There was a general cheer and much support for the Government's announcement yesterday (Wednesday 21 September) that it intends to cut the wholesale price of energy for businesses and public organisations by more than half. The support will apply to energy use from October to the end of March and the level of price reduction will depend on a businesses’ contract type and circumstances.
Our favourite alliteratively-named chancellor intervened to ... "stop businesses collapsing, protect jobs and limit inflation”, in a move that is expected to cost tens of billions of pounds. How many tens, Kwasi? Billy asked of the chancellor as the latter left No 11 Downing Street. "Oh about six, maybe ten," came the response. Details have to be finalised before we can work out if, as a country, we are to be tragically or just hopelessly broke as a result.
The general retort of business leaders was a rather ungrateful cry of "not enough" and "only for six months?". You would think that the reaction of business leaders would be to respond in a business-like way, not to moan that the nation should borrow another £100 billion, on top of the initial £100 billion, not forgetting the £340 billion still on our national credit card from Covid. How quickly Mr Kwarteng will learn that you cannot please any of the people any of the time.
For those who like to add megawatts to their understanding of the energy crisis, the details are that the Government said wholesale energy prices for businesses were now “expected to be £211 per megawatt hour [21.1p/kWh] for electricity and £75 per MWh [7.5p/kWh] for gas, less than half the wholesale prices anticipated this winter: which is a discounted price per unit of gas and electricity”.
So, cheaper then.
How much of an impact will this have to businesses who are teetering on the edge, with low consumer confidence and high inflation to deal with? They should bear in mind, when they are forecasting their future on the back of a beer mat that the Bank of England have, ten minutes ago, increased UK interest rates by 0.5 percentage points; raising them from 1.75 per cent to 2.25 per cent (the seventh time in a row the Bank have increased rates).
Businesses's numbers may be tough, but at least they are not paying a record £8.2 billion interest last month to service the national debt, as - in fact - we all are. Businesses are getting addicted to pay-outs from the Government, nothwithstanding the hair style of the prime minister may have changed and Ms Truss saying she is 'opposed to Government financial intervention'. How will we all be weaned off them? It will be a while, we think, until that happens.
