As we enter the New Year, I have the words of Roger Daltrey ringing in my ears - "Meet the new boss. Same as the old boss". But the "boss" this time isn't some shady authoritarian figure. More worryingly, its the looming spectre of 'stagflation'.
As recently as the start of October, not many openly disagreed with the Prime Minister when he said "“People have been worrying about inflation for a very long time. I’m looking at robust economic growth, and by the way those fears have been unfounded.” Now of course, three months can seem like an age in the time of Corona (the first case of the Omicron wasn't recorded until November), but the recipe for stagflation - spiralling wage and supply chain inflation, combined with sluggish growth - has been brewing for a while.
It's not often that I find myself in the target market of the businesses I'm helping steer through choppy waters professionally (rumours of my extensive Monsoon clothing collection are just that - rumours), but I have been having my own headaches dealing with a kitchen renovation. Every tradesperson I'm dealing with has found a sudden need to add anything up to 20% for labour costs on top of the initial quotes or risk losing them to other projects, and if anyone knows where to source some premium chrome plug sockets before Easter, I'd be grateful for the tip-off! So it was reassuring to see I wasn't alone. The CFO of Glenveagh has also been bemoaning the same challenges on a much larger scale in City AM, despite their much larger buying power.
And it's not just in home improvement - we're seeing the same pressures across all industries be they based on skilled, semi-skilled, or unskilled labour. When you can get up to £22 per hour for cleaning London hotels, or stacking in an Amazon warehouse, suddenly working as a labourer for half that seems a hard sell (particularly on a morning like today when the mercury was below -5!).
Will this lead to more restructuring an insolvency problems in 2022? Already we've seen insolvency stats with construction, property development and engineering related businesses representing c18% of all recent failures. If I was a betting man, I'd certainly take that wager.
"When you can get up to £22 per hour for cleaning London hotels, or stacking in an Amazon warehouse, suddenly working as a labourer for half that seems a hard sell"