ICSM Business News: concerns mount for medium and small businesses as energy prices rise by 300% and inflation hits double figures

For the last five weeks the UK Government has been effectively ‘out to lunch’ while the nation has been hit by a series of deeply worrying news.

The hike in energy prices seems like a bad dream with horror stories suggesting not only will members of the general public end up switching off their heating but businesses seeing one of their overheads sending them under.

Take for instance the hospitality industry who are seeing a 300% increase in energy costs. A pub or a café can’t switch off the lights or the heating as customers won’t come in. Sky News reported this week: “Greene King, JW Lees, Carlsberg Marston's, Admiral Taverns, Drake & Morgan and St Austell Brewery want extra help for an industry also facing big increases in wholesale food and drink prices. Nick Mackenzie, chief executive officer of 2,700-strong group Greene King, said one tenant has seen their energy bill jump £33,000 for the year.”

Any spreadsheet for a business has a spreadsheet of their costs with energy one of those fixed costs due to the practice of having contracts. To see a 300% increase in gas and electricity is enough to make a business insolvent.

Sky News reported: “The bosses, who sit on the board of British Beer and Pub Association (BBPA) have demanded the government implement an urgent support package that effectively caps the price of energy for businesses.”

The Government’s spokesperson responded by saying no Government can control global prices alone – the war in Ukraine being one. They reminded businesses the Chancellor Rishi Sunak had authorised a raft of grants, loans and support for businesses and would release more news of help after the election of a new prime minister.

Meanwhile the bad news keeps coming with Goldman Sachs predicting inflation at 22.4% by the New Year and the Trade Unions responding with industrial action to demand wage increases to mitigate the increases. What business needs right now is the guarantee of a price cap that is affordable – but that seems unlikely while as many feel the Government is ‘out to lunch’ until sometime in September.

Ian Carrotte of ICSM said his members were increasingly concerned about the huge hikes in energy costs and backs calls from most industry bodies that the Government needs to step to stabilise the economy before stagflation sets in.

In the meantime his advice is to freeze investment and expansion plans, cut debt and for owners and managers to 'take a hair cut' in order to cut costs. Moving to smaller premises, sharing space with other firms and obviously insulate offices and factory spaces.

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ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.

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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk