The optimism of business owners is fading fast as companies nationwide are struggling to soften the impact of higher energy costs.
This was the survey results of a recent study don by the Confederation of British Industry (CBI) into the state of the economy. The survey showed the growing concern about the UK’s general economic state.
What is particularly worrisome are the rising energy prices, which, at this point is still being absorbed by the companies. Almost 50 per cent have said that if fuel costs remain this high for much longer, they will have no choice but to start passing the increases on in full to their clients.
Another half claimed that they will look into undertaking greater energy efficiencies, while a third of the respondents said they will change their energy purchasing arrangements.
According to the economic analysis team of the CBI, businesses from England to Scotland are feeling the pinch of the high energy prices with a result that their profit margins are shrinking.
Doug Godden, head of economic analysis at the CBI said, “Whilst input costs have increased significantly this year, only one in eight companies has been able to pass these rises on in full to their customers in the face of weak demand conditions.”
The survey comes at the heels of the Bank of England’s announcement that it has once again revised its annual growth forecast for the economy to lower figures.
The UK economy is most likely to post a growth of 1.7 per cent this year, down from the previous forecast of 2 per cent.
Company formation and business solutions experts said that if the energy price increases continue, small businesses will more likely feel more of the pressure and this could deter other entrepreneurs from forming new businesses.