Firms risk ‘being pushed to the brink’ by further price hikes – CBI

Many viable companies face “distress” unless urgent action is taken by the Government to get a grip on the energy cost crisis.

Firms already feeling the pinch and risk being pushed to the brink by further price hikes, said the Confederation of British Industry (CBI).

It says 69% of firms expect their energy costs to increase in the next three months, with almost a third anticipating rises of more than 30%.

The CBI says that  firms are doing their best to absorb costs, with around one in three saying they do not expect to pass on additional energy costs, while 30% of companies see energy price rises as likely to negatively impact current or planned investment in Net Zero measures.

The leading business body warns that with many firms, particularly energy intensive industries and SMEs, already feeling the pinch, further energy price rises could push many viable businesses to the brink unless urgent action is taken to support them and their supply chains.

The CBI has called for HMRC to replicate Time to Pay flexibility granted during the pandemic to take account of energy price rises, while also saying that business rates should be frozen for the coming financial year.

It also calls for the government to provide energy efficiency support for the most energy intensive sectors through an expansion to the Industrial Energy Transformation Fund.

Matthew Fell, CBI chief policy director, said: “The impact of soaring energy prices on households is going to have serious consequences, not just for individuals but for the wider economy.

“While helping struggling consumers remains the number one priority, we can’t afford to lose sight of the fact that many viable businesses are under pressure and could easily tip into distress without action.

“The guiding principles for any intervention must be to act at speed, and to target help at those households and firms that need it most.

“Firms aren’t asking for a handout. But they do need Autumn to be the moment that government grips the energy cost crisis. Decisive action now will give firms headroom on cashflow and prevent a short-term crunch becoming a longer-term crisis.

“With firms under pressure not to pass on rising costs, there is a risk that vital business investment is paused or halted entirely. That in turn could pose a real threat to the UK’s economic recovery and Net Zero transition.”