Small businesses in North East could face crisis in six months

Representatives of small businesses in the north east of England have warned the government that they could be facing a major crisis in just six months if essential costs keep rising.

The Federation of Small Businesses' North East regional organiser, David Longstaff, said rising inflation and unprecedented fuel costs were threatening the whole economy of the region. He said a fuel price stabilizer should urgently be put in place as the first step to try to help them.

"Current fuel prices are putting further pressure on cash flow, which is so vital to small businesses," he said. "A stabiliser would put an automatic freeze on any further price rises."

Mr Longstaff said he was hearing the same thing from local businessmen and women several time a day, that the pressures of rising running costs were fast coming to a head.

They were certainly not helped by the jump in the UK inflation rate in December, that saw the Consumer Prices Index (CPI) rise to 3.7 per cent, up from 3.3 per cent in November, and the Retail Prices Index (RPI) inflation rise to 4.8 per cent from 4.7 per cent.

Mr Longstaff warned that the flexibility inherent to small businesses has helped them to weather the recession, but VAT increases and cost increases are areas were their flexibility cannot help them.