The first act of the new Prime Minister of the UK, Liz Truss, was to freeze energy bills.
Russia’s curtailment of natural gas supply after the invasion of Ukraine brought the energy cost to a record level all over Europe. Electricity and natural gas bills will remain constant for two years in the UK, where inflation has reached a peak of 10 percent and 40 years. Explaining the details of the plan, Truss said that the annual energy bills for an average household cannot exceed £2500 (approximately 52 thousand TL) in total. If there were no intervention, it was estimated that annual consumption in an average household would rise from 1900 to 3500 pounds with the expected price hikes next month.
100 BILLION WILL BE OUT OF THE CASE
The difference between the bill upper limit and consumption will be paid to energy companies by the state. The similar subsidy will apply to businesses, charities, schools and hospitals for six months. Analysts calculate that the plan will cost the state £100 billion. While the opposition proposes that the money in question be collected by imposing additional taxes on energy companies, it is stated that the Truss administration, which advocates tax reductions instead of tax increases, will find funds by borrowing from domestic and foreign markets. The new Finance Minister, Kwasi Kwarteng, will reveal details about the burden the implementation will bring to the budget later this month. Although the plan has been criticized for exacerbating the already weakened financial situation with the support of the pandemic, according to Kwarteng, the return of the implementation is greater than the losses. Kwarteng said that with the fixed price, they expect a four to five percentage point drop in inflation.