Small businesses face £2,000 monthly energy cost surge

Small businesses across the UK are bracing for a sharp rise in operating costs, with new research revealing that escalating energy prices linked to the war in the Middle East could add more than £2,000 to monthly expenses.

According to a national poll conducted this week for Novuna Business Finance, small firms estimate their energy-related costs will increase by an average of £2,273.90 per month. The findings highlight mounting financial pressure at a time when confidence among business owners is already fragile.

The survey breaks down the additional burden into key operational areas. Businesses expect to pay an average of £753.56 more each month for transport, travel, and logistics. Running machinery and essential equipment is projected to cost an extra £785.92, while heating offices and workplaces will add approximately £734.42 to monthly bills.

The impact is already being felt widely. Since the outbreak of conflict in the Middle East, 82% of UK small businesses report experiencing rising energy costs. Nearly half (47%) believe their monthly energy bills will increase by at least £1,000, with 21% anticipating hikes exceeding £2,000.

Heating costs alone have surged significantly, with 29% of respondents reporting increases of up to £500 per month. Meanwhile, 78% of businesses say higher energy prices are affecting the cost of operating machinery, and 41% expect to pay more than £1,000 extra in this area. Transport-related energy costs are also climbing, with one in five firms predicting increases above £2,000.

These rising expenses come against a backdrop of economic uncertainty. Previous tracking research from Novuna Business Finance found that only 27% of small business owners expect growth in the first quarter of 2026. Additionally, 78% say business-related worries are affecting their sleep, with concerns over economic volatility and geopolitical instability reaching record levels.

In response, many businesses are taking action to manage the financial strain. Around 44% say they plan to pass some of the increased costs onto customers through price rises. Others are exploring financial and operational adjustments: 20% intend to review their funding arrangements to improve cash flow, while 17% are considering switching to renewable or green energy sources to reduce long-term costs.

The research also points to potential consequences for employment. While 16% of small businesses say they may need to cut jobs, a larger proportion (34%) are looking at automation as a way to reduce overheads and maintain profitability.

Jo Morris, Head of Insight at Novuna Business Finance, said the scale of the challenge could surpass previous concerns.

“Last year, many small business owners were worried about the impact of rises to Employer’s National Insurance, but the unexpected impact of soaring energy prices could impact small businesses more profoundly,” she said.

“Unlike consumers, small businesses don’t benefit from a price cap and they have greater and more varied energy requirements. The impact of yet another cost burden comes at a time when their growth outlook is already fragile.”

Morris added that while the pressures are significant, it is encouraging to see businesses adapting. “For many, reviewing green energy options is an avenue to explore, and sustainability remains an important priority. One in five business owners also say they will review their funding arrangements, where asset finance could help streamline costs and free up working capital.”