The UK’s soaring energy bills may result in the closure of at least 60% of all factories in the country, a new survey has revealed.
The report conducted by the lobby group MakeUK said that “the current crisis is leaving businesses facing a stark choice - cut production or shut up shop altogether if help does not come soon.”
The survey added that 13% of factories now have reduced hours of operation or are avoiding peak periods, while 7% are halting production for longer stretches.
MakeUK’s chief executive officer Stephen Phipson, for his part, told Bloomberg news agency that “emergency action is needed by the new government,” adding that the UK is “already lagging behind” its “global competitors.”
This comes as UK energy regulator Ofgem announced last week a decision to increase the energy price cap by 80%, to 3,549 pounds per year, starting October 1st due to soaring global energy prices.
The move followed the Telegraph reporting that the UK government is considering a COVID-style grant scheme for small businesses to present to the next British prime minister, after the winner in the leadership race between Foreign Secretary Liz Truss and ex-Chancellor Rishi Sunak is announced on September 5.
The issue is also reportedly on the table of Shevaun Haviland, director general of the British Chambers of Commerce (BCC), who told the Telegraph that small businesses in the UK face “a tsunami of costs.” He underscored that without serious aid, “businesses will have to reduce output, stop hiring and some will have to cease trading.”
According to the BCC, about 4.5 million small- and medium-sized enterprises will need around £5,000 each to afford their power bills over the winter, which amounts to £23 billion of government support.
After Russia launched its special military operation in Ukraine in February 2022 and Western countries slapped several sanction packages on Moscow, the energy situation in Europe deteriorated considerably, with inflation in the UK reaching its highest point since March 1982.
The rising cost of living has hit millions of UK households, prompting tens of thousands of rail and postal workers to go on strike. Last month’s study conducted by the University of York suggested that at least 45 million Brits may be in the grip of fuel poverty by January 2022 due to the looming energy price cap increase.