You would be wrong in thinking the recent rise in energy prices has only affected consumers; businesses are feeling the pinch of the constant rise in energy bills as well. According to a survey by Forum of Private Business, energy rises have been the largest cause of cost inflation amongst businesses. Despite the recent economic recovery, companies have indicated they are still facing an uphill battle to make ends meet. The results of the survey, carried out among its members, showed that 94% of businesses saw an overall increase in costs, while 7% reported an increase in energy costs, 83% in transport costs, 78% rise in marketing costs and a 69% rise in the cost of raw materials/stock.
Unable to pass the costs along
An area that raises more alarm bells for businesses was the inability to be able to pass along these price rises to the consumer. This has resulted in 41% of the businesses surveyed highlighted that are having to reduce their costs and overheads as a result.
Affecting the ability to invest
81% of firms indicated that rising business costs had been detrimental to their business: 73% had cash flow issues as a result and it had a detrimental effect on 51% of firms when looking to invest. 51% also reported that it has been damaging for employment levels and 63% felt this it had inhibited their plans for growth.
No respite for price rises
When questioned about the results, Alexander Jackman, the Forum’s Head of Policy, said:
“The major reasons for increase in prices were predominantly down to transport and energy prices rising, coupled with the continued weaknesses of sterling for importers.
“Unfortunately, it doesn’t look as if there is going to be any respite from energy hikes any time soon, despite the ongoing political pressure to take action to introduce more competition in the market.”
This bleak outlook doesn’t look to be getting any better either with more energy providers looking to follow suit by putting their prices back up. This does beg the question though, at what point are the government and other related bodies, going to realise that their continued drive for financial gain is coming at the costs of businesses? Before you know it the barriers to entry will become too great for businesses to thrive and prosper.