UK SMEs warn of stagflation as costs rise and capacity stalls
A new Enginuity survey finds most UK small and medium manufacturers are pressured to raise prices and are operating below capacity, signalling stagflation risks.
Enginuity’s recent survey of over 200 manufacturing and engineering firms reveals that almost 80% of UK SMEs are under pressure to increase prices because of higher labour and raw-material expenses, and for the first time nearly 75% intend to shift those costs to buyers. Capacity utilisation remains low, with two-thirds of companies not operating at full output for a second consecutive year. Confidence in the next three to five years is below 40%, and financial constraints hinder investment in skills development.
The charity estimates that skills-related gaps cost the sector about £5.2 billion each year. Most SMEs report poor awareness of government assistance, and only a tenth believe new apprenticeship units will close the skills gap. Enginuity’s CEO Ann Watson MBE urges the Chancellor to address these issues ahead of the budget, and calls for the Milburn Commission’s recommendations to consider employer recruitment barriers.
Why it matters
The findings highlight growing inflation pressures on UK manufacturers and a skills shortage that could curb economic growth.
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