Businesses could see a fivefold increase in their gas and electricity bills leading to many of them being forced to shut, experts have warned.
Analysts at Cornwall Insight have said companies who negotiated their two-year fixed price contracts in the lockdown summer of 2020 face a price rise as high as 500%.
“Business energy prices have been rocketing for 15 months with increases proportionately higher than those experienced by households under the Default Tariff Cap,” the energy consultancy’s head of relationship development Robert Buckley said.
“What is striking about the business energy markets is how relatively calm they still seem given the price increases already experienced and the guaranteed further increases to come.”
There are fears higher energy bills could force companies to close meaning job losses in different industries.
With another recession looming in the face of the worsening cost of living crisis, October’s increase in energy prices coupled with the other economic pressures could tip businesses’ finances over the edge.
In the second quarter of 2022, more than 29,000 businesses in Scotland saw instances of early stage distress according to business rescue and recovery specialist Begbies Traynor.
Companies affected included food and drug retailers, printing and packaging, and industrial food and beverage producers.
“We are warning Scottish businesses to prepare for a rocky road ahead,” said Ken Pattullo, managing partner for Begbies Traynor in Scotland.
“Given the situation with the worsening cost of living crisis, it may well be that these latest figures do not yet reveal the strain of inflation with more distress yet to come as the winter approaches with further hikes in energy costs.”
Aileen Caldow, who owns Caldow Salon in Edinburgh’s Haymarket, said the business is still recovering from being forced to close during the coronavirus pandemic.
“It’s very difficult for us to foresee what the future holds with these crazy quotes that we are now having for the energy. We just look at it and think, what’s coming next? How can we sustain this long term?”
The family business used to pay £350 a month for electricity during winter, the most recent quote has seen the cost jump to £1,500.
“I just don’t know how that can be possible. I’ve had many sleepless nights and I wonder why I’m even doing this,” Ms Caldow said.
“I feel that we’re quite strong together and we’re lucky to have each other and the family business. If I was doing this on my own, I think I would’ve gave it up.”