Energy costs are now the number one concern for UK businesses, eclipsing concerns about the post-pandemic economic recovery, a new survey of British firms has found.
A poll of more than 200 large businesses commissioned by the business solutions arm of energy company Npower found more than three quarters of firms see spiraling and volatile energy costs as the biggest risk to their business.
Some 80 per cent of companies surveyed reported that energy is now a “board-level issue”, with nine out of 10 reporting they expect their energy costs to increase further over the next 12 months.
Soaring gas prices over the last six months have driven wholesale electricity and gas prices to record highs, and energy costs are expected to continue to climb over the coming months as Russia continues to wage war in Ukraine and demand rises this winter.
Businesses whose fixed energy contracts have recently come to an end or firms on variable tariffs are therefore facing significantly higher overheads due to their energy use.
Npower’s research highlights broad consensus among business that more action is needed to protect firms from energy costs.
Some 82 per cent of firms surveyed said they wanted to see more in terms of policy and incentives from Ministers, with one in five reporting they believed nothing had been done at all to help the private sector.
“While some progress has been made, the message coming through loud and clear from this research is that current policy is not doing the job it needs to do to support businesses at a time when energy is their biggest concern,” said Andrew Ainsworth, chief operating officer at Npower Business Solutions. “What we are hearing is that certainty and with it, investor confidence, is in short supply.”
The survey notes that businesses are taking steps to boost their resiliency in response to the crisis, with more than half reporting that sustainability measures, such as energy efficiency and energy management systems, would be their most important investment priority over the coming 12 months.
However, Ainsworth argued that firms’ efforts to protect themselves from the crisis needed to be matched by leadership from government.
“While it is encouraging to see that many businesses are being ‘masters of their own destiny’, we also need to see strong leadership in government to grasp the nettle of challenging but important change that could radically alter the way industry interacts with energy in Britain , he said.