UK's Supply Chain Crisis to Persist into 2023, Worsening Inflation and Delaying "Levelling Up" Agenda

Business leaders from various sectors, including food and drink, hospitality, construction, and autos, have warned that the UK's supply chain crisis will continue for at least two years, causing further inflation and delaying the government's "levelling up" agenda. The crisis is attributed to labour shortages, price rises, and global economic factors, including Covid-19 shutdowns and international freight rate increases.

The warnings come from Ian Wright, chief executive of the Food and Drink Federation, who told MPs that every business expects the crisis to last into 2023 and 2024. Manufacturing groups have noted that materials costs have risen 30 to 40% and international freight rates have increased 10-fold from pre-pandemic levels, with inflation in the food and hospitality sector running at 14 to 18%. Stephen Phipson, chief executive of Make UK, stated that companies are struggling to fulfil orders and are facing "really serious issues" in terms of price increases and component availability.

The business leaders criticized the government's failure to take a strategic approach to tackling labour shortages, which they deem a "structural" feature of the economy. They also responded negatively to the government's recent announcement of a three-month visa scheme to cover lorry drivers and meat workers, stating that it fails to address the scale of the shortages.

Key Takeaways:

• The UK's supply chain crisis is expected to persist for at least two years, causing further inflation and delaying the government's "levelling up" agenda.
• Labour shortages, price rises, and global economic factors, including Covid-19 shutdowns and international freight rate increases, are contributing to the crisis.
• Materials costs have risen 30 to 40% and international freight rates have increased 10-fold from pre-pandemic levels.