Energy price surge puts businesses under strain

Published: 02/04/2026 By Katie Drake

UK businesses are facing significant financial pressure as wholesale energy prices surge, driven largely by escalating conflict in the Middle East. With many commercial energy contracts due for renewal in April, companies across multiple sectors are bracing for steep cost increases that threaten already tight margins.

Sharp rises in gas and electricity costs
Recent industry analysis highlights the scale of the challenge:

• Electricity prices rising by up to 30%
• Gas bills increasing by as much as 80%

For larger sites, particularly in retail, leisure, and manufacturing, these increases could mean six‑figure jumps in annual overheads. Unlike households, businesses do not benefit from a regulated price cap, leaving them immediately exposed to wholesale volatility.

Industry leaders warn of growing risk
Energy suppliers and trade bodies have raised concerns about the wider economic impact:

• Fears of potential fuel shortages in Europe are adding to uncertainty.
• Manufacturing groups describe the current situation as a “national economic emergency.”
• The Federation of Small Businesses warns smaller firms are especially vulnerable, lacking bargaining power or hedging options.

Although the government intends to expand support for energy‑intensive industries, changes are not due until next year offering no immediate relief for firms renewing contracts this spring.

Pressure across multiple sectors
The rise in energy costs risks becoming a tipping point for businesses already dealing with:

• Shrinking margins
• Increased borrowing costs
• Wage inflation
• Slowing consumer spending

Energy‑intensive industries face the greatest exposure, but hospitality, retail and leisure sectors already hit by increases in employers’ National Insurance, higher minimum wage costs, and the removal of business rates relief are also expected to feel significant strain.

What this means for Insolvency & Restructuring
At Turpin Barker Armstrong, we anticipate:

• More enquiries from businesses experiencing cashflow pressure
• Greater restructuring activity, especially among SMEs
• Heightened insolvency risk where sudden cost spikes cannot be absorbed

Early intervention remains critical. Directors should review cashflow forecasts, stress‑test the impact of higher tariffs, and explore restructuring options while these challenges are still manageable.

We’re here to help
If you, or a client are concerned about the impact of rising energy costs on business viability, our insolvency and restructuring specialists can provide early guidance and practical support. Contact our insolvency team for an initial free confidential discussion. Call us on 020 8661 7878 or email insolvency@turpinba.co.uk