According to insolvency specialists, tens of thousands of firms are at risk of failing without government assistance due to rising energy costs. Previously lucrative enterprises are incurring severe losses and it is expected that many of those who survive will be compelled to lay off personnel.
Firms are waiting to hear if they will receive assistance with their energy expenditures.
What they are expecting
The government, led by incoming Prime Minister Liz Truss, is poised to give major financial assistance to households facing an 80% increase in the energy price cap in October on Thursday.
Businesses, on the other hand, are not protected by the energy cap, and Red Flag warns that without government assistance, more than 75,000 larger firms that use a lot of energy may go bankrupt or have to lay off workers.
The government’s plan is expected to contain some business aid, but this is not fully known yet. That means Many businesses will have to choose between paying wages and paying energy bills.
What you should know
Since January 2021, the UK benchmark gas price has quintupled, rising from £54 per therm to £245 per therm in December 2021. Britain imports a substantial amount of its gas supplies from the continent, which in turn relies on Russia for approximately 35% of its own natural gas flows.
When relations between Moscow and Brussels deteriorate, as they are today, the UK’s energy market frequently experiences turbulence.