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In the News

Energy Price Crisis - Many Small Businesses May Not Survive

Geoff Riley

14th August 2022

This article from the Financial Times provides a timely warning of the threats to the commercial viability of thousands of UK small businesses.

Soaring energy prices are adding hugely to the variable costs of many small enterprises. Consider the example in the article of an ice-cream manufacturer whose sales have boomed during this prolonged period of dry and hot weather, but whose profits are likely to be wiped out by the surge in the retail price of energy.

"Freezing 400,000 litres of ice cream a year is an energy-intensive enterprise. With 4 per cent margins on a turnover of around £2.3 million a year, the company is heading for a big loss."

Then check out this tweet from Natalie Hood which had gone viral on social media.

Anna Tims reports here for the Guardian on a 280-year old pub at risk of closure because of the cost of energy crisis. "The energy price cap imposed by the regulator for Great Britain, Ofgem, to protect consumers does not apply to businesses who pay, on average, double the capped rate for gas and electricity."

We blogged recently that the government is considering offering energy subsidies to some of the UK's larger manufacturing businesses and sectors. But what financial support will be available for smaller businesses many of whom are set to shed jobs in a bid to control costs and lots who may simply not survive.

Extensive closures and growing redundancies will make the expected 2023 recession even deeper.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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