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U.K. industries from hospitality to haulage are facing double-digit inflation pressures as the supply-chain crisis in the country escalates.
Wages, materials and freight costs are all soaring as companies grapple with shortages and a lack of workers, representatives from a range of businesses told a parliamentary committee on supply-chain issues Tuesday.
The hospitality sector is short about 500,000 workers and also facing cost inflation of 14% to 18%, said Ian Wright, head of the Food and Drink Federation.
“That is terrifying,” Wright said.
The ripple effects of worker shortages have been driving up costs across the U.K. economy. At the same committee, Duncan Buchanan, policy director of the Road Haulage Association, said it will take a year to sort out trucking issues.
The U.K. government has introduced temporary visas for foreign truckers to try and address driver shortages, but the industry has criticized the effort as too short-lived.
“If you were designing a visa system to fail, you would have designed something like this,” Buchanan said. Driver wages are rising 10% to 20% as a result of the shortages, he added.
Structural Problems
Both executives flagged structural issues which suggest the problems in the food and haulage sectors could be long-lasting.
Buchanan said there has been complacency in government over resolving freight issues, such as a lack of lorry parking, and that requiring back-to-work training is a hurdle that prevents many drivers from coming out of retirement.
Wright said the food industry faces similar issues. He pointed to the number of European workers who have returned home since Brexit, staff being recruited by online companies like Amazon.com Inc., some opting out of work altogether and fewer students who have the ability to work while studying.
“These issues are structural,” said Wright. “We don’t have the demographics.”
Inflation is also hitting manufacturing hard, with material prices up 30% to 40%, according to Make UK, an industry body. The group’s chief executive officer, Stephen Phipson, also told the committee that air freight costs have increased by 10 times, while the cost of a sea freight container from Asia has soared to $20,000 from $1,500 in December.
(Writes through with Make UK comments from 2nd paragraph.)
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