Brexit seems closer than ever, especially given the last turn of events that the UK witnessed. Therefore, it goes without saying that more and more sectors, institutions, and businesses have already started to prepare for the big leave.
Moreover, it is also clear that the biggest change caused by Brexit will be noticed in the energy sector, as every UK resident is concerned about their utility bill once the UK leaves the EU.
Naturally, that concern comes for good reason, as a significant increase in energy prices hasn’t been confirmed only by the Yellowhammer document but also by the very terms of the potential no-deal Brexit.
Brexit Impact on Energy Prices
Brexit will impact energy overall – in terms of import, export, prices, demand, supply, and so on. It is, by far, the biggest issue that both individuals and businesses will have to face when the UK leaves the EU.
It is well known that, if the country leaves the EU without a deal, this could potentially push up business energy bills and, in the worst-case-scenario, shut down startups or small companies.
- First of all, the import and export of energy will be subject to a new tariff if Brexit happens without any deal. This means that producers and suppliers will have to pay a fee for every energy transaction.
- This is because the UK currently uses the EU interconnector system and draws power from France, the Netherlands, and so on.
- The building of new connectors was planned so that the UK can meet its energy demand. At the moment, 5% of its energy is imported – the government planned to use more interconnectors to import up to 20% of its energy from the EU by 2020/2022.
- All of the above will, obviously, come with significant increases in energy prices. Once energy suppliers are affected, both consumers and businesses will notice a difference in their utility bills.
Consumer vs. Business
It is safe to say that, if the energy prices increase, the common consumer will be able to handle themselves – either by paying more or using less energy.
On the other hand, the same cannot be said by businesses, especially for startups. They must maintain proper work conditions as well as pay bills on time – if they can’t do so, they will collapse.
In fact, sources report that a number of both startups and medium-sized businesses have already collapsed under the influence of Brexit’s uncertainty. This is because uncertainty is just as bad as the actual increase in prices.
If you remember, the UK’s property market, as well as currency, have taken quite a hit after the last Brexit referendum – if the uncertainty can cause that, imagine what a no-deal Brexit could cause.
The Bottom Line
In the end, it is very likely that prices will only go higher as Brexit negotiations proceed and terms change – if that’s the case. Overall, it is bound that the energy sector of the UK will see major changes in the following couple of years – it is believed that some competitors may even quit the market in order to avoid bankruptcy.
What’s left for you to do, as a business or an individual, is to find the best energy deal out there and wait for Brexit to hit. Who knows, maybe it won’t be as bad as they claim – or maybe the UK will enjoy a longer transition period as well as a deal.