“The Energy Bills Discount Scheme offers a significantly reduced level of support to small businesses than its predecessor. This will be a huge source of stress for businesses already struggling to pass on the cost of higher raw materials and inputs, whilst also dealing with heightened costs of borrowing due to rising interest rates.
“This looming cliff-edge is likely to also impact end consumers, as businesses will be forced to raise prices to cope with rising bills, driving up the rate of inflation.
“Whilst recent business lending arrears and delinquency rates have been reasonably flat, almost a third of small businesses may not have enough cash to absorb the impending price rise, with logistics and manufacturing sectors amongst the worst hit. As a result, we may see businesses begin to struggle once the new scheme kicks in.
“The government will need to keep an eye on how heavily this change impacts certain businesses or sectors, and may need to amend the level of support provided if it becomes clear that non-eligible firms are struggling.”
Tom Renwick, Head of Business Lending, Atom bank