Shifting production to off-peak hours, closing your shop for part of the week, installing solar panels on your roof… To get ahead financially, Britain’s small businesses must redouble their efforts to lower their gas and electricity bills.
Already facing slowing growth and accelerating inflation, small businesses appear particularly vulnerable to exploding energy prices. In fact, UK energy prices are trading at levels more than 10 times higher than the seasonal average of the past five years, reports Bloomberg. As for inflation, it already reached 10.1% annually in July, its highest level in 40 years in the country. The Bank of England foresees an acceleration of this indicator to 13% in October and a recession from the end of the year.
An explosion in the number of energy bills
Faced with these price increases, many British companies are struggling to survive and are increasingly worried about their future, when they have not yet been forced to close. Like Marco Di Rienzo’s restaurant, located in Yorkshire, which could not resist, five years after its opening, the 2,000 monthly pounds (or approximately 2,373 euros) of energy costs.
For her part, Lisa-Jane Fraser, a Briton who runs a wedding and catering company, told Bloomberg that she saw her energy bill more than double in March, reaching 3,800 pounds (about 4,518 euros). Meanwhile, Mark Hidgcock, who took over the hardware store founded by his father in the Midlands 34 years ago, is also not sure how long he can hold out.
According to his estimates, his energy bill could rise to 21,000 pounds in twelve months. It is six times more than today. According to Latif Faiyaz, head of trading at gas distributor Northern Gas and Power, some customers have seen their bills increase ninefold.
No price cap and renegotiated contracts
But things could still go wrong by the end of the year. With her permanent contract coming to an end and a new contract being negotiated next October, Lisa-Jane Fraser fears her monthly energy bill could rise to £7,000 in November. Her energy bill should, if her predictions are correct, exceed her mortgage payment. According to the consulting firm BFY Group, questioned by the press agency, around 20% of British companies, such as that of Lisa-Jane Fraser, must renew their energy contracts in October. However, providers are trying to get rid of these fixed-price contracts that pose a risk to their own bottom line.
Furthermore, unlike British households, businesses do not benefit from the price cap calculated every three months by energy regulator Ofgem. Therefore, they are fully exposed to price spikes. All the more so when they are not linked to their provider by a fixed contract.
Wanted Savings Tools
Faced with this explosion in the cost of gas and electricity, these entrepreneurs must find a way to reduce their bills a little, in particular, by rethinking their activity. Lisa-Jane Fraser plans to close her restaurant on Wednesdays and possibly Thursdays, when customers tend to be less frequent. She will also embark on an additional wholesale activity of desserts and ready meals. To do this, she will program the cooking ovens between midnight and 5 in the morning, off-peak hours when energy prices are lower.
But these small businesses also turn to other less expensive sources of energy when they can. Lisa-Jane Fraser gets some of her energy from a geothermal heat pump and solar panels in particular. Many companies that can afford it are trying to equip their buildings with solar panels because of the savings these installations generate, Latif Faiyaz confirmed to Bloomberg.
“How can you run a business without knowing how high your fixed costs are going to be?” asked Lisa-Jane Fraser, before asking for “financial support.” The ‘toxic cocktail’ of rising taxes, energy costs, inflation and slowing economic growth requires immediate action, warned UK Small Business Federation National President Martin McTague, taken over by the daily mail. And to add: “the cost of living crisis cannot be solved without addressing the cost of doing business crisis”.
Source: BFM TV
