Pictured above: John Kelly, partner in the Birmingham office
of Begbies Traynor
Petrol rises could be the last straw for under pressures SMEs,
threatening to send some under, a corporate recovery expert has
warned.
John Kelly, regional managing partner in the Birmingham office
of Begbies Traynor, cautioned that the surge could tip the world
back into recession.
"Prolonged high oil prices are a very real threat to the UK's
fragile recovery," he stressed.
His comments came as revolution and unrest continued to sweep
the Middle East following the uprisings in Tunisia and Egypt.
The possibility of Western military action in Libya in support
of the insurgency there, and concern that Saudi Arabia could be
next, may mean petrol costs going higher yet, noted Ms Palmer.
He said: "'Peak oil' is the point at which global oil production
reaches its maximum - the risk of this contributed to the reality
of the financial meltdown of 2007. And the 2008-09 recession was
preceded by record high prices for oil and other commodities.
"Today, according to the AA's report for February, that is
happening again, with average pump prices for both petrol and
diesel at new record highs - unleaded up 0.5 pence per litre on the
month to 128.8ppl and the oil price at $103 a barrel.
"But oil prices had been rising again before the Libya
effect.
"The concern is that this will tip the UK back into recession
even though the Saudis have offered to supply extra oil to cover
the disruption to Libyan supplies.
"If high prices continue this will inevitably put an extra
squeeze on household budgets and already struggling SMEs. This is
made worse by inflation already running at twice the Bank of
England's target rate with the spectre of interest rate rises
looming to control this.
"The price of oil affects so many fundamentals - from the
disposable income available to already stretched households to the
fixed overheads of many businesses. SMEs are finding it
increasingly difficult to pass on price rises. It is an extremely
worrying time."
Mr Kelly said it remained to be seen whether influences could be
brought to bear to stem the price jump, given the AA survey
highlighted how last month the Government tax take stood at 62.4
per cent and some European countries had seen a drop in the cost of
fuel during late January.
"Given the scale of this country's deficit the Government has
little room for manoeuvre on tax and, as oil prices are a world
issue, they are largely in the hands of others. Indeed it could be
worse - the stronger pound has so far cushioned some of the
blow."
Northern Ireland has the highest price for unleaded petrol at
129.9ppl; Yorkshire and Humberside recorded the lowest at
127.8ppl.
The average for the West Midlands is 128.6ppl and for the South
East it is 129.5ppl.
Supermarket prices for unleaded also rose over the month by
0.7ppl to 127.4ppl. The gap between supermarket prices and the UK
average for unleaded has fallen to 1.4ppl.
The UK has the eighth highest unleaded price in Europe and the
second highest diesel price.
For more information about Begbies Traynor, please visit their
website here: www.begbies-traynorgroup.com