The situation over the last few weeks concerning the Russian attack on Ukraine has been an exceedingly fast-moving one, and there has been much turbulence and unpredictability arising from the crisis for businesses in the UK, too.
Indeed, it is only now – several weeks after the beginning of the major escalation of the broader Russo-Ukrainian conflict that has been ongoing since 2014 – that we can begin to get a serious sense of what the military invasion could mean for British businesses in months and years to come.
A conflict that has exacerbated previous inflation and supply-chain worries
Even prior to the commencement of what Russia has termed a “special military operation” rather than an invasion or war, businesses in the UK and around the world were struggling under the weight of hefty inflation and considerable supply-chain disruption.
In the early stages of the conflict, experts were quick to warn that the crisis would amplify the already-adverse hit delivered to the global economy by the COVID-19 pandemic, and help drive up the costs of energy, shipping, and commodities.
With regard to the UK specifically, the Government has moved to reassure those concerned about the potential impact of the war on gas supplies to homes and businesses, stating that “the current situation facing the UK is not a question of security of gas supply, but of high gas prices set by international markets.”
The Government added that the country’s exposure to volatile gas prices elsewhere in the world “underscores the importance of our plan to generate more cheap, clean renewable energy and nuclear power in the UK to reduce our reliance on expensive fossil fuels.”
Even putting to one side the gas-price situation, however, concerns have been voiced since the onset of the conflict about potential new or escalated cost pressures right along the supply chain. Emerging signs of wavering business confidence.
While the seemingly short-lived impact of the Omicron variant of COVID-19 has recently helped buoy business confidence in the UK, we are now starting to see indicators of the negative effects of the Russia-Ukraine situation.
Speaking to the UK Parliament’s Treasury Committee recently, Tony Danker – director-general at the Confederation of British Industry (CBI) – indicated that businesses’ confidence was beginning to fade, due to heightened costs for energy and other inputs.
Businesses to have expressed concerns about difficult economic conditions ahead have included drinks maker Fever-Tree, and The Restaurant Group (TRG), which operates 400 restaurants and pub restaurants around the UK.
Fever-Tree, for instance, said that it had lowered its profit guidance in light of what it described as a “dramatic increase” in commodity prices since the beginning of the Russian invasion. However, chief executive Tim Warrillow did say that the long-term global opportunity for the business remained “substantial”.
Meanwhile, TRG said that the increasing cost of gas and electricity would add a further £6 million to £7 million to its expenses for 2022. The company said that it anticipated its costs would go up by over 5% this year, due to price increases in commodities and pressures on supply chains.
London Registrars can help your business to navigate the continuing uncertainty
Even at this stage of the conflict, much remains unclear about the full range of consequences likely to unfold for British firms in the months and years ahead. And of course, if you are a business owner, you are likely to be mindful of the limited scope you may have to mitigate against the effects of external events.
Nonetheless, there are likely to be certain steps that you can take to ensure the highest standards of governance and compliance within your organisation, and London Registrars can very much assist you with this aim.
To learn more about our full wealth of company secretarial and business support services ranging from directors’ service addresses and minute book maintenance to ensuring timely filings at Companies House, please do not hesitate to contact our team today.