With higher inflation levels, high rates of interest, shortages of vital materials, and flagging consumer demand, the UK printing industry is already facing another problem, only six months after lockdowns became history in Britain. IPIA, the print association’s general manager, Brendan Perring, stated that the scenario had caused a difficult time for the sector. The Bank of England has already scaled up interest rates to 1.75% as of 4th August, with a bid towards battling inflation, and this may touch 13% this year itself.
This increase may get inflation back into the 2% bracket by end-2023, through discouraging higher borrowing and spending of citizens, and encouraging more savings alongside. Yet, this will encourage a slowdown of the economy in the United Kingdom as well. Any recession, which is basically a falling GDP scenario across two quarters in succession, should remain till this time, as per the forecasts made by the Bank of England.
The print industry has already been affected by factors like COVID-19 induced debt, higher utility expenditure, scarcity and higher prices of raw materials, and BREXIT. Perring stated that arrangements for supply were complicated in case of printers and the same extends to the outgoing and sales arrangements as well. He also added that pressure has been going up on the sector over the last two to three decades, meaning that it has been just in time all throughout, like several other manufacturing counterparts. Print businesses function just in time and order just about sufficient consumables for finishing whatever they are working on, since they cannot keep their funds locked up in warehouse inventory or stocks. Perring feels that the industry is more vulnerable at the moment, as a result.
This operational method has also increased overall volatility in the print industry. By late July last year, energy expenditure contributed 12% of the price of paper tonnage. They are now higher than 60%. Paper already costs 65% higher throughout Europe, as compared to China, however, where both prices and supplies are stable in comparison. Infra supply chain problems throughout Europe have made the problem worse for the sector. Some papers have to be booked a whopping six months ahead of actual manufacturing as well. Higher energy costs are the tip of the iceberg. Commercial energy costs are also on their way upwards. Increasing prices could be a short-term option for some entities. The IPIA is already planning to seek support from the Government.