Rising fuel and energy prices is putting over half of UK small businesses at risk of collapse, a new report by Simply Business, one of the UK’s largest providers of small business insurance reveals.
Over half (54%) of SME owners say rising fuel and energy costs are one of their greatest threats to survival. As a result, three in five (59%) small business owners are calling on the government to review or reduce the energy price cap.
While the energy price caps do not apply to businesses directly, millions of small business owners are still experiencing increased energy bills at a time when costs are rising in most operational areas. At the same time, with a substantial number of households affected by rising energy bills, consumer purchasing power is going down as people cut back on non-essential spending. SMEs in food and drink, hospitality and retail are most at risk, decreasing revenue and income for small business owners still in the vital post-pandemic recovery period.
Alan Thomas, UK CEO at Simply Business, said: “Many small business owners are at breaking point – feeling the crippling pressure of rising costs, energy and fuel prices, alongside their ongoing recovery from the economic impact of the pandemic. Our SME Insights Report is a clear indication that small business owners want and need government support, with three in five calling for a review or reduction of the energy price cap.
“In the meantime, whilst the energy price caps do not apply to businesses, owners are seeing their energy bills increase overall. The surging cost of fuel and energy, alongside the overall rising cost of living, will understandably see households cut back on non-essential spending. There is a domino effect in place. The impact to consumer purchasing behaviour will trickle through to the books of small business owners, at a time when SMEs need our support the most.
“The latest rate rise also came with a clear recession warning, and poses a serious risk to many small businesses. Sole traders and microbusinesses will feel the pressure more than most. This all comes at a time when many are still in recovery mode. One in six believe they will never financially recover from the pandemic. As a result, two in five owners are calling for long-lasting financial support from the government to help them get back on their feet after Covid-19.
“Accounting for over 99% of all UK businesses and contributing trillions of pounds in turnover every year, small businesses sit at the heart of our communities and are vital to our economy. And while it’s encouraging that the majority remain optimistic about their businesses chances, it’s clear that owners need support to weather the pressure of rising costs.”
