Most British exporters and manufacturers have experienced disruptions in the Red Sea due to attacks on shipping by Yemen's Iran-aligned Houthi rebels, according to a survey.

The British Chambers of Commerce found that 55% of exporters, 53% of manufacturers, and a similar percentage of business-to-consumer service firms reported disruption. Overall, 37% of all businesses surveyed reported an impact.

William Bain, the BCC's head of trade policy, noted that while the shipping freight industry has had some spare capacity to address these challenges, prolonged disruptions could lead to increasing cost pressures.

Some businesses mentioned significant increases in container hire costs, delivery delays of three to four weeks, cashflow challenges, and parts shortages. The Bank of England has identified the Red Sea disruption as a major risk to inflation, although its economic impact in Britain has been less than initially feared.

Houthi militants have been carrying out drone and missile strikes in the Red Sea, Bab Al-Mandab Strait, and Gulf of Aden since November in support of Palestinians amid the ongoing Israel-Hamas conflict. Recently, the Houthis announced plans to escalate attacks on shipping connected to Israel, the United States, and Britain.

The BCC conducted its survey between January 15 and February 9, with responses from 1,087 firms, the majority of which had fewer than 250 employees.

In February, the S&P Purchasing Managers’ Index revealed that British businesses' costs rose at the fastest rate in six months. While many manufacturers cited higher freight costs due to Red Sea disruption, rising wage bills were a more significant factor for most. Photo by Dirgela, Wikimedia commons.