, but now it’s almost £90. Plaster was roughly £4-£5 a bag in 2019, now about £10. And Brexit [and global supply chain] effects have compounded the problem – sometimes “you just can’t get hold of stuff” or must spend hours searching. The national insurance hike in April adds further pressure.
“Prices are rising every week,” Haddock said. “I’m a pretty laid back guy – you have to be in the construction business as everything changes all the time – but I’ve just been shocked.”
‘It took the shine off what otherwise should have been a great year last year’
Steve Keeton, managing director of Nippon Electric Glass
Steve Keeton, the managing director of Nippon Electric Glass, had expected a stellar year for the fibreglass manufacturer in 2021.
“Then we saw energy prices rising. At first our advisers were telling us not to worry, that there would be a small peak in energy prices and they’ll soon come down. But they didn’t,” he said.
The UK’s only maker of reinforced fibreglass directly employs 350 staff at its Wigan site, and supplies its materials to the wind power and automotive industries across Europe. Thanks to the green energy boom its biggest challenge used to be keeping pace with demand. But energy prices are beginning to take a toll.
“We lost money, on an operating level, every single month over the second half of last year. It took the shine off what otherwise should have been a great year last year,” Keeton said.
The glass industry, like many manufacturing sectors, is a high intensity user of both gas and electricity which faces an uncertain future due to rocketing energy market prices.
“I personally don’t want a government bail out,” Keeton said. “As a leader in my business I understand that my job is to create the right environment for my team to be successful. So what I expect from the government is for them to create the environment for business to be successful. That means a stable and predictable energy supply situation, and the infrastructure to support this,” he said.