UK small businesses are delaying growth and cutting investment as rising costs, including energy bills, put pressure on margins.
A survey of 526 businesses by EDF Small Business, Enterprise Nation and Square found 69% had delayed or cancelled a growth plan during the past year, while half had reduced investment.
Energy costs were identified as part of a wider squeeze alongside VAT, wages, employer National Insurance, business rates and supply costs. Companies able to estimate the impact said rising energy bills had reduced margins by around 18% on average.
The research also found many businesses are not taking advantage of available support. Three-quarters of respondents were unaware of energy efficiency grants or reliefs available to them, while 69% did not know that reducing energy costs by 20% could have a similar impact on profits as increasing sales by 5%.
Claire Nutt, Director of Small Business at EDF, said: “Independent retailers and small businesses are the engine of our high streets, yet three quarters are unaware of the efficiency support available to them. That’s a missed opportunity: even modest changes to lighting, heating and equipment can deliver meaningful savings.”
The report highlights that high street businesses are facing the most pressure. 77% had delayed growth, while 42% had reduced customer-facing staff.
Overall, 64% of respondents said the UK was now a harder place to operate than Europe for smaller organisations.
Reducing VAT was the most popular policy measure requested ahead of the Budget, backed by 37% of businesses.
However, respondents claimed savings would primarily be used to absorb rising costs and reinvest in their companies rather than reduce prices.
The findings suggest energy efficiency could help businesses control costs while maintaining operations and future investment over the coming years.
The report now calls for the government to provide greater support for small businesses. This includes raising the Small Business Rate Relief thresholds, funding the enforcement of the late payment law and a decision on VAT at the October Budget.
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