City View: Cross Your Fingers and Hope Oil and Fuel Costs Fall

Summary

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'We don't want to be busy fools,' industrialists used to say explaining why they had missed some much-vaunted contract. They couldn't get it at a tolerably profitable price and preferred to do nothing rather than keep the factories humming to no financial purpose.

It's not a phrase I have heard for years. No doubt modern managers regard it as an axiom that doesn't need stating. Yet yesterday's CBI trends survey contains more than a hint of a warning that British industry as a whole could be heading into this once familiar trap. Industry is cranking up to tackle the welcome revival of its order books just as oil and metal prices go through the roof. Without plenty of luck and good management, the rewards that should have flowed through into profits and investment will be skimmed off to the oil sheikhs and providers of assorted basic commodities - now to be joined by the gas and electricity companies. After years of merciless competition driving prices of most industrial products relentlessly downwards - to the extent that the old skill of imposing price increases on reluctant customers had become rusty - this looked like an uncomfortable scenario.

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City View: Cross Your Fingers and Hope Oil and Fuel Costs Fall

But no longer, it seems. The CBI found more companies expecting to raise their prices...

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