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Energy prices force SMEs to overhaul operations

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  • Energy bills increase by over 20% for two-thirds of UK SMEs
  • SMEs respond by moving production overseas, cutting production, and encouraging staff to work from home
  • Opinium research for Paragon Bank

The rise in energy bills have forced SMEs to make substantial changes to their operations, new research by Paragon Bank has found.

Conducted for Paragon Bank by Opinium, the research of over 500 UK SMEs found that 67% of firms had seen their energy bills increase by over 20% over the last twelve months - with nearly half (48%) of firms recording an increase of over 30%.

The rise in energy prices has seen SMEs bring in a series of changes to their working practices, including:

  • Increasing the price of goods and services (58%)
  • Cutting current or planned spending (44%)
  • Encouraging staff to work from home (38%)
  • Taking out additional finance (33%)
  • Cutting production output (33%)
  • Transferring some element of production overseas (30%)

A further 9% of firms have seen their energy bills increase by less than 10%, with 18% reporting a 10-20% rise. Only 6% of firms have not seen their energy bills increase over the last twelve months.

Commenting on the findings John Phillipou, Paragon Bank’s Director of SME Lending, said: “After their vital role in keeping the UK economy moving throughout the pandemic, SMEs are now facing the challenge of increased energy prices. As our research demonstrates, the rise in energy costs is compelling SMEs to adopt new working practices to help them to adapt to the changing circumstances – but firms may also need to seek support to ensure they can continue to operate and help our economy recover.”

He continued: “Paragon was proud to support SMEs during the pandemic and we committed to continue supporting them through the current challenges. While the rise in the cost of energy may be temporary, our economy will always depend on a thriving SME sector - and we are ready to speak with businesses and discuss any further financial support they may require.”   

For further information contact:

Tom Frew
Media Relations Manager
E: [email protected]

Notes to editors:

Paragon Bank PLC a subsidiary of the Paragon Banking Group PLC which is a FTSE 250 company based in Solihull in the West Midlands. Established in 1985, Paragon Banking Group PLC has over £13 billion of assets under management and manages over 450,000 customer accounts.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551.