Threat to businesses as energy prices set to continue rising
With all the various negotiation to form an orderly exit from the European Union another potential time bomb awaits to ambush UK businesses. Since Brexit, the UK has seen some of its biggest cost rises in years.
The new costs have large implications for commercial users and SMEs whose energy costs are a large part of their business. Already, we have seen Electricity costs rise 15% – 20% in the last 18 months and businesses are expecting it. Roll back to 2015 / 2016 when oil was at rock bottom and many companies secured attractive 2-4 year fixed energy contracts at great rates. These same businesses are now coming towards their renewal window and suddenly finding large unexpected increases. 52% of the energy costs businesses pay are third party charges such as infrastructure, transport,government taxes, renewable obligations and tariffs. This total is set to increase to 58% in the near future meaning that whilst energy commodity costs may be flat, charges to businesses are still increasing. So, if your business is an energy user then be prepared for higher future costs. Ensure that your business plan and budgeting have taken these elevated costs into account, it will be higher costs for the same product. We have already worked with many businesses who have found these new costs crippling to their businesses when margins are already tight.