Rising fuel costs a concern for small UK firms

Small businesses are facing increasing financial pressures as fuel prices continue to rise, according to a leading business group.

With costs at their highest point for three years, the Federation of Small Businesses has warned that operational costs are spiralling for small firms.

The additional costs have hit logistics and haulage firms heavily and the organisation's national chairman Mike Cherry has urged the government to take action.

Figures from the Department for Business, Energy and Industrial Strategy show that the average price for one litre of petrol has hit £1.21, up from £1.02 per litre in early 2016.

It is a similar situation for diesel vehicles and the FSB believes rising fuel costs are the primary reason behind mounting operational costs for small firms.

Mr Cherry has also called on the government to ensure that fuel duty is not raised in 2018 - Chancellor Philip Hammond announced in last November's budget that it would be frozen for an eighth consecutive year.

He said that affordable travel is 'vital to the success' of Britain's small businesses and the warning comes against a backdrop of falling business confidence.

A record number of small business owners have suggested they intend to cease operations, sell up or cut staff with costs at a five-year high.

Some businesses may turn to administration processes in order to rescue the business as a going concern or to deliver the best results for creditors if that is not possible.

Others may want to consider solvent restructuring processes if they wish to streamline their operations or secure their financial future.

The FSB has suggested that the insurance premium tax should be the focus of attention as insurers have said it drives up premiums which has a knock-on impact on a wide variety of insurance that is needed by businesses.

Both the AA and the RAC have said they expect fuel costs to continue rising in the early part of 2018, which means expenditure for small firms is also likely to remain high.

By Phil Smith


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