The number of manufacturers citing energy as their biggest worry has doubled in seven months, with experts urging firms to put coping measures in place before government support ends in 2023.
According to surveys by the Office for National Statistics (ONS), 29 per cent of UK manufacturers perceived energy prices as their ‘biggest concern’ in early October, compared to just 14 per cent as recently as February.
As well as having a direct impact through bills, the crisis is also feeding into the cost of raw materials and is now the predominant factor in businesses raising their own prices, the research shows. Nearly half (46 per cent) of businesses surveyed across all sectors by the ONS in October were considering raising their prices due to the cost of energy.
While the six-month Energy Bill Relief Scheme announced in September is expected to reduce pressure on businesses in the short-term, most are still set to pay much higher energy prices when compared on an annual basis, and prices are expected to remain high well into 2023 after the scheme ends.
Commenting on the figures, Rob Turner, Energy and Resources Sector Leader at PwC UK, said:
“This ONS data highlights the stress on UK business caused by over a year of high and volatile energy prices. The greater concern is that this pressure is growing, with reduced gas supply from Russia – now sitting at just 20 per cent of pre-conflict levels in Europe – adding to risks to prices for Winter 2022. The risk of energy shortages is forcing action like never before.
“The business impact needs to be understood not just as a short-term crisis, but as a medium-term challenge, as outlined in PwC’s 10 point plan for business. Forecasts suggest that, absent a complete change in Russian supply, tight supplies, and thus high and volatile prices, will be a feature well beyond this winter. Firms therefore need to engage in short-term coping measures alongside measures to reduce energy use and manage costs over the longer term.”