Energy crisis prompts fears of a ‘generation of lost businesses’
Energy crisis prompts fears of a ‘generation of lost businesses’
Posted on 30 Aug 2022
Nearly 14% of small UK businesses expect to close in the next twelve months, according to a new report published by the Federation of Small Businesses.
The FSB has warned that rapidly rising energy prices could provoke a succession of business collapses. Its data shows that nearly 53% of small companies expect to stagnate, downsize, or fold in the next year. Fuel and utilities were the most-mentioned causes of this increase in costs.
FSB National Chair Martin McTague is quotes as saying:
“Far too many small businesses are finding it hard to stay afloat with spiralling operating costs and reporting energy bills mushrooming by four or five times in recent months.
“While domestic consumers quite rightly have at least some protection through the price cap and are being given direct cash support, there is no price cap for small businesses and currently no financial support either, despite many seeing energy costs soaring at an alarming rate.
“We also need to see immediate allocation of unspent Covid additional relief funding to help businesses with rising energy costs.”
Mr McTague added that there are levers the government can pull – energy bill support for small firms to match that given to households, a reduction in VAT on energy, a cut in fuel duty.
He said: “Cost pressures more widely could be eased through a reversal in the recent national insurance hike and taking more small firms out of business rates. The government needs to grasp hold of these levers and start pulling them now.
“Small businesses are at the heart of both the economy and communities, and account for 60% of private sector employment.
“The importance of providing support for small businesses in these worrying times cannot be over-stated and must not be overlooked. The number of small firms in the UK shrank by almost 400,000 over the first year of the pandemic. Without support at this time of costs crisis, this year could turn out to be equally catastrophic.”