What Inflation and the Brexit Reset Really Mean for UK Companies

Inflation has jumped again, and the government is talking about a “Brexit reset.” Together, these developments raise big questions for businesses already facing tight margins: are energy costs about to rise again, and if so, why?

It’s true that inflation impacts business energy bills, particularly the non-commodity charges that make up a growing share of what you pay – things like network costs, environmental levies and supplier overheads. And when inflation rises, those costs often rise with it.

However, inflation doesn’t drive energy prices on its own. The biggest influence on business energy costs is still supply and demand – in other words, how much energy is available, how much is needed, and how global markets respond.

That said, understanding how inflation and new UK–EU agreements might shape future costs can help businesses make better energy decisions today. In this update, we break down the latest data and what it means for your next bill, and your next contract.

Consumer Price Index (CPI) at 3.5% — But That’s Not the Whole Story

In April 2025, UK inflation rose to 3.5%, up from 2.6% in March, the sharpest jump in over a year. Source: ONS

Most of this data refers to household costs, not commercial bills. For example:

• Electricity and gas bills up 6.7% → domestic energy tariffs

• Water and sewerage up 26.1% → residential supplier pricing

So if you’re managing business energy contracts, why should you care? Here’s why these figures still matter:

Why Domestic Inflation Still Impacts Businesses

Even if the Consumer Price Index (CPI) is aimed at households, it reflects system-wide pressures that influence the business energy market:

1. Non-commodity costs are rising

A significant proportion of a business energy bill (sometimes in excess of 50%) is made up of non-commodity charges, things like network maintenance, levies, and environmental costs. These costs are often tied to inflation or supplier overheads, which rise alongside domestic inflation and forecasts suggests this is rising.

2. Supplier risk premiums go up

When inflation rises, suppliers face higher costs. That gets factored into forward pricing, especially for new contracts and renewals. Even if wholesale prices are flat, your next rate may still rise.

3. SMEs may be on domestic-style rates

If you’re a small or microbusiness, and especially if you’re out of contract or on a deemed rate, your tariffcould reflect domestic trends. The 6.7% increase seen in households could soon show up in your invoices.

4. Water increases are reflected commercially

Although the 26.1% figure is for households, most commercial water providers raised their tariffs this April, with annual price reviews aligning closely with consumer rate hikes.

“Brexit Reset”: Opportunities and Uncertainties for Energy

In May 2025, the UK and EU announced a renewed cooperation package, labelled in the media as the “Brexit reset.” The energy sector is a key part of the agreement, but it comes with both upsides and risks.

What Might Help

• UK-EU Emissions Trading Link
  The UK will reconnect its Emissions Trading Scheme (ETS) with the EU’s. This could save UK exporters up to £800 million by avoiding duplication under the EU’s Carbon Border Adjustment Mechanism (CBAM). Source: UK Government explainer

• Improved interconnector cooperation
  There are moves to coordinate electricity trading more efficiently across UK-EU interconnectors. In the long term, this could reduce volatility and enhance supply security, particularly during peak demand.

What Could Complicate Things

• Regulatory alignment without representation
  Some industries are concerned that aligning with EU rules, particularly on carbon pricing and energy infrastructure, means following regulations without having a say. Critics call this a potential risk to sovereignty and future flexibility.
• Implementation delays
  Most of these policies are still being negotiated. Businesses are unlikely to see immediate benefits, and policy uncertainty tends to increase supplier risk pricing, at least in the short term.

• Concerns from other sectors
  Fishing and manufacturing lobby groups have already raised concerns about the perceived trade-offs in the wider deal. That political friction could delay or dilute the energy-related reforms.

What Should Your Business Do?

If you’re managing energy for a site, or a whole portfolio, here’s what we recommend:

1. Check your contract structure

Are you on a fixed rate? Does it include passthrough charges? Rising network and non-commodity costs may already be creeping in, even if your energy unit rate is locked.

2. Plan ahead for renewals

If your contract ends within the next 6–12 months, start planning now. Suppliers are already factoring in the inflation and regulatory outlook into 2025 pricing.

3. Monitor usage

With non-commodity charges rising and more pricing tied to when energy is used, it’s no longer just about how much you use, but when. That’s why understanding your usage patterns is more important than ever.

The market-wide half-hourly settlement (MHHS) rollout means more businesses will have their energy usage measured and settled every 30 minutes, not just larger energy users. This shift allows for more accurate billing, but it also opens the door for time-of-use pricing, where energy used at peak times may cost more.

If your business has a smart or half-hourly meter, you’re already part of this transition. Tools like Tritility’s Energy Metrics platform give you access to this half-hourly data, helping you spot inefficiencies, monitor out-of-hours usage, and adjust consumption habits before those patterns start costing more.

The businesses that get ahead of this shift now will be better placed to control future costs and negotiate smarter contracts when the time comes.

4. Keep an eye on net zero reporting

If your business is subject to Streamlined Energy and Carbon Reporting (SECR) or preparing for Phase 4 of the Energy Savings Opportunity Scheme (ESOS), new carbon pricing rules and Emissions Trading Scheme (ETS) links could affect how you report and plan emissions reductions.

In Summary

While the latest inflation figures reflect rising household costs, their impact on business energy is very real, with non-commodity charges, supplier overheads, and risk premiums all on the rise. 

The so-called “Brexit reset” offers potential long-term benefits, such as savings on carbon charges and improved energy security through EU cooperation. However, the short-term picture is less clear, with regulatory uncertainty and implementation delays creating risk for UK businesses. 

Now is the time for businesses to get proactive: review contract structures, monitor energy use, and stay informed. Those that act early will be best placed to avoid unnecessary cost and stay ahead of regulatory change.

If you’re not sure how changes in regulation, inflation, or tariffs affect your business, speak to us. We help businesses of all sizes make smarter energy decisions. You can reach out to us here: Contact Tritility