Energy price crisis: Quarter of SMEs say power bills unsustainable within months
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Three quarters of the small and medium-sized enterprises (SMEs) that are experiencing higher energy bills say they will have to pass costs on to customers, according to the YouGov poll of more than 500 businesses.
The report follows the grim news that the energy price cap for consumers is to jump by 80 per cent to £3,549 from October with some forecasters warning of annual bills spiking as high as £6,800 next April.
Most businesses do not fall within the Ofgem cap and many have already been hit with soaring energy costs. They face a double whammy as cash-strapped households rein back on discretionary spending.
The YouGov survey of 526 SMEs found that 60 per cent of firms are having to pay higher energy bills than they were at the start of the year. For 13 per cent of businesses bills have increased despite the fact they are using less energy now than they were at the start of 2022.
Of those firms experiencing higher prices, a large portion say they are unsustainable for the business - 44 per cent say they won’t be able to sustain them for longer than 12 months, including 9 per cent who say they already cannot afford to pay for them.
These figures represent 26 per cent and 5 per cent of all SMEs, respectively.
Some 75 per cent of those firms whose energy bills have gone up say they are going to have to pass on higher prices for customers, including 34 per cent who say it will lead to “much higher” prices for their customers.
Meanwhile, almost two thirds (64 per cent) of SMEs say they are worried about the forthcoming increase in the energy price cap, and the fallout it is likely to have on their businesses, including 30 per cent who are “very worried”.
Responding to the news that the household energy price cap is set to increase to £3,549, Federation of Small Businesses (FSB) national chairman Martin McTague said: “Small businesses are left out in the cold when it comes to energy bills, with the vast majority excluded from the household energy price cap and other protections designed for domestic household consumers.
“Unlike large corporates, small firms cannot hedge costs and negotiate deals with their large energy suppliers. Many of our members say the eye-watering energy bills could be the final nail in the coffin as they struggle to get through winter.”
Sophie Lund-Yates, lead equity analyst at investment platform Hargreaves Lansdown, noted: “While the cap changes have been known about for some time, this change will still come as a shock when the reality of these figures sinks in. It’s likely to result in a further cooling of demand for discretionary items, and an increase in people struggling to purchase even the basics.
“This increases the focus on Truss and Sunak, who will be under immediate and heavy pressure to do something about the situation.”#