Companies should take more responsibility for curbing price rises, especially after huge pandemic
Time for businesses to take responsibility for helping overcome current inflation crisis.
Chancellor is right to expect businesses to play their part in curbing price rises and margin expansion.
After the massive amounts spent supporting businesses through Covid, there should be a recognition of their duty to society as economy looks for new normal.
Corporate Social Responsibility should include behaving responsibly during current economic emergency which was partly caused by post-pandemic readjustments.
The Chancellor has been speaking to businesses, urging them to play their part in helping alleviate inflationary pressures during the current economic emergency. The risk of a wage-price spiral becoming embedded, as UK inflation stays higher than most other countries, is rightly worrying policymakers and business has the power to act responsibly, rather than taking the chance to expand margins and continually hike prices, just because they seem to be able to do so.
Act now to curb price rises and margin expansion, rather than waiting to be forced by recession: Before the Bank of England is forced to keep raising interest rates and tips the economy into full-blown recession to curb demand, it makes sense for the Government to ask businesses to play their part in addressing this crisis.
Taxpayers spent billions of pounds supporting businesses through the Covid emergency: During the pandemic, there was massive business support in the form of temporary tax cuts, grants, loans and government guarantees. The Chancellor provided liquidity to businesses across the economy to prevent insolvencies, with both partial and full underwriting of financial support, while the economic emergency deterred financial institutions from business lending as demand collapsed and businesses had to close. The Coronavirus Business Interruption Loans, Bounce Bank Loans, the Future Fund, furlough, free testing kits, PPE, tax cuts – businesses were showered with support courtesy of taxpayers and central bank money creation, for two years at huge cost.
It is now payback time: Businesses should show more restraint with their pricing decisions, rather than taking excessive commercial advantage of post-pandemic adjustments and inflation expectation pressures from excessively long QE central bank money creation, plus the Ukraine War. The rise in ‘core’ inflation is a serious concern and reflects across the board pricing pressures, in goods and services, which cannot just be explained by raw material costs. Many firms are reporting record profits and have clearly taken the chance to expand margins, as customer demand has not slowed enough to impact sales significantly. Rather than waiting for the Bank of England to keep tightening policy to curb inflation, potentially causing a recession, I hope businesses might recognise they have a duty to society to show restraint – which is no doubt what the Chancellor is trying to explain.
Responsible capitalism and Corporate Social Responsibility are important for future prosperity: So far, Corporate Social Responsibility has failed to focus on this basic idea. It is time for businesses to play their part and behave more responsibly as the country grapples with the most serious inflationary crisis for decades. Shareholder interests are of course important, but ignoring the wider economic interest, especially after so much taxpayer money was spent propping up business and market performance in recent years, would not fit well with responsible capitalism in my view.