Are UK Energy Prices Putting Businesses at Risk?

Energy costs in the UK have soared in recent months, and while this has put pressure on consumers and businesses, some business owners have reported risking closure if things don't improve. In this article, we recap the current state of energy costs in the UK and explore what's being done to improve the situation.

What's Increasing the Cost of Energy?

While many factors are causing energy prices to be high, one of the notable causes is rising wholesale costs. According to Ofgem, from November 2021 until August 2022, the wholesale price of gas has increased by more than 460% (105.66 to 592.56), with wholesale electricity following a similar trend, increasing almost 380% (106.87 to 511.2) during the same period. Although wholesale prices have reduced since then, businesses have had to deal with a sharp increase in energy bills, with some businesses facing bills that are double or even triple what they were paying a year ago.

How are Businesses Being Affected?

There have been several reports of rising energy costs affecting businesses, from Yahoo reporting UK pubs, bars and restaurants revealing their average bills have surged 81% over the past year to The Times reporting on record energy debt bankruptcies.

Some businesses are having to pass on the increased costs to their customers, leading to higher prices for consumers. Other businesses are being forced to cut operating costs, leading to job losses and slower economic growth.

What has the UK Government Done?

The government has taken some steps to help businesses with the rising cost of energy. From the 1st of October 2022, they ran the Energy Bill Relief Scheme, and from the 1st of April, they introduced the Energy Bills Discount Scheme, which is set to run until April 2024. While these measures relieved UK businesses, some argue they need to do more to offset the full impact of rising energy costs.

How to Deal with Rising Energy Costs

Here are some tips for businesses struggling with rising energy costs:

• Review your energy contract - Ensure that you are on the best possible deal for your energy needs. You may be able to save money by switching energy suppliers or negotiating a better deal with your current supplier.

• Invest in energy efficiency measures - You can do many things to improve your business's energy efficiency, such as installing energy-efficient lighting and insulation. By reducing your energy consumption, you should start to save money on your energy bills. You can read more about reducing your energy usage in our 'Top 10 Business Energy Saving Tips' guide

• Consider using renewable energy - Renewable energy sources, such as solar and wind power, can help you to reduce your reliance on fossil fuels and could save you money on your energy bills.

Should you Switch Business Energy Suppliers?

Ultimately, whether you should switch depends on the current energy contract. If you're getting a great price now, it's not worth switching. What will be beneficial, is ensuring you are paying the best price for business energy.

At BusinessComparison, we've made comparing energy prices quick and easy. Simply provide your details, and we'll do your research for you, providing you with the best possible price from our panel of energy suppliers. It only takes a few minutes and can help you to decide if it's worth switching energy providers.

Are Businesses at Risk?

Rising energy costs are a significant challenge for UK businesses. However, by ensuring you're on the best energy tariff for your business, taking steps to reduce your energy consumption and taking advantage of government support, you can help to mitigate the impact of the rising cost of energy.

If your business is facing financial hardship due to the current state of energy costs, we can help you with solutions that can help keep your cash flow positive. We compare various finance products that can give your business a cash injection, from Business Loans to Invoice Finance solutions.

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Jon Cole-Dalton