Businesses’ spending on electricity is set to more than double as a share of all expenditure compared with 2018, New Statesman analysis found.
Pubs, restaurants and catering services, for example, were spending an average of 8.8 per cent of their budget on electricity in 2018. Without government support, that figure is expected to rise to 20.6 per cent in October 2022 when the energy price cap is increased.
Hospitality businesses will be particularly badly affected. A group of pubs and breweries have sent an open letter to Rishi Sunak and Liz Truss on Tuesday warning that the soaring energy prices may cause lay-offs and pub closures.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: “There are pubs that weathered the storm of the past two years that now face closure because of rocketing energy bills for both them and their customers. If we lose them, we not only lose businesses and the jobs that go with them, but also the beating heart of communities across the country where people gather in times of need. We need an energy cap for businesses before it’s too late.”
Our analysis assumes that electricity prices will rise in line with the announced energy price cap for October, while all other expenses will follow overall inflation rates and Bank of England projections. This doesn’t account for business electricity rates or differences in the types of other goods and services businesses spend their money on and some sectors may see even higher price rises.