Lights could be going out all over Britain when fuel shortage hits businesses

History shows that the end of an era seldom comes at a convenient time, and it is increasingly looking like the decline of North Sea oil and gas fits into the pattern.

The discovery of vast energy reserves under the seabed at the end of the 1970s has helped to support the British economy over the past quarter of a century.

But the UK is about to become a net importer of both oil and gas, just as concerns over vital energy supplies are reaching crisis point, the forecasts are for a cold shock this winter, and the economy is running at its weakest pace for 13 years.

The UK became a net importer of oil in August for almost the first time in 25 years. Earlier blips were dwarfed by the £413m deficit.

The Houses of Parliament's science and technology office, an independent research unit, forecasts that Britain will revert to being a net gas importer next year. By 2010 the UK could be importing half its gas needs, and 80 per cent by 2020.

The problem is that ready access to supplies of oil and gas from our waters had provided little incentive for policymakers to worry about security of energy supply.

Investment in new pipelines and storage facilities will not come on stream for a couple of years. Britain relies on gas for 39 per cent of its energy needs - more than any other single source. Nuclear power provides just 9 per cent. This leaves the UK vulnerable if there are low temperatures and power black-outs.

Last month Sir Digby Jones, head of the CBI, the largest employers' organisation, warned that "businesses will shut down, people will lose their jobs".

Domestic users have priority, so will never go cold. But most businesses have "interruptible" contracts with energy suppliers, and would be the first hit.

Steve Radley, the chief economist of the EEF, the manufacturers' organisation, says economic output would be hit if businesses had to close plants and offices as lights went out.

"The longer-term issue is that the UK's image around the world as a location for business would be damaged if firms were seen to be suffering power cuts," he says.

Thanks to the Bacton Interconnector pipeline between the UK and Holland, Britain can access European supplies. But British businesses claim lack of competition on the Continent makes imported gas much dearer.

The European Commission is investigating anti-competitive practices in Europe, and will produce a preliminary finding in December. But it might not come in time to avert a damaging hike in interest rates.