Supply crisis could curtail growth among small firms, says NatWest chief

·2 min read

NatWest’s business banking boss has said the supply chain crisis is holding back growth among Britain’s army of small firms and warned over mounting problems if shortages persist.

Andrew Harrison said poor availability of key goods and materials was “curtailing” growth in the sector, which comes at a vital time for small firms as they look to bounce back from the pandemic.

Speaking to the PA news agency, he said that while the bank’s one million business customers were currently coping with supply woes and staffing shortages, there could be more damaging effects if the problems prove to be longer-term.

It comes after the NatWest chief executive, Alison Rose, was reported earlier this month cautioning over a “real drop” in sentiment among corporate customers in recent weeks.

She said firms were also facing a cash squeeze as they are left unable to fulfil orders and having to wait longer between ordering goods and selling due to delays caused by the supply issues.

Mr Harrison said: “It may not be impacting (small firms’) current performance, but it might be curtailing their opportunity to grow by accessing new supplies or expanding by recruiting new people.”

“If this is a short-term blip in the economy and a transition from Covid to the new world and passes reasonably quickly, then businesses will be able to absorb that.

“The issue comes if this is much more permanent.”

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NatWest chief executive Alison Rose has flagged falling sentiment among firms in recent weeks (Nick Ansell/PA)

Mr Harrison said small firms have also being barraged by soaring prices for everything from raw materials and wages to fuel and energy – the likes of which have not been seen for more than a decade.

“It has been a long time since the UK has been in an inflationary cycle – there’s not as much experience about on how to run a business if there’s inflation, because it was last like this 10 to 15 years back,” he said.

NatWest, which is the UK’s largest business lender, has seen demand for working capital increase among its corporate customers as they look to expand, but also to cover rising cost pressures.

The group is not yet concerned about the health of company balance sheets, with many still sitting on cash accessed through Government Covid-19 loan and support schemes.

Default levels on Government-backed, bounce-back loans remain fairly low, with more than 90% meeting their repayments, according to NatWest.

But Mr Harrison said there “might be more concern” if current supply issues fail to ease soon.

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