Four fifths of firms (80%) report an existing or expected impact from the Iran conflict, according to research by British Chambers of Commerce (BCC).
Energy price increases and shipping costs were the direct impacts most frequently cited by surveyed businesses. Over 800 firms took part in the online research during April, the majority SMEs.
The research shows over half of firms (55%) said they are already directly impacted by the unrest in the Middle East, while a quarter (25%) expect to be in future. Only 16% said they don’t expect any direct impacts and 4% said they were unsure.
Manufacturing was the sector reporting the biggest impact, with 68% of businesses already affected. A further 23% of manufacturers said they anticipate they’ll soon be impacted.
According to the research, three quarters of firms (75%) expect an increase in their energy bills in the next year, because of the conflict. 43% of responding businesses said they expect their energy costs to increase by more than 20% in the next 12 months.
Meanwhile over a third (36%) of businesses told the BCC they will find it difficult to pay their energy bills over the next year. This has risen from around a quarter (27%) at the start of the year.
“Fuel costs are having a significant impact on my business, and the availability of fuel could become an issue very soon.”
“Shipping costs are higher, and routes/times are unpredictable. Cost of flights to visit suppliers and customers in Asia are now costing more as the routing options have diminished.”
“Supplier price increases using force majeure. Increases from 3% to 30% with just a few weeks' notice.”
“100% of business stopped from Middle East countries”
The impact of the Iran conflict is being directly felt by firms the length and breadth of the UK. Higher energy bills, shipping disruption and the rising cost of raw materials are daily concerns for business. “Even if the current ceasefire soon signals the end of the conflict, the economic reverberations will be felt for many months to come. The geopolitical kaleidoscope has been shaken and there’s no quick fix. “The ongoing uncertainty over the Strait of Hormuz is deeply worrying for UK businesses relying on that maritime passageway. “Consumers will be given clarity over their energy costs in the coming days, but for businesses there’s no price cap. While government has provided some relief for high energy users, most UK firms remain vulnerable to the volatile global market. “Ministers should consider funding renewable levies on business bills, roll out a national business energy advice scheme, and strengthen protections for firms against unfair pricing practices. “In the medium term, accelerating grid reform, improving energy storage capacity and incentivising firms to electrify are essential to insulating our economy against these price shocks.
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