The Government is being urged to provide more financial support to businesses as the cost of living surges in the UK.
South West chamber of commerce Business West said firms were being hit with rising supply chain and wage inflation, soaring energy bills and higher taxes.
Inflation rose to 7% in the year to March - the highest rate since 1992 - driven by rising fuel prices and energy bills, according to the Office for National Statistics (ONS).
Business West is now calling on the Government to expand the energy bills rebate scheme to help small firms, particularly energy intensive businesses.
The scheme, announced by Chancellor Rishi Sunak, will see domestic electricity customers being given a £200 loan towards their energy bills from October, which will be paid back in instalments over five years.
“The government must provide urgent financial support to businesses,” said Phil Smith, managing director of Business West.
“Firms are now being hit with rising supply chain and wage inflation, surging energy bills, and higher taxes which will damage UK output including consumer spending."
Economic growth slowed more than expected in February, despite a surge in January of holiday bookings as Covid restrictions eased.
The ONS said gross domestic product (GDP) rose by 0.1% in February, down from monthly growth of 0.8% in January, as the economy began recovering from a wave or Omicron infections. City economists had forecast a monthly growth rate of 0.3%.
“The significant slowdown in growth shown in the ONS report, combined with the pressure on firms to rise prices, shows the UK economy was faltering even before the impact of Russia’s invasion of the Ukraine,” a spokesperson for Business West added.
According to the business body, while tourism-related industries and accommodation services recorded the strongest improvements, growing by 0.2% as restrictions ended and concerns over Omicron reduced, this was offset by production, which fell by 0.6% and construction, which fell by 0.1%.
Business West said a recent survey of more than 400 businesses found that nearly half had increased prices over the last three months.
The British Chamber of Commerce (BCC) warned the upward pressure on energy and commodity prices from Russia’s invasion of Ukraine could drive consumer prices higher and said inflation was likely peak close to 10% later this year.
“Soaring inflation has raised the prospect of a notable slump in economic output in the near term by weakening consumer spending and damaging firms' finances and their ability to invest and grow," added Suren Thiru, head of economics at the BCC.
"The Government must provide urgent financial support, through the expansion of the energy bills rebate scheme, to include small firms and energy intensive businesses, and an SME energy price cap to protect smaller firms from some of the price increases.”
