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UK labour shortages and lingering high inflation slow growth

Recent data shows that inflation remains above 10%. It is an economic environment that can bring management accounting skills “to the fore”.

UK organisations are feeling the brunt of inflation that remains above 10%, and many continue to shy away from hiring amidst cost pressures.

The UK's Consumer Prices Index rose 10.1% for the 12 months that ended in March, according to data from the Office for National Statistics (ONS). That's down from 10.4% at the end of February.

Job vacancy rates are falling in response to economic pressures, driving companies to hold back on recruiting, the ONS said in its release of labour market data. In January to March, vacancies on the quarter dropped for the ninth consecutive period, declining 47,000 to 1,105,000.

Andrew Harding, FCMA, CGMA, chief executive–Management Accounting at AICPA & CIMA, together as the Association of International Certified Professional Accountants, said that AICPA & CIMA research "indicates that tackling supply-side issues, including problems in supply chains and persistent skills gaps in the UK workforce, are the long-term solution to bringing inflation down while maintaining the healthy level of economic growth we all want to see."

Businesses will still need to adapt their strategies and operations, according to Harding. "Finance professionals have a key role to play in mapping out scenarios, analysing the impacts on the business model, and offering strategic counsel for organisations affected by elevated levels of inflation," he said. "Cost leadership is critical in these times, bringing this fundamental management accounting skill to the fore."

AICPA & CIMA have put together an inflation toolkit to help finance teams navigate this environment.

— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.