The UK is easing pressure on businesses by halving energy bills this winter

LONDON, Sept 21 (Reuters) – The British government said on Wednesday it would cap total electricity and gas costs for businesses at less than half the market rate from next month, helping to ease pressure on energy costs. Rising costs.

Total prices for electricity will be set at around 211 pounds ($239) per megawatt hour (MWh) and 75 pounds per MWh for gas, compared to forecast market prices of 600 pounds and 180 pounds respectively. read more

“We have taken measures to prevent businesses from collapsing, protect jobs and control inflation,” said Finance Minister Kwasi Kwarteng, who is due to give a fiscal update on Friday.

Wholesale gas and electricity prices in Europe spiked after Russia invaded Ukraine and have remained volatile since then. The final unit prices for the project will be in Sep. 30 will be confirmed.

Groups representing businesses from pubs to steelmakers welcomed the intervention, saying the government had thrown a lifeline to companies struggling to survive. read more

The government has not released any estimate of the cost, but Citi predicts it will be £25bn-£30bn over the next six months and other reports put the price at up to £42bn. This comes on top of the £100bn previously announced plan to help families. read more

“The difficulty with giving a cost figure is that it depends on where energy prices go in the winter and it’s very difficult to predict, so I can’t give you an absolute cost,” said Business Minister Jacob Rees-Mogg.

“It will undoubtedly be in the tens of billions of pounds,” he said. read more

A spokeswoman for Prime Minister Liz Truss said Kvarteng’s funding event would outline an assessment of support packages for businesses and families.

Important test

After weeks of political deadlock as the ruling Conservatives elect a new leader and the country mourns the death of Queen Elizabeth, the government is making several announcements this week aimed at averting a looming economic crisis.

On Friday, Kwarteng is expected to release some details on how he will pay for the energy project, while making promises to lower taxes, although the total cost of the energy project will depend on market prices in the coming months.

Investors say Friday’s report will be an important test of confidence in British public finances. Borrowing costs are rising at the same time the government spends more, and ministers are banking on rapid economic growth to prevent the bill from growing out of control. read more

Kwarteng said on Wednesday that he had pledged to reduce debt in the medium term, but said it was “absolutely right” to help households and businesses in the face of a major economic shock.

The Commercial Energy Scheme will initially apply to all non-domestic energy users, including charities and public sectors and businesses such as schools and hospitals, from October 1 to March 31, 2023. read more

The program initially provides emergency support to all companies in need, but is expected to be scaled back in March with support targeted at companies most in need.

“We’re going to review it after six months. We’ll make sure the most vulnerable businesses, like pubs, shops, continue to be supported after that,” Truss told broadcasters.

The government announced support for families in Northern Ireland, on the same scale as in the United Kingdom, which will take effect from November but will be delayed until early October.

The scheme has been heavily criticized by most political parties in the region, who say the £100 surcharge is not enough for families who cannot be supported by the price cap because they use alternative fuels such as heating oil.

According to the Consumer Council of Northern Ireland, two-thirds of households in Northern Ireland use oil boilers as their main source of heating, the largest percentage in Western Europe.

($1 = 0.8822 pounds)

Reporting by Paul Sandle, William James, Alistair Smout, David Milliken and Kylie MacLellan, additional reporting by Padraic Halpin in Dublin and Amanda Ferguson in Belfast; Editing by Mark Heinrich, Angus MacSwan and Mark Porter

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