What policies will the British energy suppliers set for the coming cold season?
Which Western European country is experiencing the worst cost-of-living crisis?
Why are the Brits facing a high rate of inflation?
When could the UK experience a recession?
How could the new UK PM tackle inflation?
Amid the cost-of-living crisis in the UK, the energy price cap goes up again by 80 percent from 1 October. The UK is at risk of a brutal winter as the rising energy and food costs elevate inflation. The UK government should take adequate measures to address the financial crisis in the country.
New Conservative Cabinet Should Soon Deal with Energy Issue
The energy price cap goes up again by 80 percent from 1 October for all the households in the UK. Ofgem, the Office of Gas and Electricity Markets, will raise the average gas and electricity bill to £3,549 yearly. Consumers in Britain have already struggled with skyrocketing energy costs and soaring inflation. The average dual-fuel tariff is currently £1,971, and Ofgem will add £1,578 to it, a rise of 80 percent. The new prime minister should present a plan to address the issue soon after establishing the cabinet.
Energy, Food Prices Increase Inflation Sharply
Millions of British people struggle to cope with the worst cost-of-living crisis in a generation. As the cold seasons set in, the energy price cap goes up again by 80 percent from 1 October. The energy upsurge and soaring food costs increase the UK’s inflation rate. The inflation pressure will make it extremely hard for low-income households to cover their essential bills. So, a grassroots movement called “Don’t Pay” energy bill is campaigning to oppose the mounting energy costs.
British Consumers Have to Cut Energy Usage
The cost of energy is too high to afford for some British households. They will feel more pressure as the energy price cap goes up again by 80 percent from 1 October. Since consumers have to pay more, they have to use less energy to cut their bills. The soaring energy costs and food prices increased the UK’s inflation rate to 10 percent in July. This is the highest inflation rise in four decades and can continue to grow.
US Banks Forecasted High-Rate Inflation for Britain
Many economists have predicted that worse will come, and inflation could reach more than 13 percent in the UK. US bank Citi predicted that a surge in energy costs would increase UK inflation to 18 percent next year. US investment bank Goldman Sachs has also warned UK inflation could peak at 22 percent in 2023. If the energy costs continue to soar, the UK’s gross domestic product could drop. The Bank of England has warned soaring inflation will push the country into a recession in 2023.
Ofgem Advised New PM to Act Urgently on Energy Issue
As the energy price cap increases again by 80 percent from 1 October, Ofgem’s CEO has warned of the winter hardship. The regulator’s chief executive has warned of the massive impact of price increases on British households. Brearley told BBC Radio 4’s Today program that the industry could not tackle the effect of the price rises. Jonathan Brearley advised the new prime minister to tackle the situation urgently. Ofgem’s new strategy will urgently pressure the government to help households.
Ofgem Cap Raises Energy Prices
The latest increase in the energy cap means energy companies will raise their prices. It is the maximum amount that a gas supplier can charge consumers on variable tariffs per unit. The new surge in energy prices will worsen the cost-of-living crisis in Britain. The UK government has several schemes to grant benefits and financial help to people. The new prime minister and the new cabinet should fully pay the energy bill support and not spread it over several months.
Europe Energy Crisis Mounted by Covid & War
After the Covid pandemic, global wholesale gas prices began to surge. Workplaces, industries, leisure places, schools, and universities needed more energy once the government lifted the Covid lockdown. Therefore, energy suppliers experienced unprecedented pressures and increased prices. After the Russian invasion of Ukraine, energy prices increased even further across Europe. European nations started to reduce their exports, and global energy prices kept rising.
Global Markets Hit by Covid Ukraine Crisis
Western sanctions on Russia and Moscow’s refusal to transfer oil and gas to Europe have a significant economic impact. The UK imports 3 percent of its needed gas from Russia, and a third comes from Norway. More than half of the UK’s gas comes from the North Sea. The rest comes in the form of LNG from Qatar and the US. However, the world was hugely dependent on Russian energy supplies. Therefore, the global energy market affected the UK, and contracts for natural gas delivery increased.
Previous Cap Rise Affected Millions of Brits
Before Russia invaded Ukraine, inflation was already rising in Britain and Europe. Brexit and Covid pushed financial pressure on Brits, and the war caused the price to rise even further. The UK government had already increased the cap on energy prices by 54 percent in April. The April rise affected 22 million households, and the cost-of-living crisis soared over two weeks. People feeling the strain will face fuel poverty and struggle to heat their homes.
UK Falls Behind EU in Energy Storage
International competition for fuel has increased, and European countries are racing to prepare for the winter. The EU has cut gas consumption in summer and boosted LNG imports to save energy for the cold season. The UK has limitations for the high volume of LNG storage compared to the rest of the European countries. Britain lacks storage facilities, so Centrica Storage Ltd (CSL) is seeking approval to resume gas storage.
UK’s Energy Company May Not Suffice
Centrica provided 70 percent of the UK gas storage capacity for over three decades. Centrica closed the rough gas storage in 2017 and is now doing engineering work to reopen it. Brits experience record energy prices after the energy price cap goes up again by 80 percent from 1 October. The British gas parent company Centrica can play a role in saving energy for the winter. However, the facility cannot store enough gases unless fully functional.
IMF Warned of Energy Crisis in Britain
British households face a more complex energy crisis than other countries in western Europe. The difference between the energy price burden on rich and low-income families is more unequal in Britain. According to the International Monetary Fund (IMF), Brits must pay higher energy bills. As a result, the average British household could lose 8.3 percent of its total spending power in 2022. The UK relies more on gas to heat homes and produce terawatt hours of electricity.
New British Leader Must Save British Households
Rising prices at grocery stores and gasoline stations have been familiar for Brits recently. Higher consumer prices have raised the inflation rate and intensified the pressure on British households. The UK has suffered worse inflation among the Group 7 member states and central European countries. Recently, the country was leaderless and lagged behind other European countries in urging people to reduce energy consumption. The new Conservative government must introduce policies to shield British consumers from high energy costs.
Tackling Energy Crisis Must be Truss’s 1st Decision.
Unfortunately, the energy price cap goes up again by 80 percent from 1 October. The price rises and the ways to deal with them are hot topics of political discourse in the UK. Over the past decade, the UK government has failed to respond to the crippling increase in energy bills. The Conservative government is under pressure to do more to help people cope with the cost-of-living crisis. The new prime minister, Liz Truss, must set out plans to resolve the energy crisis and tackle inflation.