March 31, 2023

LONDON (AP) – At Sophia Sutton-Jones’ bakery in north London, the electricity bill has more than tripled since the beginning of the year. It now costs 5,500 pounds ($6,260) a month to power the oven and keep the lights on at Sourdough Sofia.

“Where should I magically get an extra £4,000 a month that I haven’t accounted for?” she said. To cope with rising costsHe has had to borrow £50,000 and raise the price of his bread, baguettes and pretzels twice this year.

He doubts that even a huge support package The UK government’s announcement this week will make a huge difference to businesses like his that are struggling with rising energy costs.

Pubs, restaurants, breweries, retailers and other businesses across the United Kingdom are being pushed to the brink of skyrocketing energy bills that have helped send inflation to a four-decade high. And the cost of living is fueling the crisis.

Rising spending forced measures that threatened to tip the British economy into recessionNew Prime Minister Liz Truss The government on Wednesday revealed details that wholesale energy bills for businesses will be capped this winter.

The government will pick up some tabs for six months from Oct. 1 to give businesses discounted rates that are “less than half the wholesale price expected this winter.”

It is also capping household energy bills And detailed more economic intervention is expected Friday

Fuel price hike was stoked First by the global economic recovery from the Covid-19 pandemic, which fueled demand for fuel, and then by the aftershocks of Russia’s war in Ukraine.. The UK gets only a fraction of its gas from Russia, but is more vulnerable to volatile spot market prices because it has less nuclear and renewable energy and little gas storage capacity.

The support package will “hopefully reduce the immediate risk of business downturns and job losses,” said Jamie Stewart, deputy director of the University of Strathclydes’ Center for Energy Policy. “This should limit costs for businesses by raising the prices of their goods and services and compounding already severe cost-of-living pressures.”

Business groups generally welcomed the announcement, but some expressed concern that the aid would end abruptly after six months. The government said it would review after three months.

Traders like Sutton-Jones complain that relief has been too slow to arrive.

“There is no backdating, so basically we cannot fully benefit from the support package, and many employers will be forced to close,” he said. “What about the huge debt that many businesses have already racked up?”

The Federation of Small Businesses shares the concern and has called for a hardship fund for firms that fall through the cracks.

The British Beer and Pub Association called the energy support “a lifeline for many pubs and brewers this winter”.

Britain’s famous pubs barely had time to recover from the pandemic before they were hit with supply chain problems, labor shortages and across-the-board price hikes that, combined with sky-high energy bills, “more than wiped out their gross net income for many businesses,” Seven pubs, breweries and hospitality groups said last week In a letter to the UK Chancellor of the Exchequer.

At the King’s Head pub in northern England, rising electricity prices forced manager Cheryl Lowther to stop serving food for a few days because the kitchen’s energy-guzzling oven, double boiler, three deep fryers and dishwasher were too expensive to run.

He said his latest electricity bill had risen from the usual £500 to £800 a month and was set to double to £1,600.

Even if the new government’s support kept his bill at previous levels, “I couldn’t afford 800,” Lowther said.

As winter approaches, he’s also bracing for higher heating oil costs, saying kerosene for the pub’s old heating system “costs a fortune at the moment.”

On top of that, he has a contract with a brewing company that is raising alcohol prices just as Cockfield Village customers are grappling with rising costs of their own, often at home.

On a recent night, he gained only 20 pounds.

Since he started running the pub 10 months ago, he’s burned through the reserve fund and now has “no money left to pay anything,” Lowther said.

“All the time I’ve been in the pub, I haven’t been able to take a wage,” said Lother, who is concerned about going into debt.

Even a major pub operator, a London-based chain Fuller, Smith & Turner plcsaid this week that energy costs for its 385 pubs had risen to “unprecedented levels”.

Without factoring in the UK government’s support measures, Fullers expects to spend £18m on gas and electricity this year, up from £8m last year.

Smaller manufacturers are also under pressure.

Exeter Charcoal has been forced to increase the price of its small mobile “retorts” – devices used to make charcoal by heating wood – by £3,000 to £17,450. The metal for the machines is cut with a precision laser by a nearby engineering firm.

“We took a huge hit on laser-cutting costs,” said company director Robin Raul. Engineering firm’s “energy consumption is going through the roof.”

Buyers include forest owners, schools and local governments who have excess wood they can turn into charcoal for sale. But in addition to rising labor and raw material costs, “the whole thing is getting out of affordability for most of our customers,” Raul said.

The company will be able to address the crisis by making a smaller, cheaper version that has proven popular, he said.

But Raoul worried that the government’s plan was fiscally irresponsible. Officials did not detail how much the aid package would cost, but it is expected to be several billion pounds.

“I think what Liz Truss is planning is particularly scary,” Raul said. “The amount of money involved — all we are doing is raising debt. And as a businessman, you really can’t spend money you don’t have.”

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