Mar 23, 2023
370,000 UK Firms Could Close, Cut Staff as Energy Support Ends
(Bloomberg) -- Some 370,000 small businesses in the UK will be at risk of job cuts or closure when government support for energy bills effectively stops at the end of next week, according to a leading lobby group.
To keep up with the bills, businesses need to be able to renegotiate their energy contracts to reflect lower wholesale prices, especially firms that signed fixed contracts when the government support was in place, said Tina McKenzie, policy chair of the Federation of Small Businesses.
Chancellor Jeremy Hunt announced the UK would extend energy support to consumers, but the aid to businesses will end April 1, with limited exceptions for energy-intensive producers. And while European wholesale energy prices have come down from highs last year, they remain double the levels from before the energy crisis, leaving firms with hefty bills.
“This cliff-edge will also hit consumers as businesses will have to raise prices to cope with soaring bills, driving up inflation,” McKenzie said.
Under the current relief plan, the FSB said a pub that signed a new energy contract in August last year would have received £60,000 a year on its estimated £85,000 energy bill. The new plan would provide the firm just over £2,000 of support, according to the group.
Despite the current support, several UK companies have collapsed under the weight of record energy bills. The manufacturing group Make UK said earlier this year that about 13% of manufacturers were just breaking even and would close if the government withdrew energy support.
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