Those of you who have listened to Radio 5 Live recently may have heard our esteemed MD, Chris Effendowicz, sharing his thoughts on the impact of high commodity costs on UK manufacturers. For us this is a very important issue but it has wider implications, as several commentators have already said. Although the general assumption is that the rise in commodity prices in a recession can only be due to speculation, as traders work the futures market. I’m sure that this is true, but also prices are going up because demand is outstripping supply. In some cases, manufacturing sites have been shut down for efficiency savings, meaning that there is no spare production to cover spikes in demand, meaning shortages and hence higher prices. So even if raw materials costs fall, as they undoubtedly will one day, the fact that is that higher prices are probably here to stay. Which is bad news all round.
Show from April 28th