UK energy crisis package could cost $175 billion

Liz Truss, who replaced Boris Johnson earlier this week, told lawmakers on Wednesday she would reveal the plans she was working on. very high energy prices on thursday.
Truss plans to keep average annual household utility costs around £2,500 ($2,860). for the next two years, financial times report. That would mean a 27% rise in billings from current levels, but without government intervention he is expected to start in October, well below £3,549 ($3,954). will be

It gets expensive. The FT reportedly said the plan could include £90bn ($103bn) in support for households and up to £60bn ($69bn) in support for businesses. increase.

If so, that would be more than the government spent to subsidize the salaries of millions of workers To prevent a whopping £80bn ($91bn) of mass layoffs during the pandemic. It also dwarfs his €95 billion ($94 billion) pledged by the German government so far this year to help homes and businesses. meet their energy costs.

break the bank?

Like the rest of Europe, the UK is working on ways to pay for ambitious relief packages.

The details of Truss’ plans are still unknown, but she’s already made one thing clear.windfall taxbumper profit the energy company.

On Wednesday, she announced that former Finance Minister Rishi Sunak would pay a £5 billion ($6 billion) tax introduced in May to UK oil and gas producers to fund an earlier energy bailout package. refused to extend.

“I am against the windfall tax,” she told Congress. “I think it would be wrong for companies to put off investing in the UK when they need to grow the economy,” she added.

Truss has repeatedly promised tax cuts, not higher ones, in hopes of reviving the ailing economy. Without the windfall tax, the government will likely have to borrow more to subsidize the bill.

The country’s new finance minister, Kwasi Kwarten, also indicated over the weekend that more borrowing was on the way.

“Given the severity of the crisis we are facing, we will need to ease our finances to help people over the winter,” he wrote to the FT.

Still heavily borrowed — plus tax cut Additional defense spending pledged by the Truss during the campaign — risk more frightening Investors are already concerned that Britain’s public finances are on an unsustainable path.

That could cause the pound to plummet, making prices even higher and making it harder to pay for essential imports. The currency has already lost almost 15% of its value against the US dollar this year.

But the UK government desperately needs help beyond the £33bn ($39bn) it has calculated it has already committed this year. The support has come through tax cuts, energy bill rebates and direct payments to households, IfG said.

Without new plans to keep prices down, the average annual bill for millions could top £5,700 ($6,513) from next April, according to estimates by research firm Auxilione on Wednesday. Small business bills are rising at an even faster pace.

Julia Horowitz contributed to the report.


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