Begbies Traynor’s Ian Walker commented before the Budget:
Ian Walker, Partner at Begbies Traynor's Exeter office
Petrol rises could be the last straw for under-pressure SMEs, threatening to send some under, a corporate recovery expert has warned.
Ian Walker, partner in the Exeter office of national business rescue and recovery experts Begbies Traynor, cautioned that the surge could tip the world back into recession. “Prolonged high oil prices are a very real threat to the UK’s fragile recovery,” he stressed.
His comments came as military action in Libya in support of the insurgency there followed the continuing revolution and unrest sweeping the Middle East after the uprisings in Tunisia and Egypt. “There is a real possibility of petrol costs going higher yet”, noted Mr Walker.
He said: “The 2008-09 recession was preceded by record high prices for oil and other commodities. Today, that is happening again, with average pump prices for both petrol and diesel at new record highs of well over 130 ppl, and the oil price at $103 a barrel.
“But oil prices had been rising again before the Libya effect. The concern is that this will tip the UK back into recession even though the Saudis have offered to supply extra oil to cover the disruption to Libyan supplies. If high prices continue this will inevitably put an extra squeeze on household budgets and SMEs that are already struggling. This is made worse by inflation now running at twice the Bank of England’s target rate with the spectre of interest rate rises looming to control this.
“We hope that the chancellor does indeed surrender the fuel duty rise flagged up in the Budget, as sources have suggested. An AA survey in February highlighted how the Government tax-take already stood at 62.4 per cent and that some European countries had actually seen a drop in the cost of fuel during late January. The price of oil affects so many fundamentals – from the disposable income available to already stretched households to the fixed overheads of many businesses. SMEs are finding it increasingly difficult to pass on price rises. It is an extremely worrying time.”
The UK has the eighth highest unleaded price in Europe and the second highest diesel price.
