From bakeries to small European clothing and carpet industries and paper mills producing toilet paper, small European businesses are being brought to their knees by the cost of energy.
These are all European companies that employ less than 250 employees, but they are precisely those that represent 99% of all companies in the EU, contribute more than 50% of GDP of and employ 100 million people.
As her relevant report points out Wall Street Journal, the industrial giants that produce steel, chemicals, fertilizers and generally energy-intensive industries were the first to be hit by the rise in natural gas prices. Some were even forced to suspend the operation of their foundries or other expensive units in Europe and move them to other geographical areas with lower energy costs. They have this choice because they have an international presence. Many large companies benefit, after all, from long-term contracts that were negotiated and closed before the energy crisis and skyrocketing energy prices began. However, those European companies that do not have an international presence cannot transfer their production outside the Old Continent in order to reduce energy costs. They are therefore crushed between the demands of their suppliers and the imperative need not to pass on the increased costs to their customers.
Holger Schmidig, economist at the investment bank Berenberg, underlines that “many have already reduced their production and will need to reduce it even more”. According to estimates by German insurer Allianz SE, increases in energy prices will take about $150 billion from the profits of small and medium-sized enterprises in the European manufacturing sector this year. An illustrative case is the company Adalberto Estampados in Portugal near Porto. It dyes fabrics that, according to its boss, are used to sew designer clothes, such as those of luxury brands Hugo Boss and Moschino. However, she faces ten times the cost of natural gas compared to last year, which is absolutely necessary for her to dye and dry the fabrics.
At the same time, outside the E.U. Britain the cost of gas for businesses has increased by 424% and electricity by 349%. So everything from hotels in Aberdeen to shops serving fried fish or chicken, deli and fried chicken packets to mushroom farms are predicting massive winter closures due to energy costs. “No one will survive,” Paul Bright, who owns a bar and restaurant, said to the British Guardian, stressing that the situation is worse than the pandemic crisis and that since December until today, the electricity bill for his businesses has increased from 22,000 sterling, an amount equivalent to 26,000 euros, to 80,000 sterling, an amount equivalent to 95,000 euros.
kathimerini.gr
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