Ofgem: “Rising energy prices detrimental to SME owners”
“The latest energy price cap increase is a fresh blow to the thousands of small business owners already at breaking point. SMEs are feeling the crippling pressure of rising costs, energy and fuel prices, alongside their ongoing recovery from the economic impact of the pandemic.
“Our SME Insights Report is a clear indication of the serious threat that skyrocketing energy bills are placing on small business owners, alongside the need for prompt government support. Three in five small businesses (59%) are urgently calling for a review of the energy price cap.
“As the energy price cap does not apply to businesses, suppliers are allowed to increase their out-of-contract rates by as much as they choose in order to cover their own costs. The surging cost of fuel and energy, alongside the overall rising cost of living, will also understandably see households cut back on non-essential spending. There is a domino effect in place. This impact on consumer purchasing behaviour will trickle through to the books of small business owners at a time when SMEs need our support the most. The reduced levels of cash-flow and liquidity will only make things worse for many.
“The latest interest rate rise also came with a clear recession warning, and poses a serious risk to many small businesses. Sole traders and microbusinesses will feel the pressure more than most. This all comes at a time when many are still in recovery mode following the pandemic. One in six (16%) believe they will never financially recover from the impact of the past few years. As a result, two in five (40%) owners are calling for long-lasting financial support from the government to help them get back on their feet after Covid-19.
“Rising fuel and energy costs are already one of the greatest threats to survival according to over half (54%) of all small business owners and we can expect this figure to rise further if SMEs continue to go without support. As we head into winter and bills increase further, there is a significant risk that thousands of small businesses will be forced to permanently cease trading.
“Small businesses sit at the heart of our communities and are vital to our economy. With almost six million of them in the UK, they account for over 99 per cent of all businesses, 33 per cent of employment and 21 per cent of all turnover. The message from small businesses is clear: this is a pandemic level crisis and the clock is ticking.”
Alan Thomas, UK CEO at Simply Business