The UK Energy Crisis: The effect on businesses

Article posted

3rd May 2024

Read time

3-6 min read


Mollie Pinnington

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The UK energy crisis, triggered by a surge in wholesale gas prices, has had a significant impact on businesses across the country. Unlike households, which benefit from a price cap, businesses have been exposed to the full brunt of fluctuating energy costs. This has led to a challenging environment for many companies, squeezing their profits and forcing difficult decisions.

The pain of rising bills

The most immediate impact of the energy crisis is the sharp increase in energy bills. Businesses that rely heavily on energy, such as manufacturers, hospitality providers, and data centres, have seen their operating costs soar. This puts a strain on their cash flow, making it difficult to invest in growth or maintain current employee levels.


A domino effect on prices

For many businesses, simply absorbing the higher energy costs isn't an option. To protect their profit margins, some companies have been forced to raise prices for their goods and services. This can lead to a domino effect, with inflation rising further as consumers face higher prices across the board.


Difficult choices and tough calls

The energy crisis has forced businesses to make tough decisions. Some have opted to reduce operating hours, while others have implemented temporary closures or redundancies. In extreme cases, businesses have been forced to shut down entirely, unable to cope with the financial burden of soaring energy bills.


A glimmer of hope (But not a full recovery)

While wholesale gas prices have come down from their peak, they remain significantly higher than pre-crisis levels. This means that the pressure on businesses is far from over. Although some businesses may benefit from renegotiating supplier contracts or implementing energy efficiency measures, the road to recovery will likely be long and challenging.


The bottom line impact

The energy crisis has had a clear and negative impact on the bottom lines of businesses across the UK. Here's a breakdown of the effects:

  • Reduced Profits: Higher energy bills eat into profits, leaving less money for investment and growth.
  • Increased Costs: Businesses may need to raise prices to offset energy costs, potentially impacting sales.
  • Operational Challenges: Reduced hours, closures, and redundancies can disrupt operations and productivity.
  • Business Closures: In some cases, the financial strain can be too much for businesses to bear, leading to closures.


 Looking forward

Over the past two years, the UK government has implemented some measures to help businesses weather the storm, such as tax breaks and schemes. However, it's clear that the energy crisis has exposed the vulnerability of businesses to volatile energy markets.

As the situation evolves, businesses will need to continue adapting and innovating to find ways to operate efficiently and remain profitable in this new energy landscape.


 How can your business reduce financial burdens?

One way that your business could escape the higher energy prices could be to work with an energy consultant. At Resolve energy we have a team of energy experts that can find you an energy deal that is much better for your business. We offer many services such as:

  • Energy procurement
  • Energy negotiation
  • Account management
  • Customer support

If you would like to find out how we can help your business, get in touch today to find out!

If you're looking to save money on your energy bills then why not get in touch today? The relationships Resolve Energy has developed with over 24 of the UK’s biggest business energy suppliers allows our energy experts to source the best business energy rates available for your company right when you need them. Request a free quote today and start saving money on your energy.

Looking to pay less on your energy bills?

Get a free quote today