UK small businesses are having profitability reduced by inflation

Creditsafe reports that 10% of UK small businesses have had their expenses go up by more than 25% in the past year, and companies with up to twenty-five staff are the worst affected.

76% of new businesses, which were established between 1995 and 1999, have had this level of cost increase in the last twelve months.

Creditsafe reports that this business expense escalation has been mainly caused by fuel and borrowing cost increases. The cost rises have produced a strain on profitability and have deferred expansion plans for many UK small businesses.

The consumer price index inflation rose to 4.7% in August, up from 4.4% in July, which is more than double the government's 2% target.

So UK small businesses have to face substantial increases in the cost of doing business, as well as credit availability restrictions due to the depressed economic circumstances - plus slow paying clients, particularly regarding payments from large companies and government departments.

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