Britain’s jobs crisis: Number of firms desperate to hire new staff soars to record high

The UK economy is still below pre-coronavirus levels while the number of firms desperate to hire staff has soared to a record high amid ‘abject labour shortage’, experts have warned. 

Numbers published this morning by the Office for National Statistics (ONS) revealed that UK gross domestic product grew by 0.4 per cent in August this year – remaining 0.8 per cent lower than it was before the coronavirus crisis. 

Economists said Britain’s fuel crisis and widespread shortages may have contributed to growth ‘coming to a near-standstill’ since August.

Meanwhile, industry leaders warned the labour market is flooded with a ‘complete misalignment’ between employees and professions which is driving up vacancies.

Recruitment difficulties are expected to hamper the UK’s recovery from the pandemic despite record numbers on company payrolls.

Office For National Statistics’ figures released yesterday showed another record leap in available jobs.

The ONS estimated they shot up by nearly 1.2million in September, meaning as many jobs are on offer now as before Covid struck.    

The labour market is flooded with a ‘complete misalignment’ between employees and professions which is driving up vacancy figures, the industry leaders said (file photo)

Paul Dales, chief UK economist at research consultancy Capital Economics, warned the economy might flatline as a result of supply bottlenecks.

He added: ‘Shortages may bite harder in the coming months.

‘The recent broadening in shortages and the fuel crisis may mean that growth has come to a near-standstill since August.’

Director of Policy at the British Chamber of Commerce James Martin said: ‘There remain very real difficulties under the overall numbers, with labour and skill gaps, rising cost pressures and an increasingly onerous tax burden showing that the Government needs to act now to improve business conditions.’

‘[The] figures show a second month with a record number of vacancies, now at more than a third above their pre-pandemic levels.

‘With Brexit and the pandemic driving a more deep-seated decline in labour supply, businesses throughout the UK tell us they cannot access the skills they need even as their costs balloon.

‘These recruitment difficulties are likely to dampen the recovery by limiting firms’ abilities to fulfil orders and meet customer demand.’

He added: ‘Business investment will then suffer, curbing any chance of a prolonged recovery.’

Chris Sanderson, CEO of the hospitality recruitment app Limber, said: ‘One of the biggest problems with the jobs market right now isn’t the lack of positions available, but finding the people to actually fill them.

‘The pandemic has, in many sectors, created a mass disconnect between employers and employees, and it’s holding the economy back.

‘The jobs market could be a lot more robust if employers ditched their legacy mindsets when it comes to employment contracts and allowed people to work on their terms.’

Matthew Percival, CBI Programme Director for Skills & Inclusion, said: ‘Companies have found hiring difficult this autumn and the official data is beginning to tell the same story, with the number of people on payroll exceeding pre-Covid highs and record vacancies.’

The ONS flagged the impact of the mounting recruitment crisis in the UK, with vacancies rising 318,000 above levels seen before Covid and recent analysis showing a raft of sectors struggling to fill posts. 

The hospitality sector is finding it the most difficult to recruit, according to the ONS, with nearly a third (30 per cent) saying it is harder than normal to fill vacancies.

In another sign of the buoyant recruitment market, the ONS said the biggest rise in vacancies was seen in the administration and support sector, in particular temporary employment agencies, with a 165,000 increase.

Hospitality firms were looking to fill 32,000 jobs in September.

Chancellor Rishi Sunak said: ‘As we move to the next stage of our support, it’s encouraging to see our Plan for Jobs working – the number of expected redundancies remained very low in September, there are more employees on payrolls than ever before and the unemployment rate has fallen for eight months in a row.’

But recruitment experts remained uneasy and said the gap between talent among those unemployed and the jobs available was too wide.

Julia Kermode, founder at Nantwich-based IWork, said: ‘The jobs market is completely candidate-led in sectors where there are shortages of workers.

‘We’ve all seen the headlines about HGV drivers but other sectors that are starved of people include health, social care, hospitality, agriculture, distribution centres and factories.

Chancellor Rishi Sunak (pictured) said: 'As we move to the next stage of our support, it's encouraging to see our Plan for Jobs working - the number of expected redundancies remained very low in September, there are more employees on payrolls than ever before and the unemployment rate has fallen for eight months in a row'

Chancellor Rishi Sunak (pictured) said: ‘As we move to the next stage of our support, it’s encouraging to see our Plan for Jobs working – the number of expected redundancies remained very low in September, there are more employees on payrolls than ever before and the unemployment rate has fallen for eight months in a row’

‘Shortages are so bad that the UK’s army of temporary workers, the traditional back-stop for businesses in need, cannot meet the demand.

‘It’s incredibly competitive, with some firms opting to increase pay rates, but many businesses simply don’t have pots of money to throw at the problem.’

UK economy grew by 0.4 per cent in August but it is STILL below pre-coronavirus levels

The UK economy grew by 0.4 per cent in August this year – but it is still below pre-pandemic levels. 

Numbers published this morning by the Office for National Statistics revealed that UK gross domestic product remains 0.8 per cent lower than it was before the coronavirus crisis. 

Meanwhile, the ONS said its figures for July have been revised downwards in a move likely to cause alarm in the Treasury.  

The ONS originally said the economy had grown by 0.1 per cent in July but it has now been changed to a 0.1 per cent contraction. 

It is the first time the economy has shrunk since January this year when the winter lockdown wreaked havoc. 

Business chiefs said the data ‘paints a picture of a slow-down in the UK’s economic recovery’ and suggests ‘economic headwinds caused by labour shortages and supply chain disruption are beginning to bite’.  

Sandra Wilson, director of Ipswich-based recruitment and HR company, Cottrell Moore said: ‘We have seen vacancies reach an astonishingly high level over the past few months.

‘As positive as this sounds, all is not as it appears. There is a complete misalignment of skills available in the market and high demand in certain skill sets and sectors is creating a false economy.’

Louise Burns, director of Tyne and Wear-based Nineteen Recruitment: ‘As a supplier of staff to the social care and education sectors in the North East, we have seen a distinct decline in candidates looking for work.

‘There is significant demand for support workers and care assistants at the moment and there simply aren’t enough candidates to fill those jobs.

‘Working in social care already demands flexibility and long working hours, and because of the climate, employers in social care are looking for candidates who already have experience and are able to hit the ground running.’

She added: ‘There simply aren’t enough candidates able to do this to fulfil demand right now.’

Cheney Hamilton, CEO at Darlington-based flexible working recruiter, Find Your Flex: ‘In the current jobs market, one thing is certain: flexibility needs to be on the table if employers want to attract the best talent.

‘Job vacancies are at an all-time high, and employers that increase their ‘flex appeal’ are offering training to those re-careering and homeworking and flexibility options to experienced hires who increasingly demand it.

‘It’s a great time to be a jobseeker right now, and we encourage women in particular to vocalise their worth and needs to potential employers.’

The ONS figures showed unemployment fell 126,000 in the quarter to August to 1.5 million, while employment rose 235,000 to 32.4 million.

Wages enjoyed another steep rise, with average weekly earnings up 7.2 per cent with bonuses or 6 per cent without bonuses, in the three months to August.

But the ONS stressed that the earnings figures continue to be skewed by certain factors, with lower-paid jobs being hit hardest by the pandemic.

Financial markets are now pricing in a rate rise by the end of the year, although many economists think 2022 will see the first move.

Samuel Tombs at Pantheon Macroeconomics said the labour bounce-back was ‘not strong enough for the Monetary Policy Committee to hike rates in November, before it has assessed the post-furlough landscape.’

Air freight bookings soar 70% this month as firms bid to bypass ports chaos and get goods into UK in time for Christmas – as shoppers are told to ‘order gifts early’ or risk them being stranded at sea ‘until 2022’

By Tom Pyman and James Gant for MailOnline

Air freight bookings have soared by 70 per cent in the UK this month, according to a cargo group, while firms bid to bypass ports chaos and get goods into the UK in time for Christmas amid the ongoing delivery crisis. 

Air Charter Service, which sees firms hire planes to move goods, said demand had skyrocketed this month having already surged during the pandemic. 

Group cargo director Dan Morgan-Evans predicted pre-bookings for October to be around double that of the same period last year, in addition to pre-bookings in the UK increasing by 20 per cent year on year in September. 

It comes as millions of Britons were today urged to order gifts for Christmas immediately to avoid disappointment because of delays at the UK’s choked ports where containers are stacked high and ships are being diverted.

Experts warn the crisis will not be solved until ‘well into 2022’ and will lead to gaps on the shelves throughout the festive period.

The most popular toys, games consoles, smart phones, white goods as well as chocolate and even Christmas trees are predicted to be in short supply this December.

Britain’s busiest container port, Felixstowe, has become severely congested to the point Maersk, the world’s largest container shipping company, is diverting its big vessels away from the UK to Rotterdam in the Netherlands.

Containers at the Suffolk port are taking up to ten days to be put on to trucks instead of the usual three days while big ships are having to wait up to a week after arriving off the UK coast to dock and unload.

Some customers are turning to the air to solve the backlog, with pre-bookings for air freight services in October soaring by 70 per cent. 

Meanwhile Co-chairman of the Conservative Party Oliver Dowden admitted just 20 out of 300 foreign lorry drivers who have applied for temporary visas are on the roads in another blow for delivery services.

He said the number of workers from abroad Britain has been able to attract to drive trucks has been ‘relatively limited’ and said it would not solve the current crisis. 

Experts have said Britain's ports are exceptionally busy but a lack of staff and HGV drivers is causing delays. Ships are having to wait off Felixstowe (right) for up to a week, Maersk has said

Experts have said Britain’s ports are exceptionally busy but a lack of staff and HGV drivers is causing delays. Ships are having to wait off Felixstowe (right) for up to a week, Maersk has said

Containers are stacking up at Felixstowe, Britain’s biggest container port, in yet another pre-Christmas crisis emerging as it is taking ten days instead of five for each one to be moved due to a lack of HGV drivers and port staff

The backlog is affecting major retailers including IKEA and major food companies including Nestle, the world's largest food producer of coffee, baby food and chocolate, as well as tens of thousands of smaller UK businesses waiting for orders from all over the world

The backlog is affecting major retailers including IKEA and major food companies including Nestle, the world’s largest food producer of coffee, baby food and chocolate, as well as tens of thousands of smaller UK businesses waiting for orders from all over the world

Industry bosses are warning that empty shelves may have to be expected not only over Christmas but ‘well into 2022’

Desperate steel, chemicals and glass factories plead for tax breaks on soaring energy bills as Boris prepares to sign off hundreds of millions of pounds in LOANS 

Desperate steel, chemicals and glass factories today pleaded for tax breaks to help them cope with soaring energy bills – as Boris Johnson prepares to sign off hundreds of millions of pounds in loans to keep them afloat. 

Energy-intensive businesses insisted cutting taxes and levies was more important than a bailout, after an extraordinary bout of wrangling in Whitehall.

Mr Johnson appears to have sided with Business Secretary Kwasi Kwarteng following his spat with Chancellor Rishi Sunak over the need for government support. 

A package is now due within days, but rather than handouts or a price cap on industrial energy costs, it is expected to come in the form of loans.

It is understood the support will also come with ‘strings attached’, ensuring companies cannot pay out big bonuses while they are benefiting. 

The move could raise concerns that the government is merely kicking the can down the road, as firms will have to repay the costs later when energy prices have settled down. 

The Treasury is said to have been alarmed at the prospect of doling out more cash, warning that ‘demands simply increase’ when sectors know the Chancellor is involved in the process. 

Mr Morgan-Evans told the Guardian: ‘Having so many flights pre-booked at the beginning of the month for cargo is completely out of the ordinary.

‘It is impossible to say how many planeloads will be brought into the UK at this stage, as that partly depends on demand for aircraft elsewhere in the world.

‘It is possible there simply won’t be enough aircraft able to cope with the expected last-minute demand that has characterised [the final quarter of the year] in previous years, although we are confident that there are just about enough solutions out there.’

Shipping experts have warned the crisis is hitting Britain particularly hard.

Peter Wilson, managing director at Cory Brothers shipping agency, said problems affecting shipping and transport is a global issue but added the UK has a ‘significant pinch point around HGV drivers and the demand on them to move goods from the ports’.

He told BBC Radio 4’s Today Programme: ‘That’s a really significant issue for us here in the UK.’

Asked if it will affect Christmas, he said it has the ‘potential’ but stressed that the supply chain ‘will not fail in the UK’, adding that consumers should ‘be sensible, think ahead, plan appropriately, and order your Christmas goods and the items that you need in a timely fashion to ensure that you have them.’

Mr Wilson said there is a potential that some items may not be available nearer to Christmas, and when asked what items are most at risk of that, he said: ‘It’s a real mix.

‘We import so much into the UK by container on these shipping lines, so it’s from white goods to your Christmas toys, and we include food goods with this as well, so it could be a real mixed bag of all items.

‘But I think you know, Christmas, the toys, the goods will be the significant big selling point as we build up to Christmas and I think that’s where we’re going to get pinch points.’

Some customers are turning to the air for a way around the backlog, with air freight services rocketing this month by 70 per cent. 

Meanwhile Tory co-chairman Mr Dowden admitted just 20 out of 300 foreign lorry drivers who have applied for temporary visas are on the roads in another blow for delivery services.

He told LBC the number of workers from abroad that Britain has been able to attract to drive trucks has been ‘relatively limited’.

Asked if it was going to solve the crisis, Mr Dowden said: ‘No it’s not, and that’s why it is just one of a range of measures we are taking, because of course we can’t just do what we have always done, which is when we have a shortage get more foreign labour in.

‘We need to improve the skills in our country, and we need to get more people training to be HGV drivers. That’s why we are streamlining the recruitment process.’

Mr Dowden said there are two different elements to recruiting lorry drivers successfully – applications for visas from foreign drivers, and the streamlining of the testing process which happens for HGV drivers already in this country.

He told Mr Ferrari: ‘Over the longer term we need to get more people driving HGVs. That’s why we are investing more and streamlining that process, in fact it’s why we have got military testers also helping us with this. 

‘The best way to solve this is getting people in this country to train as HGV drivers.’ Mr Ferrari asked the minister: ‘I’m sorry, I must have misheard you.

‘I thought you said this process had been streamlined. I don’t see 20 out of 300 as particularly streamlined chairman?’ He pushed the minister on whether or not he was pleased with a roughly 7 per cent success rate. 

Mr Dowden replied: ‘That number is just a reflection of the number of applicants who have been processed and have actually got their visa.’ ‘So we have 300 on the road, I see…’ Mr Ferrari replied.

But Mr Dowden clarified: ‘No, we have 300 who have applied for these visas. I believe the number is just over 20 who have actually received them and are on the road. I expect this number to increase over time.’

Mr Ferrari branded the success rate ‘hopeless’, adding: ‘You’d get booted out of school for that, minister!’

Maersk, the world's largest shipping firm, says it is diverting bigger ships away from the UK due to the delays at the dockside because it is quicker to avoid Felixstowe and move goods via France to Dover or to smaller UK ports such as Hull

Maersk, the world’s largest shipping firm, says it is diverting bigger ships away from the UK due to the delays at the dockside because it is quicker to avoid Felixstowe and move goods via France to Dover or to smaller UK ports such as Hull

Ikea and Nestle are among the huge businesses that say their products are being snarled up due to a lack of HGV drivers that is hitting all parts of British life

Ikea and Nestle are among the huge businesses that say their products are being snarled up due to a lack of HGV drivers that is hitting all parts of British life

Thousands of shipping containers at the Port of Felixstowe in Suffolk, as shipping giant Maersk has said it is diverting vessels away from UK ports to unload elsewhere in Europe

Thousands of shipping containers at the Port of Felixstowe in Suffolk, as shipping giant Maersk has said it is diverting vessels away from UK ports to unload elsewhere in Europe

Shipping containers are unloaded at the Port of Felixstowe in Suffolk as the global supply chain continues to be disrupted on Wednesday

Shipping containers are unloaded at the Port of Felixstowe in Suffolk as the global supply chain continues to be disrupted on Wednesday

The heads of several import firms are growing concerned as containers packed with food, furniture and electronics are backing up at Britain’s busiest freight port predominantly due to the UK’s dearth of drivers.

However, the disruption is not limited to Felixstowe, with sources pointing to a bottleneck at distribution centres in the Midlands causing problems as well.

The lack of drivers to move containers, along with a surge in imports and restrictions at ports due to Covid has created a ‘perfect storm’, according to the Times.

Maersk boss Lars Mikael Jensen says its largest ships are being diverted from Felixstowe to Rotterdam because they were waiting for up to a week off the port.  

He has warned that retailers may need to prioritise what they ship to Britain in the coming months, with 10 to 15 large ships from Asia arriving in the UK every week. He added that he felt it would be ‘well into 2022’ before the situation began to resolve itself. 

He said: ‘We’ve taken those measures because we saw, because of the big ships, there is a limit to how many berths they can call in Felixstowe, and because its slower, it took longer to handle every ship. Instead of wasting time waiting, we progressed to the next stop, and arranged that the boxes are relayed from that port rather than wait for a week and then discharge.’

Adam Searle, of CP Transport, which operates 45 lorries out of Felixstowe, said the situation was a ‘nightmare’.  He told the Telegraph: ‘My guys in the office are pulling their hair out every single day and are working extended hours just to try and deliver what our customers need. I’m scared for the final rush to Christmas.’

Pictures from Felixstowe yesterday showed how it was rammed with containers piled up over the gigantic dockside, as the British International Freight Association said it understood average ‘dwell times’ for cargo at the port have nearly doubled in the last two weeks, from five to 9.7 days.

The backlog is affecting major retailers including IKEA and major food companies including Nestle, the world’s largest food producer of coffee, baby food and chocolate, as well as tens of thousands of smaller UK businesses waiting for orders from all over the world.

Some cargo ships are now being sent to European ports with containers moved into the UK via Dover or on smaller ships to less busy ports such as Hull and Liverpool because it is now quicker to avoid Felixstowe.

Inside those containers are tens of thousands of tonnes of goods destined for shops, supermarkets and households for the busy festive period. Britons are already buying their turkeys, gammons and Christmas puddings due to shortage fears.

Consumers are seeing products in some parts of supermarkets missing, due in large part to issues with deliveries and a shortage of C02 used in thousands of products

Consumers are seeing products in some parts of supermarkets missing, due in large part to issues with deliveries and a shortage of C02 used in thousands of products

More empty shelves are pictured in the meat aisle at Sainsbury's in Leeds - with fresh fruit supplies also down on the usual

More empty shelves are pictured in the meat aisle at Sainsbury’s in Leeds – with fresh fruit supplies also down on the usual

The Sainsbury's store in Leeds shows fridges left nearly empty as shoppers stock up on their favourite products and clear the shelves

The Sainsbury’s store in Leeds shows fridges left nearly empty as shoppers stock up on their favourite products and clear the shelves 

This Department for Transport map shows how much traffic is handled by ports dealing with more than two million tonnes

This Department for Transport map shows how much traffic is handled by ports dealing with more than two million tonnes

The Department for Transport has also produced a graphic showing where goods come in from - split by region

The Department for Transport has also produced a graphic showing where goods come in from – split by region

This map from the Department of Transport shows ports split by cargo group. Ro-Ro stands for Roll-on/Roll-off, as in lorries; while Lo-Lo stands for Lift-on/Lift-off, as in containers

This map from the Department of Transport shows ports split by cargo group. Ro-Ro stands for Roll-on/Roll-off, as in lorries; while Lo-Lo stands for Lift-on/Lift-off, as in containers

Britain’s labour crisis is also being blamed for the logjam with one logistics company whistleblower telling ITV News anonymously: ‘I’m fed up with this. Year on year this port never has enough staff to cope with high demand.

‘Now we’re hitting another peak period and all that people are talking about again is shutdowns and gridlock. These volumes were forecast, there have been many meetings about the run up to Christmas. Why are we on this position?’

There are empty shelves in every major supermarket in the country due to shortages with store managers and staff also telling MailOnline that deliveries are regularly now ‘just not turning up’ due to a lack of drivers.

One logistics industry source told MailOnline there had been much discussion that the peak season is going to be tough and some suspect the shipping lines will be making plans to spread the load between Felixstowe, Liverpool, Southampton and London Gateway.

They added that decision to ‘drop a port call is nothing new’, and that there was anecdotal evidence that the dwell times at other major container ports is increasing.

The source said: ‘The increased pressure on inland depots and UK terminals in general is down to a number of factors including the ongoing HGV driver issue, equipment shortage, post Brexit stockpiling and an increase in domestic spending due to a lack of foreign travel, as well as other matters.’

It came as Boris Johnson sealed a deal to reverse the shortage of CO2 for use in beer and food production but shoppers will be paying more for staples almost immediately after the US company producing 60% of the UK’s supply allowed to up its prices from £200 to £1,000 per ton.

The price of the gas, which is used to carbonate drinks, preserve food and stun animals for slaughter, is expected to rise five times after the country’s biggest manufacturer threatened to shut its UK factories.

The shortage of C02 is part of a storm of crises the Government is accused of failing to get a grip on, including a shortage of fuel and 100,000 HGV drivers, a lack of food processing workers and butchers due to the pandemic and Brexit, gaps in the global supply chain and the highest rise in energy prices for decades hitting households and businesses.

This graphic from Danish logistics and shipping company DFDS shows its freight shipping routes in Europe and beyond

This graphic from Danish logistics and shipping company DFDS shows its freight shipping routes in Europe and beyond

Dr Jean-Paul Rodrigue from Hofstra University in New York put together this map showing the world's main shipping routes

Dr Jean-Paul Rodrigue from Hofstra University in New York put together this map showing the world’s main shipping routes

The PM has brought in the former boss of Tesco, Sir Dave Lewis, to unblock Britain’s choked supply chains.

Experts have warned that delays at Felixstowe are bound to cause more problems with the flow of goods into the UK, with just ten weeks to go until Christmas. 

The near-ten day wait for containers to clear is nearly double the average for 2020. It comes despite the port – which handles 40 per cent of Britain’s container imports – only dealing with similar import volumes to 2019 with Brexit and the pandemic causing problems.  

Felixstowe is the route into Britain for much almost half of all of the UK’s imports, especially containers carrying goods from Asia via the Suez Canal. In the past year problems caused by the pandemic led to the delay of goods such as Apple AirPods and Sony PS5s as well as a plethora of items ordered from China by UK businesses. 

The shortage of lorry drivers means it is having more containers arrive than are being collected, creating a backlog affecting major retailers including IKEA and major food companies including Nestle, the world’s largest food producer of coffee, baby food and chocolate. 

An IKEA spokesman said: ‘Like many retailers, we are experiencing ongoing challenges with our supply chains.

Why is the price of coffee going up? How drought and frost in Brazil has hit Colombian farmers – forcing up the price of beans

World coffee prices have soared by 55 per cent this year, which is mainly due to bad weather in top producer Brazil that has hit supplies.

Drought and severe frost are estimated to have destroyed about 20 per cent of its coffee plants – and production of growers in Brazil has been reduced by around 25 per cent.

This situation has prompted coffee farmers in Colombia, which is the world’s number two producer, to default on sales clinched when prices were much lower in order to re-sell the coffee at higher rates.

This has seen Colombia fail to deliver up to one million bags of beans this year or nearly 10 per cent of the country’s crop – leaving exporters, traders and roasters facing steep losses.

However it is hoped that a price spike would be temporary, because the defaulting in Colombia is on coffee which ultimately exists and will weigh on markets once it is re-sold.

Colombian farmers say they will deliver the coffee later this year or next but buyers are unconvinced, with many opting to see losses now and write the purchases off rather than risk bigger loses.

Several global trade houses are said to be looking at losses of up to $10 million each on undelivered coffee.

‘As a result, we are experiencing low availability in some of our ranges. With Felixstowe nearing capacity, we have faced some challenges in returning containers to the port.’ 

Alex Veitch, of Logistics UK, said: ‘The current issues being experienced at Felixstowe port are partly due to the HGV driver shortage.’

Robert Keen, director general of The British International Freight Association, said: ‘BIFA has anecdotal evidence that the import dwell time for containers at some of UK’s main gateways for container shipping services has gone up from 5 to 9.7days over the past two weeks, but members are resigned to this being just part and parcel of the deep sea shipping world these days.’

A Port of Felixstowe spokesman said: ‘The pre-Christmas peak, combined with haulage shortages, congested inland terminals, poor vessel schedule reliability and the pandemic, has resulted in a build-up of containers at the port. The vast majority of import containers are cleared for collection within minutes of arriving.’

The backlog at Felixstowe comes as the spectre of bare shelves continued to haunt supermarkets.

Low stocks were in evidence at supermarkets including a Tesco in Chester, an Asda store in South East London and a Waitrose in Surrey.

Workers at the supermarkets said deliveries had ‘just not turned up’.

Meanwhile, there were warnings of price rises affecting staple items including baked beans and coffee.  

Kraft Heinz CEO Miguel Patricio said yesterday the firm is ‘raising prices, where necessary’, blaming a lack of truck drivers in the UK and labour shortages and an increase in logistics costs in the US.

He added: ‘If costs keep going up we’re going to struggle. We will simply have to increase the price for customers.’

The price of Arabica coffee has jumped almost 73 per cent in the past year to levels not seen since 2014 after 20 per cent of coffee plants in Brazil – the world’s biggest bean exporter – were killed by drought and severe frost in the past year.

In Colombia, the third largest coffee-producing country in the world, farmers have refused to deliver bags of beans unless they receive higher prices.

Shoppers face higher supermarket prices as part of a deal to protect vital supplies of carbon dioxide.

The price of the gas, which is used to carbonate drinks, preserve food and stun animals for slaughter, is expected to rise fivefold after the Britain’s biggest manufacturer threatened to shut its factories.

Carbon dioxide is also used in surgical operations in hospitals, and as a coolant for nuclear power stations.

Ministers stepped in with a subsidy worth tens of millions to keep the supply going for three weeks and allow space for CF Fertiliser, which makes three-fifths of the UK’s supply, to negotiate with its customers.

It has now agreed higher prices that will guarantee supply until at least January.

But drinks companies and food producers may be forced to pass on the huge cost increase, thought to be from £200 to £1,000 per ton, to their consumers.

Industry bosses warned yesterday that three in five retailers expect to increase prices before Christmas in the face of rising costs for energy, ingredients and wages.

It comes after last month’s warning from Tesco chairman John Allan that food inflation could hit 5 per cent this year after a long period of falling prices.

Spiking energy prices forced a major CO2 producer, CF Fertilisers, to shut down its two UK plants last month as the Government stepped in for three weeks to prop up the firm in a move that was expected to cost taxpayers tens of millions of pounds

Spiking energy prices forced a major CO2 producer, CF Fertilisers, to shut down its two UK plants last month as the Government stepped in for three weeks to prop up the firm in a move that was expected to cost taxpayers tens of millions of pounds

Business Secretary Kwasi Kwarteng said the new deal between CF Fertiliser and its customers – industrial gas companies – was a ‘more sustainable solution’. He added: ‘Critical industries can have confidence in their supplies of CO2 over the coming months without further taxpayer support.’

The deal reflected ‘the vital importance of this material to everything from our nuclear industry to hospitals to the food and beverage industry’.

Last week Mr Kwarteng temporarily exempted parts of the CO2 industry from competition law so the deal could go through. Previously, ministers had warned that companies would have to accept a large rise in CO2 rates, with a possible fivefold increase.

Now CO2 customers will pay CF Fertilisers a set price until January, which will let the company continue to operate while global gas prices remain high. But with energy bills for its factories expected to rise further still, there is no guarantee that the firm can keep going beyond that date.

And a CF spokesman said the company expected the UK government and industrial gas customers to develop ‘robust alternative sources of CO2 as part of a long-term solution for meeting demand’.

Environment Secretary George Eustice said: ‘The Government has taken decisive action in these exceptional circumstances to allow a deal to be reached which will continue the supply of CO2.’

Gavin Partington, director general of the British Soft Drinks Association, said: ‘We welcome news of this arrangement, which provides some certainty of supply over the next few months. Although CO2 is a only a small percentage of total cost for most soft drinks producers, the significantly higher prices for supply only add to the economic pressures already facing manufacturers, including the shortage of HGV drivers.’

Andrew Opie, director of food and sustainability at the British Retail Consortium, added: ‘We welcome a deal to ensure that CO2 supplies are secure until after Christmas.

‘However, this is yet another example of cost pressures in the supply chain, along with rising transport costs, higher energy and commodity prices, and ongoing labour shortages.’

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