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UK chemical sector slows down amid inflation and supply chain issues

UK chemical sector slows down amid inflation and supply chain issues

The chemical industry in the UK reportedly saw a drop in its quarterly sales, the first time since the peak of the Covid-19 pandemic, with sales likely to continue deteriorating as the winter season approaches.

As per the latest survey by the Chemistry Industry Association (CIA), firms are struggling with constant supply chain issues that are delaying orders and inflation which is affecting their margins and consumer prices.

According to the report, two out of five firms reported a decline in sales in the third quarter, while 90% of them confirmed that the challenges from rising labor costs have worsened in the last quarter.

Most surveyed firms reported an average hike of 76% in their input prices, which has led to higher output prices, around 81%, putting further pressure on the sector.

Steve Elliott, Chief Executive at CIA, warned that the industry will face a tough winter, and that businesses are not safe from danger despite the Energy Bill Relief Scheme.

Steve said that with inflation reaching nearly 10% in the country with predictions of further rise and the ongoing cost-of-living crisis, demand will remain damp through the rest of the year. The agency expects with surge to continue into next year.

Elliot added that the CIA will work with the government regarding future plans to alleviate the burden on businesses. It is also ready to contribute to the government’s six-month support package review due in January 2023.

It was mentioned that a more long-term plan was needed to maintain existing, as well as attract new jobs and investments to the UK.

Speculations have it that the companies CIA surveyed will have higher sales, production, and new orders once the sector is able to push through the coming months. However, these estimations also contain high uncertainty levels.

The chemical industry played a critical role in the UK’s response to the pandemic by supplying vaccine ingredients, PPE, and hand sanitizers.

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Pooja Sharma

Pursuing her professional career as a content writer for over two years now, Pooja Sharma is endowed with a post-graduate degree in English Literature. The articles that she writes are a balanced blend of her ever-growing love of language and the technical expertise that she has gained over the years. Currently Pooja pens insightful articles for Newsorigins and numerous other websites, covering subjects such as business, finance, and technology.