Soaring prices hit aftermarket businesses as petition started to reduce fuel duty and VAT

Date: Friday 11 March 2022

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Businesses in the automotive aftermarket continue to face higher operating costs with increases felt across the board in areas such as people, utilities, raw materials and transport.

With fuel reaching record high levels, there was potentially some good news with crude oil prices stabilising below $120 a barrel after the UAE signalled it would push other oil exporting nations to boost production.

However, experts warned that oil prices would remain volatile and could spike further, while gas prices look set to remain high as Europe weans itself off Russian supplies.

Recruitment
While the skills shortage has been well documented, the pressure on businesses to offer higher salaries has been challenged by rising inflation, which has seen overall business costs increase.

Raw Materials
The surge in commodity prices that followed Russia’s invasion of Ukraine will worsen the squeeze on UK living costs and reduce growth, economists have warned.

Russia is a major producer of platinum and palladium. Palladium is used in the manufacture of catalytic converters.

Palladium prices have surged in recent weeks, rising by 13% in the past month.

Transport
Businesses have been impacted by rising costs linked to transport in different ways.

Fuel and the cost of shipping containers have led to increased costs of transporting goods at a time when businesses are also adapting to new customs regulations and trade agreements.

An official petition to the UK Government to reduce the cost of fuel through a reduction of 40% in fuel duty and VAT for 2 years is heading towards 100,000 signatures.

Although the campaign was launched last year, it has gathered momentum in recent weeks due to the impact the Russian invasion of Ukraine has had on the price of fuel. The deadline for the petition is 18 April, and should it reach its target number of signatures, it will have to be debated in Parliament.

https://petition.parliament.uk/petitions/599089 

Recession looms
Commenting on the latest ONS GDP figures for January 2022, published today, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:

“While there was a strong rebound in output in January as the impact of Omicron started to ease, the figures have been pushed into the rear-view mirror by renewed domestic and global shocks, including Russia’s invasion of Ukraine.

“UK’s economy could stall in the near term as rising inflation, soaring energy bills and higher taxes increasingly drag on activity, despite a probable boost to output in February from the end of Plan B Covid restrictions.

“Russia’s invasion of Ukraine has increased the risk of a recession in the UK by exacerbating the already acute inflationary squeeze on consumers and businesses and derailing the supply of critical commodities to many sectors of the economy.

“Raising interest rates and taxes at this time would weaken the UK’s growth prospects further, by undermining confidence and diminishing households' and firms' finances."

 

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