Economy

Business costs are falling, say accountants

The cost of doing business in the UK fell in February for the first time in six years, according to business advisors at BDO.

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The cost of doing business in the UK fell in February for the first time in six years, according to business advisors at BDO.

Economy

Business costs are falling, say accountants

The cost of doing business in the UK fell in February for the first time in six years, according to business advisors at BDO.

Share this article

The cost of doing business in the UK fell in February for the first time in six years, according to business advisors at BDO.

The drop, the first reported in BDO’s inflation index since 2009, was due to a steep fall in the price of oil. Crude oil prices have dropped by nearly half since last summer.

The reduction of input prices – the cost of raw materials used to make finished products – makes it easier for businesses to make a profit and reinvest in growth.

Peter Hemington, partner at BDO LLP, said falling costs would help the UK’s economic recovery, but that the government should increase public sector investment to capitalise on the positive data.

“British business is well placed to take advantage of falling costs, to help them to bed in growth,” he said in a statement released by BDO.

“Lower input prices will help entrench the recovery, as consumers gain more spending power. However, the UK economy still has substantial spare capacity.

“Spending on infrastructure is one of the most effective ways to push the economy back toward full employment and keep the recovery on track.

“Government debt is cheaper than it’s ever been, and now, with falling raw material costs there is a fantastic opportunity for increased public sector investment.

Hemington said the chancellor should use the government’s last Budget before the general election to spend big on growth-boosting measures.

“As we head towards the Budget, the Chancellor needs to do more to capitalise on this for the benefit of all of us,” he said.

There was also good news in BDO’s optimism index, which revealed business confidence is flying high.

The index registered a score of 104.9 for February, up from 104.4 in January and the same as the traditionally busy Christmas period.

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Business costs are falling, say accountants

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