The UK government on Wednesday released details of a plan to cut energy costs for businesses over the winter.
For six months from October, businesses, charities and other public sector organizations, including schools and hospitals, will have a per-unit price set at £211 (about $240) per megawatt-hour of electricity and renewable energy. is set to 75 lbs. gas. The government said this was less than half the wholesale prices expected for the winter. Prices will return to spring levels, according to energy research and consulting firm Cornwall Insight.
Energy prices across Europe are soaring as Russia restricts the flow of natural gas to the region and countries scrambling to find alternative energy sources. Wholesale gas prices, which have a large impact on electricity prices, have fallen from recent record highs but remain higher than they were in recent winters. Even with the cap, UK homes and businesses are still facing higher than normal energy costs, pushing up prices for other goods and services and putting pressure on budgets.
The business-focused plan comes with a drastic effort to freeze household utility bills for the next two winters. These massive policies are being announced without an official estimate of how much they will cost. Economists predict the household spending freeze could cost him £150bn. However, the final bill is uncertain as the plan relies on volatile wholesale market prices for energy and a wide range of business contracts. We expect it to increase.
Investec analyst Martin Young estimates that the cost of the course of business could be in the range of £22bn to £48bn. Cornwall Insight says government costs could be as high as £25bn for him.
The new government, led by Prime Minister Liz Truss, is just beginning to take action after mourning for Queen Elizabeth II. Truss announced plans to limit household expenses on his Sept. 8, promising “equal support” for businesses. A few hours later, the Queen died, putting many government activities on hold.
The weight of the economic and social crisis facing the UK is now at the fore, with consumers contending with the fastest rising inflation in 40 years and the specter of a recession looming over the economy. Truss and her finance minister, Kwasi Kwarteng, have pledged to rapidly boost economic growth. They claim tax cuts will do this, and some of these tax cuts are due to be announced later this week. I see signs of not being accepted into the house.
In a statement on Wednesday, Mr. Kwarteng said he had “intervened to prevent business collapse, protect jobs and curb inflation.”
The discount a company receives depends on the type of contract the company has signed (variable or fixed, etc.) and when it was agreed. Maximum discount applies to variable rate agreements. The government also said it will review the subsidies within three months and identify the most vulnerable companies to continue supporting after six months.
Shevaun Haviland, Executive Director of the British Chamber of Commerce, said in a statement, “This package of support is important and will ease the cost pressures that have been building up for businesses. , added that it would not be enough time for companies to make investment plans.
“There are also various other challenges that need to be addressed, such as labor shortages, supply chain disruptions and rising raw material costs,” Haviland added.