Andrew McRae

Andrew McRae, FSB Scotland policy chair, said: “Small businesses have been calling for some certainty on energy prices for months, but many will be forgiven for wondering whether today’s statement was really worth waiting for.

“This is a significant reduction in support – and it will have real-world impacts.

“Energy costs are still the single biggest challenge for many of our members, with six in ten reporting utilities as the main driver of cost increases. By switching the support from a cap to a discount on wholesale costs, businesses are once again at the mercy of the global events that drive those prices.”

He added: “This creates more uncertainty. With a wholesale unit price cap, you can at least plan ahead. But with a mere discount on wholesale prices, many businesses will fear the next spike in energy costs and how high they might go. This will make it harder for firms to bid for fixed-price contracts, or to decide when, or if, they’ll open in the first half of the year.

“On top of the withdrawal of the vast majority of energy price support, this decision also risks stoking inflation through higher business bills. The original EBRS scheme suppressed inflation by 5 points, but this has been cancelled today – just as we enter a recession.”