Member Article

UK businesses see overall costs fall for first time in six years

UK businesses saw overall costs fall in February for the first time in six years, a survey from BDO suggests

The accountancy and services group said that its inflation index had descended into deflationary territory for the first time since 2009.

BDO has attributed fall to the sharp drop in crude oil prices, which have almost halved since June.

It said the fall in prices would enable firms to invest in growth.

Malcolm Thixton, partner at accountancy and business advisory firm BDO LLP in Southampton, said: “Businesses are well placed to take advantage of falling costs, to help them to bed in growth. “Lower input prices will help entrench the recovery, as consumers gain more spending power. However, the economy still has substantial spare capacity.

“Spending on infrastructure is one of the most effective ways to push the economy back toward full employment and keep the recovery on track. Government debt is cheaper than it’s ever been, and now, with falling raw material costs, there is a fantastic opportunity for increased public sector investment. As we head towards the Budget, the Chancellor needs to do more to capitalise on this for the benefit of all of us.”

The report also found that both business confidence and companies’ hiring intentions remained high, with companies expecting the steady growth in the UK economy to continue into mid-2015.

Its research also showed companies were increasing the number of people they are hiring for work, with a net balance of 4.2% of small firms saying they had taken on new staff in the last quarter.

However, it warned that companies were still struggling with skills shortages, which the report found were continuing to get worse.

This was posted in Bdaily's Members' News section by Ellen Forster .