Europe’s energy crisis is squeezing the small and midsize firms that form the backbone of the continent’s economy, leading some business owners to curb production or close up shop. Katrien Vandenheuvel recently decided to shutter her family’s grocery store—nestled in a village outside Antwerp, Belgium—after realizing she needed to sell about 3,000 more loaves of bread every month to cover the higher natural-gas bills. The store had already been charging higher prices for pastries and cheeses than chain stores, she says. Hiking prices enough to cover expenses would have driven more customers away. “We didn’t want to go further in debt,” says Ms. Vandenheuvel, a 41-year-old former schoolteacher. Local bakeries and regional meat suppliers are losing customers, she says, “and I think it’s not the end yet.” Many smaller companies in Europe—from bakeries and masons to makers of clothing and carpets—lack the economies of scale to shoulder the surge […]