A main street decorated with British Union banners in Penistone, United Kingdom. The Fuel Poverty Eradication Coalition warned that “a tsunami of fuel poverty will hit the country this winter.”
Bloomberg | Bloomberg | Getty Images
LONDON – Faced with high energy bills, rising costs, and a rapid decline in consumers’ purchasing power, small businesses across the United Kingdom are struggling to make ends meet.
New data showed on Wednesday UK inflation jumps to 40-year high at 10.1% In July, food and energy costs continued to rise, exacerbating the country’s cost-of-living crisis.
The Bank of England It expects consumer price inflation to reach 13.3% in October, with average energy bills in the country (determined by a price cap) expected to rise sharply in the fourth quarter to eventually exceed £4,266 ($5,170) in early 2023.
On Wednesday, The director of Britain’s energy organisation, Ofgem . has resigned On its decision to add hundreds of pounds to home bills, accusing the watchdog of failing to strike the “right balance between the interests of consumers and those of suppliers”.
Real wages in the UK fell 3% annually in the second quarter of 2022, the largest decline ever, as wage increases failed to keep pace with the rising cost of living.
A new survey published Friday also shows consumer confidence has fallen to its lowest level since records began in 1974.
Alan Thomas, chief executive of insurance company Simply Business UK, said: “While energy price caps do not apply to businesses directly, millions of small business owners continue to struggle with rising energy bills at a time when costs are rising in most areas. operational”.
At the same time, consumer purchasing power is falling as Britons cut back on non-essential spending, hurting the books of SMEs. [small and medium-sized enterprise] friends “.
This assessment was echoed by Christopher Jamon, director of e-commerce at Lynx Aquatics – a store and warehouse in Lincolnshire that provides aquariums, ponds and marine livestock.
Jamon told CNBC Thursday that the company has seen energy costs rise 90% so far since the war in Ukraine began, and that its owners plan to provide for more increases in the coming months.
“We are combating the increased cost by switching everything to LED lights, solar panels and wind turbines (planning in process) and shutting down unused systems,” Jamon said.
“We’ve also had to increase the prices of produce – mostly livestock because it is now more expensive to care for them.”
Customers are increasingly holding back on fish and reptiles because of the cost of maintenance, and on Wednesday, the store asked a customer to bring in a snake they could no longer afford to care for.
Soaring costs have forced Lynx Aquatics to close a store in East Yorkshire, and lay off many workers, while it has been trying to offer wage increases to employees at its remaining two locations in Lincolnshire to help them weather the crisis.
The company is also expanding its online store due to the rising costs of in-store maintenance, water heating for marine aquariums and purchasing pump equipment is more expensive than ever.
In early July, a quarterly survey from the British Chamber of Commerce found that 82% of UK businesses viewed inflation as a growing concern for their business, with slowing sales growth, investment intentions and confidence in long-term customer turnover.
“Companies are facing an unprecedented convergence of cost pressures, with key drivers coming from raw materials, fuels, utilities, taxes and labor,” said David Barrier, head of research at BCC.
“The ongoing supply chain crisis, exacerbated by the conflict in Ukraine and the shutdowns in China, has further exacerbated this.”
ACC Director General Shavon Haviland added that “red lights on the economic dashboard are starting to flash” with nearly all indicators deteriorating since the March survey.
Phil Speed, an independent distributor for multi-service Utility Warehouse, based in Skegness, England, coordinates with brokers to find power deals for corporate clients.
He told CNBC earlier this week that for the first time in 10 years, he couldn’t get a better deal for a client than his out-of-contract price — the usually exorbitant prices paid when a company or individual doesn’t have a contract deal in place.
“I think the unit price you quoted was 60p [pence] Gas unit, which is ridiculous. I was imagining a year ago, we were looking at 5 or 6p. “It’s just utter madness,” Spade said.
“We have no idea what will be presented to us, because we have no idea what will happen. The price is heading towards ballistics. No one will buy it.”
The cost of gas for both businesses and consumers is expected to increase during the colder winter months. Spade noted that local coffee shops that cook on gas will likely suffer, as they have no choice but to continue using it, unless they can replace gas appliances with electric ones.
“Shouting too loudly at someone”
Rail strikes had already brought the country to a standstill for several days throughout the summer and seemed likely to continue, while postal workers, communications engineers and dock workers voted to strike as inflation eroded real wages.
Favorite Conservative Driving Liz Truss Earlier this month, they were forced to fundamentally change a plan to cut public sector salaries outside London, which would have eliminated wages for teachers, nurses, police and armed forces alike.
Local authorities recently offered public school support staff a flat pay raise of £1,925 a year, meaning a 10.5% increase for lower-paid employees and just over 4% for higher earners, following pressure from three of the country’s biggest unions.
A woman in her early fifties – a support staff member at a public school in Lincolnshire who asked not to be named due to the sensitive situation and fears about public reprisals – told CNBC that years of pay cuts in real terms have left many interns receiving their salaries for public sector workers who They struggle to make ends meet.
In 2010, in the wake of the global financial crisis, the British government announced a two-year wage freeze for public sector workers, followed by a 1% upper limit on public sector pay bonuses that were raised in 2017, with average wage increases increasing. to approximately 2% by 2020.
While a 10.5% increase for lower-paid school support staff would ease the pressure, the woman said her energy costs had doubled and that her private landlord had tried to increase her rent by £40 a month, which she did not agree to and which she did not agree to. It may mean that she will need to sell her car to cover basic living expenses.
She called for the government to temporarily reduce the “standing fee”, a fixed daily amount that households have to pay on most gas and electricity bills no matter how much they actually use, and to redouble its efforts to recover the one-time “unexpected tax”. From energy companies like BPAnd the coincidence and Centrica, which are posting record profits..
“I think this is a bigger crisis than [the Covid-19 pandemic]because that would affect not only low-income earners, but perhaps even middle-income earners as well, because I don’t see how anyone could absorb these kinds of energy costs.”
Pressures on businesses and government to raise wages in the face of rising costs of living have raised further concerns about entrenching inflation – but this consideration is a far cry from the reality of working families increasingly having to cut back on necessities.
“It’s OK to say ‘we can’t keep paying people, it will make the cost of living worse,’ but the cost of living is really out of control and the only way to survive is to raise their wages,” the woman said.
“I know it’s a 22 problem, but I don’t really see a way around that — you have to eat.”
The situation in recent months, even before the expected deterioration of the energy crisis, began to take a toll.
“I think I’m a very honest and hardworking person,” she said. “I’ve never committed a crime and have always done things right, but now I’m starting to feel like that doesn’t get you anywhere in this country.”
“For the first time in my life, I want to go out and protest and scream out loud at someone, and you just think ‘What does it take? “
“Hipster-friendly troublemaker. Communicator. Organizer. Devoted web lover. Unapologetic problem solver. Reader. Explorer. Travel guru.”
Stocks making the biggest moves midday: AFRM, WBD, SFIX, CPB
Investors weigh the Fed’s policy and economic outlook
The Australian economy expanded 2.3% in the first quarter