Following the uncertainty created by Brexit – not to mention the latest election – we are having lots of conversations with clients about the rising cost of doing business in the UK & Ireland.

There are a number of factors at play here and over the next few weeks we will explore some of the themes and some of the issues that are shaping the rising costs being seen by UK organisations. Our clients come from a wide range of sectors, including Manufacturing, Retail and Wholesale, Professional Services and Education as well as the charity and public sectors.

Our core principle is to return budgets to be better deployed within your organisation, rather than propping up the bank accounts of your suppliers.

We hope you enjoy reading, and we welcome the discussion that will follow about what you can do with our help to combat rising costs.

Navigating Rising Costs

The current period is a highly volatile and uncertain climate.

A combination of political, financial and security concerns, together with the ongoing disruption caused by constantly evolving technology, represent a challenging set of circumstances for organisations to navigate. Whilst many are predicting growth, the pressure on budgets and a need to react to changing circumstances in the face of an unpredictable future is bringing cost management to the forefront of many an agenda.

Following the UK’s decision to leave the EU and an election, where by common consent the winners lost and the losers won, this is truer in the UK than anywhere else. The challenges faced by the UK economy are real: since the height of November 2015, sterling has fallen by more than 16%. Whilst it rallied a little, by 2.5% between February and May according to the Bank of England, the election result caused it to fall again by 2%.

This devaluation – whilst good for UK exporters – has had a significant effect on input costs to UK businesses. The BoE predicts an increase of 6% this year and the Monetary Policy Committee further states:

“Given the nature of the recent fall in sterling, the speed of pass-through from import prices to consumer prices is likely to be faster than average.”

This confirms what we’ve been seeing in our conversations. The rising costs are impacting already.

Manufacturers and suppliers in a range of industries are already raising prices in reaction to the macroeconomic environment. Raw material price increases and erratic market conditions add risk to buying decisions. Organisations that don’t fully understand the market they are purchasing from are usually unable to achieve the best possible value or work with suppliers to drive performance, service and price.

Whilst we’ve been able to successfully challenge price increases in some areas, there are justifiable increases already in place and more on the way, in a range of cost areas. Only by focussing on dealing with these costs proactively, using specialist knowledge, will businesses successfully negotiate the testing times that lie ahead.

“The Bank of England Monetary Policy Committee forecasts both a 6% increase in input costs and the likelihood that these will be passed onto customers more quickly.

For more information, please contact us.