Work by Threadneedle Street’s own analysts suggest that firms are intending to keep prices high, despite falling costs
examines how a wide spectrum of businesses plan to cope over the next few months and into 2024.
Questions about profits have formed part of the researchers’ questionnaire only since May this year but, impressively, they have also examined the respondents’ annual accounts as far back as 2005. Not all businesses are flourishing. The survey found the weakest firms had survived on profit margins at or below zero for much of the last decade. Some might ask how they managed to survive if their margins were negative, but that is not made clear in the research.
. Governor Andrew Bailey has urged workers on many occasions to forgo wage rises to help prevent inflationary pressures building on companies. He expects to see a mechanical reaction, almost as if he is talking about physics and not economics, from wage rises feeding directly into prices. There is always a danger when looking for causation, especially when data points to a strong conclusion. In this case, the small sample size used by the Bank’s survey is notable: it covers 2,500 of the UK’s 5m-plus companies. This may be a small sample, but the Bank believes it can provide significant information about firms in relation to many other subjects, so why not this one?
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