Firms need government support or risk collapse, experts warn – amid soaring energy bills

Tens of thousands of businesses are at risk of collapsing if the government fails to help support them because of soaring energy bills, according to experts. 

Businesses that survive will likely have to lay off workers, Red Flag Alert consultancy, which monitors the financial health of firms, told the BBC. 

Firms are waiting to find out if the new government will be helping with energy bills, as PM Liz Truss has promised bold plans. 

On Thursday, Truss is expected to announce significant financial support for households facing an 80 per cent rise in the energy price cap in October. 

Businesses are not covered by the cap, but Red Flag is warning that more than 75,000 larger firms that are high energy users are at risk of insolvency or are likely to have to lay off staff without government support. 

Truss’s plans are expected to include some relief for businesses – but details are not yet known. 

Red Flag says many firms will have to choose between paying wages or paying energy bills. 

“Businesses can’t absorb these costs and they’re going to be forced very quickly into a decision about headcount or being able to pay energy bills,” said chief economist Nicola Headlam. “That’s going to be the reality and it’s coming down the track very quickly.”