The Energy Price Crisis & Its Impact on UK Businesses

Why the UK Has Been Affected by the Energy Crisis and What It Means for Businesses

The UK has experienced a significant energy price crisis over the past few years, with electricity and gas prices reaching record highs. While prices have stabilised somewhat in 2024–2025, they remain well above pre-crisis levels, and UK businesses are still feeling the pressure.

What Caused the UK Energy Crisis?

The UK energy crisis was caused by a combination of global shocks, domestic market vulnerabilities, and long-term underinvestment in energy infrastructure.

Here are the main contributing factors:

  1. Global Gas Supply Disruptions

  2. Limited Domestic Storage Capacity

  3. Volatility in Wholesale Electricity Markets

  4. High Energy Import Dependency

  5. Climate Events and Low Renewable Output

How Are UK Businesses Affected?

The energy crisis has led to major financial, operational, and strategic challenges for businesses of all sizes and sectors:

1. Higher Operating Costs

  • Gas and electricity bills doubled or tripled in some cases between 2021 and 2023.

  • Many businesses were locked into expensive fixed-rate contracts at peak prices.

  • Even with prices falling, non-domestic energy remains costly and volatile.

2. Contract Uncertainty

  • Complex and rapidly changing tariffs made it difficult to forecast and budget accurately.

  • SMEs, in particular, struggled with cash flow and long-term contract commitments.

3. Reduced Competitiveness

  • Energy-intensive industries (manufacturing, food production, logistics) face narrower margins.

  • This affects pricing, profit, and their ability to compete domestically and internationally.

4. Delayed Net Zero Progress

  • Some companies delayed decarbonisation or energy-efficiency investments due to cost uncertainty.

  • Others saw rising energy costs as a wake-up call to invest in renewables and resilience.