BUSINESSES face an “increasingly difficult” winter, with inflation and a shortage of staff set to blight 2022.

The latest Business Trends report from accountancy and business advisory firm BDO LLP showed the growth in output slowed in October for the sixth consecutive month.

Malcolm Thixton, partner at BDO in Southampton, said: “Businesses are facing an increasingly difficult winter. Between rising inflation and a lack of staff, 2022 could be a difficult year for companies who have been forced to to prioritise short-term problems over long-term growth.

“At the same time, consumers are beginning to see the impact of these shortages with rising fuel and energy prices, which may in turn lead to cutbacks in discretionary spending.

“In the final months of the year, businesses and consumers alike will be hoping that the economy can find some Christmas spirit over November and December and help take us into the new year on a high.”

The Business Trends report showed output growth at its lowest overall level since March, with supply chain disruption and staff shortages hitting business.

The Output Index weighs macroeconomic data from the UK’s main business surveys to produce what BDO says is the most comprehensive snapshot of output in manufacturing and services. It fell from 105.23 points in September to 103.35 in October, with both sectors showing a decline.

Manufacturing output, which has been particularly hard hit by supply chain disruption, tell 2.09 points to hit 97.03 – edging closer to the 95-point mark which separates growth and decline.

Staff shortages were the main driver behind the slowdown in growth in the services sector, which dropped by 1.85 points to 104.15.

The end of the furlough scheme at the end of September caused BDO’s Employment Index to fall for the first time since January, when a further winter lockdown had curtailed economic activity. The index fell 1.13 points to 107.65, but the dip is expected to be short-term as demand for workers rises grows.

BDO’s Inflation Index rose 3.06 points to 105.76, its highest since November 2008. Spiralling inflation has led to significant pressure on the Bank of England to raise interest rates.