thefreeonline 25 Jan, 2024 at Business/59113
Total household energy debt in the UK has reached nearly $3.8 billion and continues to grow, as UK goes to war and bans dissent
More than 1.4 million people in the UK have been disconnected from the energy grid since November as consumers struggle to pay their bills this winter, according to new research by state-funded Citizens Advice.
Published on Tuesday, the study shows that over 3 million people have been cut off from energy in the last year because they could not afford to top up their prepayment meter. The average energy debt had increased to £1,835 ($2,332) by the end of 2023, up from £1,579 a year earlier.
As the total energy debt pile – currently at £2.9 billion – continues to rise, it is weighing down millions of consumers and risks becoming unsustainable for the sector, the researchers warned.
Data shows that over 5 million people live in homes with an energy debt, and are at greater risk as a result of actions to reduce costs, including turning off the heating or skipping meals.
“The rest of winter looks set to be even worse, with prices rising 5% this month and colder weather seeing typical household energy usage reach its highest point,” Citizens Advice wrote. “We estimate that over 2 million people will disconnect because they can’t afford to top up by the end of winter.”
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The report comes as the energy price cap in Britain has risen this month. With the situation predicted to ease somewhat from April, bills will still be 40% higher than they were in 2021, Citizens Advice wrote. “We risk an annual winter crisis unless action is taken to help those struggling most,” the report warned.
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Nearly 50,000 UK businesses on verge of collapse – report
Construction and real estate are among the hardest hit sectors, researchers say
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The number of UK businesses on the brink of bankruptcy skyrocketed by more than a quarter at the end of last year amid a “debt storm” triggered by a series of interest rate hikes, a report from a group of insolvency specialists revealed on Monday.
The latest ‘Red Flag Alert’ released by Begbies Traynor Group found that 47,477 firms in Britain were in “critical” financial distress in the final quarter of last year, as more companies struggled with inflation and borrowing costs. The figure was a 26% increase compared to the 37,772 firms that reported a “critical” level of distress in the previous three months.
The surge marked the second consecutive quarter-on-quarter period in which critical financial distress has risen by 25%, the report noted. A significant percentage of businesses facing these conditions are expected to enter insolvency over the course of the next year.
According to Julie Palmer, a partner at Begbies Traynor, soaring interest rates, “rampant” inflation and weak consumer confidence amid rising and “unpredictable” input costs have created a “perfect storm” for British businesses.
The Bank of England has steadily raised interest rates from 0.1% at the end of 2021 to the current 5.25% in an effort to tame inflation.
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“Hundreds of thousands of businesses in the UK, who loaded up on affordable debt during those halcyon days, are now coming to terms with the added burden this will have on their finances,” Palmer added. “For tens of thousands of British businesses who should be looking ahead with some degree of optimism, the new year will bring a fight for survival.”
Macroeconomic turmoil is impacting “every corner” of the UK economy, Palmer said, noting that the most serious concerns are in the construction and real estate sectors. They represent nearly 30% of all businesses in critical financial distress, according to Begbies. Researchers pointed out that all of the 22 sectors assessed saw an increase in “critical” financial distress last year.
The report also showed that almost 540,000 British companies were in “significant” distress in the final quarter of last year, up 12.9% from the third quarter. Begbies Traynor warned that insolvency rates in the UK are likely to speed up in 2024.
The Free 