There are fears that the level of support the UK Government may give firms to help them cope with soaring energy bills won't be enough.

One insolvency expert calculates business will need £100billion a year in support to tackle the rise in energy bills - which would dwarf the total of £40billion they are expected to be allocated.

Red Flag Alert says today that tens of thousands of businesses are at risk of going under without government help.

The consultant, which monitors the financial health of firms, told the BBC that previously-profitable companies are experiencing significant losses.

Among those that survive, many will be forced to make workers redundant, the insolvency expert said.

Red Flag is warning that more than 75,000 larger companies that are high energy users are at risk of insolvency or are likely to lay off staff without enough government support.

According to Red Flag, many firms will face a choice between paying wages or paying energy bills.

Reality coming down the track

"Businesses can't absorb these costs and they're going to be forced very quickly into a decision about headcount or being able to pay energy bills," said chief economist Nicola Headlam. "That's going to be the reality and it's coming down the track very quickly."

According to Red Flag Alert, there are 355,000 companies with a turnover higher than £1million that are designated as high energy users - industries such as steel, glass, concrete, and paper production. Of those, the firm estimates 75,972 are at risk of insolvency, and they estimate 26,720 of them could fail because of energy costs. That's in addition to the 26,000 insolvencies they'd already predicted this year.

"That is a colossal number of people whose businesses will fail, without a large-scale support package from the government," said Ms Headlam. "That's more than during the pandemic, and more than in any other recession.

"A business turning over a million pounds two years ago would have spent around 8% of that on energy costs and made profits of around £90,000," she said. "If the cost of energy doubles to 16%, that instantly wipes out profitability, and they're straight into a scenario where it threatens the viability of the business within a year."

Beyond the large, energy-intensive companies, smaller companies with turnover under £1million were also at risk of failure, Red Flag Alert said. It highlighted the hospitality sector where firms face a triple threat of increasing energy bills, higher supply and staffing costs, and a fall-off in consumer spending squeezed by inflation.

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