SMEs set to raise prices amid stagflation fears

Oct 5, 2026 | Industry News

Ann Watson e1791191152600 SMEs set to raise prices amid stagflation fears

Ann Watson, CEO of Enginuity

SMEs are preparing to pass on rising costs to customers, as almost 80% feel under pressure to raise prices due to escalating labour and raw material costs.

A recent survey from Enginuity suggests almost 3/4 of companies asked said they are willing to pass the buck to their customers – a first since the survey started – amid future economic uncertainty.

In another blow to the Government’s growth ambitions, 2/3 of SMEs are not operating at full capacity for the second consecutive year.

It also suggests less than 40% of respondents reported confidence in the next three to five years, although financial constraints remain the most significant barrier to investing in skills development.

Ann Watson MBE, CEO of Enginuity, said: “SMEs are telling us they are at their limit and cannot hold back prices any longer while at the same time, they are not able to achieve maximum production.

“We have already highlighted that skills-related challenges cost the engineering and manufacturing sector £5.2 billion a year.

“Reducing skills-related challenges is imperative if we are to have a fighting chance of improving economic growth in this country.”

With the Milburn Commission due to deliver its findings on cracking the conundrum of more than a million young people not in education, employment or training (NEETs) and Government announcing an extension of work experience and skills training to 14–16-year-olds, with changes to the school curriculum and the introduction of new vocational qualifications, skills seem higher on the political agenda than ever.

Ms Watson continued: “The Chancellor needs to take heed as he prepares for the budget – and find a way of ensuring that small and medium-sized enterprises, which make up more than 90% of the manufacturing sector, can afford to take on extra personnel.

“Likewise, with employer confidence in recruitment persistently lagging their confidence in training, Alan Milburn’s final recommendations must consider what is holding employers back from recruiting if they are to succeed in creating more opportunities for young people.”

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