Energy bills are straining businesses and people as UK costs rise.

LONDON – With rising energy bills, rising costs and rapidly declining consumer purchasing power, small businesses across the UK are struggling to make ends meet.

UK inflation rose to a 40-year high of 10.1% in July, new data showed on Wednesday as rising food and energy prices exacerbated the country’s cost-of-living crisis.

The Bank of England expects consumer price inflation to rise 13.3% in October, while the country’s average energy bills (adjusted by price cap) are expected to rise sharply in the fourth quarter, eventually surpassing the annualized £4,266 ($5,170) at the start. 2023.

On Wednesday, UK energy regulator Ofgem accused the regulator of failing to strike “the right balance between the needs of consumers and the needs of suppliers” in its decision to add hundreds of pounds to household bills.

In the second quarter of 2022, real wages in the UK fell by 3%, a sharp decline, as wage rises failed to keep up with the rising cost of living.

A new survey published Friday showed consumer confidence fell to the lowest level since records began in 1974.

‘absolute madness’

Alan Thomas, chief executive of UK insurance company Simply Business, said: “While the energy price hike does not directly affect businesses, millions of small business owners are still facing increased energy bills at a time when costs are rising across most operations.”

“At the same time, consumers’ purchasing power is shrinking as Britain cuts non-essential spending, hurting small and medium-sized school textbooks. [small and medium-sized enterprise] Owners.”

This assessment is echoed by Christopher Gammon, e-commerce manager at Lynx Aquatics – a Lincolnshire-based shop that supplies aquariums, ponds and marine animals.

The business has increased its energy costs by 90% since the start of the war in Ukraine, Gammon told CNBC on Thursday, and the owners are offering more increases in the coming months.

“We’re fighting the rising costs of switching everything to LEDs, solar panels, wind turbines (planning in progress) and shutting down unused systems,” Gammon said.

“We also had to increase the cost of products – most of which were animals because they now cost more to care for.”

Customers are moving away from keeping fish and reptiles because of the cost of maintenance, and on Wednesday the store brought in a snake that a customer could no longer care for.

While it is trying to give staff at its two remaining sites in Lincolnshire a pay rise to help it weather the crisis, the cost of shifting has forced Lynx Aquatics to close its East Yorkshire store, laying off a number of workers.

As heating water for marine tanks and purchasing pumping equipment become more expensive, the business is working to expand its online store due to rising in-store repair costs.

In early July, a quarterly survey from the British Chambers of Commerce found that 82 percent of UK businesses see inflation as a concern for their business, with sales growth, investment intentions and long-term confidence all falling.

“Businesses face unprecedented cost pressures, with key drivers coming from raw materials, fuel, utilities, taxes and energy,” said David Baier, head of research at BCC.

The ongoing supply chain crisis exacerbated by the conflict in Ukraine and China’s blockade has exacerbated this.

“The red lights on our economic dashboard are starting to blink,” added Shevaun Haviland, executive director of the BCC, adding that every indicator has been declining since the March survey.

Phil Speed, an independent distributor for multi-service company Utility Warehouse in Skegness, England, deals with brokers to source power supplies for business customers.

Earlier this week, he told CNBC that for the first time in 10 years, he was unable to get a better deal for the customer than out-of-contract — the typically expensive prices paid when a business or individual doesn’t have a contract in place.

“I think the unit rate she was referring to was 60p. [pence] A room for gas, which is just ridiculous. I think a year ago, we were looking at 5 or 6 pins. It’s just absolute madness,” Speed ​​said.

“We don’t know what’s going to be offered to us because we don’t know what’s going to happen. The price is going ballistic. Nobody can buy it.”

Gas prices for both businesses and consumers can only be expected during the cold winter months. Gas-powered cafes have no choice but to replace gas appliances with electric ones, Speed ​​said.

‘Too loud at someone’

Rail strikes have brought the country to a standstill for several days over the winter months and look set to continue, with postal workers, telecoms engineers and ship workers voting to strike as inflation erodes real wages.

Lease Trust, a favorite of the Conservative leadership, was forced earlier this month to make dramatic changes to plans to cut public sector pay that will slash pay for teachers, nurses, police and the defense force.

Local authorities recently offered state school support workers a £1,925-a-year pay rise, a 10.5% increase for the lowest paid staff and just over 4% for the highest paid, after pressure from the country’s three biggest unions.

A woman in her early fifties — a support staff member at a Lincolnshire state school who asked not to be named because of her emotional state and fear of public reprisal — told CNBC that years of actual pay cuts have kept many down. Salaried civil servants are struggling to make ends meet.

The British government In 2010, after the global financial crisis, it announced a two-year pay freeze for public sector workers, followed by a 1% average ceiling increase in public sector salary awards in 2017, with average salary increases increasing. About 2% by 2020.

A 10.5% rise for low-paid school support workers would ease the pressure, but the woman said her energy costs had doubled and her private landlord had tried to increase the rent by £40 a month, which she refused and meant she would need to sell her car to cover basic living costs.

She called on the government to temporarily reduce “fixed charges”, reduce the fixed rate households pay on most gas and electricity bills and step up efforts to bring back the one-off “wind tax”. With energy companies such as BP, Shell and Centrica reporting record profits…

“I think this is a worse crisis than this [the Covid-19 pandemic]”Because this affects not only low-income people, but probably even middle-income people, because I don’t see how anyone can absorb those energy costs,” she said.

Pressure on businesses and government to raise wages in the face of rising living costs has fueled further concerns that inflation is taking root – but this is a far cry from the reality that working families are increasingly being forced to cut back on essentials.

“We can’t keep paying people, which will make the cost of living worse, but the cost of living is out of control, and the only way people can survive is when wages go up.” ” said the woman.

“I know 22 is caught, but I don’t see a way around that – you’ve got to eat.”

The situation in recent months, even before the expected energy crisis, has already begun to pay a high price.

“I think I’m just a very honest, hard-working person. I’ve never committed a crime, I’ve always done things right, but now I feel like it’s not going to get you anywhere in this country,” she said.

“For the first time in my life, I want to go to a protest and scream at someone, and you’re like, ‘What is it going to take?’ They think so.”