Petrol shortages are just the beginning and complacent consumers are unprepared for an inflation shock, a personal finance expert has warned.
Some petrol stations around the UK have been running out of fuel amid panic-buying at the pumps.
Britain’s acute shortage of HGV drivers lies behind this and other supply chain problems affecting manufacturers, construction firms and retailers of all kinds.
Tesco and other supermarkets, as well as leading business groups, are pressing the UK Government for action – including a relaxation of the immigration rules – as a combination of Brexit, Covid-19 and other more longstanding structural problems threaten to spoil Christmas.
Meanwhile, the Bank of England Bank has predicted inflation will top 4% before the end of the year, fuelled by rising energy costs.
Neil Lovatt, commercial director at financial services firm Scottish Friendly, said: “The government and Bank of England face an uphill battle thanks to the vicious psychology of inflation.
“They would be wise to start doing something now, before the situation gets totally out of control.
“Far from being at the beginning of the end of the crisis, we are simply at the end of the beginning of our woes.”
He added: “As the latest, highly worrying example of petrol stations forced to close by supply chain issues shows – once the inflation shock hits, it is extremely difficult to control.
“Plus its fallout will be compounded because the bulk of the country has never had to go through a highly inflationary environment.”
Inflation has not been a “real issue” in the UK since the end of the 1980s”, Mr Lovatt said.
He added: “That means most people under the age of 50 have no real experience of how difficult it can be managing a budget in an inflationary environment.
“Adapting to that new world will not just be a case of having to cope with a little more arithmetic.
“It’s about constantly having to adjust your budgets because you literally run out of money by the end of the month.
“These are serious issues. Complacency has set in across the board and there could be a lot of people in for a rude awakening.
“It is time for policymakers to get a grip on the situation.”
Most people under the age of 50 have no real experience of how difficult it can be managing a budget in an inflationary environment.”
Neil Lovatt, Scottish Friendly.
Temporary visas are among the ideas being suggested to ease the HGV driver shortage.
The Confederation of British Industry (CBI) has called on the UK Government to a “COBR-level” response, reserved for national emergencies, to the developing crisis.
CBI members have reported sharply increasing material costs and shortages of key manufacturing components, with producers now also facing rocketing energy prices.
‘Major threat’ to recovery
Tony Danker, the employer group’s director-general, said: “After speaking with hundreds of business leaders… it’s clear there’s a total mindset shift from growing to coping.
“This is now a major threat to our recovery, and the government needs to step up its response to a new level of both speed and boldness.
“While many of these challenges are global in nature, the solutions we need are local.”
Mr Danker added: “This is as much about opportunity than threat.
“We can be one of the fastest nations in the world to respond to this global surge in demand.
“If we can unblock these constraints together, we can race ahead in terms of recovery and growth.”