‘Cost of business’ crisis spiraling warn firms - The Entrepreneurial Way with A.I.


Thursday, August 25, 2022

‘Cost of business’ crisis spiraling warn firms


By Timothy Adler on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

Gas burner with vector swooshing upwards, cost of business crisis concept

Ministers are being urged to provide Covid-style support for businesses to head off what’s being called the “cost-of-doing-business crisis”.

The British Chambers of Commerce (BCC) has called for Covid-style energy grants to protect livelihoods.

The BCC warns that smaller businesses hit by increased energy prices are in urgent need of support, including emergency energy grants and a cut in VAT on energy.

>See also: Firms may be offered grants to pay for energy

Shevaun Haviland, director of the BCC, told Radio 4’s Today programme that companies are already struggling with day-to-day life.

She said that one of its members had stopped buying raw materials to buy products, even though its order books are full, in order to cover its energy bill.

The BCC has written to the government and the two Conservative candidates in the race to become the next prime minister proposing a five-point plan to help businesses.

>See also: Just one supplier has fixed business energy deal from October

The plan also includes giving Ofgem, the energy regulator, more power over the market for businesses, reversing the planned rise in national insurance contributions, a temporary cut in energy VAT to 5 per cent and expansion of overseas work visas to ease the labour shortage crisis.

Haviland said: “Consumer confidence reported at a 50-year low, and the Bank of England’s projections of a year-long recession, demonstrates that the cost-of-living crisis and the cost-of-doing-business crisis are two sides of the same coin.”

Households are braced for Ofgem to double the retail energy price cap to an estimated £3,600 from October. Without a corporate price cap,. small businesses are more exposed to the sharp jump in wholesale energy markets.

The Federation of Small Businesses has called for an energy price cap for small businesses with 10 employees or less, similar to the one for households.

Chancellor Nadhmim Zahawi has reportedly drawn up his own package of proposals to save thousands of small businesses from going under, including grants distributed through local councils – as happened with Covid-19 financial support – as well as temporary reductions in VAT and business rates.

Further reading

9 of the best business energy suppliers based in the UK

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Timothy Adler, Khareem Sudlow