Khem Rogaly, senior researcher at Common Wealth, the think tank, argues that is no need for the UK to increase military spending.
The US pivot on Ukraine has created an opening to collaborate on European security and build a defence architecture independent from the US. More spending is not needed if Britain reallocates resources currently devoted to supporting the US in the projection of power worldwide.
For any serious debate to be had, we urgently need to recognise that that the military budget is already larger in real terms than in 1980 – during the height of the Cold War.
The British armed forces are presently deployed in the Middle East, Indo-Pacific and Europe. Rather than rethinking these commitments, ramping up spending further has been taken as given. This is is a strategy for BAE Systems’ shareholders, not genuine security. Real resilience will come from prioritising our economy and society, investing in public services and domestic industries and learning to manage external supply shocks.
BP to redevelop Kirkuk oil and gas fields
BP is preparing for a showdown with activist hedge fund Elliott Investment Management by going back to its roots.
Ahead of a keenly anticipated investor day on Wednesday, Iraq’s state news agency said the oil major, once known as the Anglo-Persian Oil Company, had signed a deal to redevelop four of the gulf state’s Kirkuk oil and gas fields over 100 years after it first began drilling for oil in the region.
The deal has emerged as BP’s board prepares to present a “fundamental reset” of the company’s struggling strategy to defend the company against Elliot which has recently amassed a stake worth almost £3.8bn, or 5% of its shares.
Elliott Management is widely expected to use its grip on the 120-year-old company to demand sweeping changes, including a potential break-up of the company, after BP lost almost a quarter of its market value in the past two years.
Under the terms of the deal BP is expected to spend up to $25bn over the lifetime of the project, a senior Iraqi oil official told Reuters in early February.
The signing came after the two parties agreed on “technical issues and contractual terms, including the economic model of the project,” according to a statement published by the state news agency.
The deal also marks a breakthrough for Iraq, where output has been held back by years of war, corruption and sectarian tensions.
Updated
Closing post
Time to wrap up….
Bitcoin has hit its lowest level since last November, as the crypto surge following Donald Trump’s election last year loses momentum.
Bitcoin is down over 6% today at around $88,000, while ether has slumped 10%.
Analysts blamed volatility in the markets, as well as a blow to crypto investor confidence from last week’s $1.5bn hack of ether from the Bybit exchange.
Sales of new Tesla cars almost halved in Europe last month, indicating waning demand for the US carmaker’s vehicles as its chief executive Elon Musk intervened repeatedly in the politics on both sides of the Atlantic.
The Texas-based carmaker sold 9,945 vehicles in Europe in January, down 45% from last year’s 18,161, according to data from the European Automobile Manufacturers’ Association (ACEA). Tesla’s share of the market dropped to 1% from 1.8%.
Shares in UK defence companies have jumped after Sir Keir Starmer announced plans to increase defence spending to at least 2.5% of GDP by 2027.
BAE Systems, which makes armoured vehicles, warships, attack submarines, missile launchers, artillery systems and munitions, are up 4.2%.
Babcock, which supplies engineering support to naval, land, air and nuclear operations, are up 1.5%.
The average energy bill for households in Great Britain will rise by £111 from April to £1,849 a year for a typical household, after the energy regulator announced the third consecutive increase in the cap on gas and electricity charges.
The slide in Bitcoin is hurting MicroStrategy, the software company which turned itself into the world’s first “bitcoin treasury company”.
Shares in MicroStrategy, which has issued billions of dollars of debt to buy bitcoin, are down 8.5% in early trading….
Tesla shares drop after European sales plunge
Over on Wall Street, shares in Tesla have dropped 1.5% at the start of trading.
Tom Bailey, head of research at HANetf, cautions that Keir Starmer’s pledge to achieve 2.5% of GDP defence spending by 2027 is unlikely to be enough to fortify Europe.
Bailey explains:
The Trump administration has demanded 5%, while Mark Rutte, the current head of NATO, has said spending will have to go much higher than 3%.
“The figure also remains well below Cold War era spending (as a share of GDP). In 1989, the UK spent 4.2% of its GDP on defence, while in the early 1970s it spent an average of 5.1%. This, we should remember, was a time when the U.S. commitment to European security was rock solid. In our current era of heightened geopolitical instability, combined with the potential of U.S. disengagement, the UK and other European NATO members will have to be much more ambitious.
“The current increase in defence spending will continue to benefit UK defence stocks, Bailey predicts, adding:
The news saw a lift to BAE Systems’ share price, now up over 4% today at time of writing. Babcock and QinetiQ also saw gains on the back of the news.
Over in the US, house price growth has picked up a little.
Prices rose by 3.9% in the year to December, according to the S&P CoreLogic Case-Shiller U.S. National Home Price index, up from a 3.7% annual gain in November.
A narrower survey of 20 large US cities showed that house price inflation rose to 4.5%, up from 4.3%.
New York again reported the highest annual gain among the 20 cities with a 7.2% increase in December, followed by Chicago and Boston with annual increases of 6.6% and 6.3%, respectively. Tampa posted the lowest return, falling 1.1%.
Cutting foreign aid (to fund higher defence spending) will weakens the UK in an unstable world, warns the IPPR think tank.
Harry Quilter-Pinner, executive director at IPPR, explains:
“The government is right to act decisively to increase defence spending – the world has changed radically even in the last week. Some on the left will find this difficult to accept, but there is nothing progressive about leaving the UK or Europe under-defended. Any government’s first duty is to keep its citizens safe and secure.
“But to navigate this era of global insecurity the UK will need new partnerships and alliances, and cutting the aid budget will undercut our ability to build them. When the UK helps countries to adjust to climate change, to grow and to prosper, we build our relationships and our influence. When countries like the UK withdraw, China and Russia stand ready to step in. The US is making a strategic mistake in dismantling USAID: the UK should not fall into the same trap.
“With defence spending set to rise beyond 2.5 per cent, and other pressures on public services growing, further spending cuts will not be a viable strategy in the future. The world has changed since Labour took office. Going forward, the government should re-consider whether its commitments on spending and tax are fit for the future.”
Updated
Here’s City analyst Kathleen Brooks, research director at XTB, on the defence stock rally:
News that the uk will boost its defence spending to 2.5% if gdp by 2027 and to 3% of gdp in the next decade is having an impact on markets. BAE systems is one of the top performers on the FTSE 100 and airbus and safran are top performers in Europe. @XTBUK
— kathleen brooks (@KATHLEENBROOKS) February 25, 2025
Defence is now a massive theme for European stocks in 2025. Germany is also planning to make a special defence fund of €200bn, there is a huge amount of investment involved.
— kathleen brooks (@KATHLEENBROOKS) February 25, 2025
Ben Zaranko, associate director at the Institute for Fiscal Studies, says Keir Starmer is right to resist funding higher defence spending through higher borrowing:
“If the UK needs to spend more on defence on a structural and permanent basis, that is not something that can be sustainably borrowed for. The Prime Minister has recognised this, and has signalled that higher defence spending will be offset, at least in the short term, by lower spending on overseas aid. If defence spending needs to go higher than 2.5% of GDP, cuts to aid won’t be enough.
Getting towards 3% of GDP will eventually mean more tough choices and sacrifices elsewhere - whether higher taxes, or cuts to other bits of government. The world has changed, and one question is whether the government’s pre-existing promises on tax and spend might need to change as well.
Zaranko adds:
As a minor note to what is a major announcement, the Prime Minister followed in the steps of the last government by announcing a misleadingly large figure for the “extra” defence spending this announcement entails. An extra 0.2% of GDP is around £6 billion, and this is the size of the cut to the aid budget. Yet he trumpeted a £13 billion increase in defence spending.
It’s hard to be certain without more detail from the Treasury, but this figure only seems to make sense if one thinks the defence budget would otherwise have been frozen in cash terms. This is of course dwarfed by the significance of today’s announcement but is frustrating none the less.”
Crypto markets are “anything but quiet”, says David Morrison, senior market analyst at Trade Nation, following the drop in bitcoin to around $88,000 today.
Morrison says:
Yesterday Bitcoin slumped below intermediate support around $95,000, and this morning it sliced through longer-term support at $91,000. Bitcoin has lost around 10% since the end of last week and is trading at its lowest level in over three months.
Ether is down 16% since Sunday’s close, and other cryptos are also getting hit. The move looks like a broad ‘risk off’ trade, triggered by last week’s $1.5 billion hack of the Bybit exchange.
Updated
Keir Starmer’s defence spending pledge has not hurt UK government bonds.
Gilt prices are a little higher today, pulling down the yield (or interest rate) on short and long-term UK debt slightly.
That’s because Starmer was clear to MPs that the money to hit the 2.5% of GDP target will come from the overseas development budget, not from increased borrowing.
Defence stocks lifted by higher spending plans
Shares in UK defence company BAE Systems have climbed, after Sir Keir Starmer told MPs that the UK government will lift defence spending to 2.5% of GDP by 2027.
BAE Systems are now up 4.2%, the top riser on the FTSE 100 index, as Starmer confirmed earlier rumours that he would boost spending, and also set a “clear ambition” to get defence spending to 3% in the next parliament.
Traders will be calculating that some of the £13.4bn of extra spending pledged each year from 2027 by Starmer (funded by cutting the aid budget) will be spent buying BAE products, which include armoured vehicles, warships, attack submarines, missile launchers, artillery systems and munitions.
So far this year, BAE’s shares have risen by over 17%, as pressure has mounted on European governments to spend more on defence.
Other European defence company stocks are also rallying today – Germany’s Thyssenkgrupp has jumped by over 11%, following reports that Germany’s chancellor-in-waiting Friedrich Merz has opened talks with the Social Democrats to quickly approve as much as €200bn in special defense spending.
Updated
Shares in defence company BAE Systems are rising, following the news that Sir Keir Starmer is to give a surprise statement to MPs at 12.30pm on “defence and security”.
BAE Systems rising again on expectations of a rise in UK defence spending: https://t.co/uJJDXd2HuA pic.twitter.com/OI0KDBcdGJ
— Chris Beauchamp (@ChrisB_IG) February 25, 2025
My colleague Andrew Sparrow writes:
We have not been told what he will be announcing, but a ministerial statement by the prime minister is normally big news, and there is speculation that he might have something significant to say about defence spending ahead of his meeting with President Trump in the White House on Thursday.
The government has a theoretical commitment to raise defence spending to 2.5% of GDP, but it has not said when this will happen, or even if it will be before the next election. Until recently ministers have been saying that the decision will be announced when the strategic defence review is published in the spring.
But Starmer is going to want to arrive in Washington with some news that will impress Trump, and the one thing the US president gets most praise from in Europe is being right about the need for Nato countries to spend more on defence. Starmer may be addressing that today.
There’s a rumour that Starmer may slash the UK aid budget to fund higher spending on defence….
UK PM STARMER TO SLASH BRITAIN'S AID BUDGET TO IMMEDIATELY HIKE DEFENCE SPENDING TO 2.5 PER CENT OF GDP - THE SUN REPORTER
— *Walter Bloomberg (@DeItaone) February 25, 2025
BAE Systems are up 3.2% today, adding to their recent gains on expectations of higher European defence spending.
Updated
Joel Kruger, market strategist at LMAX Group, reckons two factors are responsible for the drop in crypto prices:
“The crypto market has gotten off to a tough start in 2025. We believe there are two material factors contributing to this.
The first comes down to what has already been priced in. Indeed, there has been plenty of optimism around a crypto-friendly US administration. At the same time, a lot of this optimism has already been reflected in the price action from November through January, leaving the market exposed to a sell-the-fact type reaction. Investors are now looking for more follow-through on the administration’s policies, which should act as a catalyst for the next wave of demand.
“The other drag comes from the world of traditional markets where risk appetite has cooled off in response to global trade tension and a more hawkish Fed outlook.
As far as this goes, we believe correlations between bitcoin and traditional risk assets can be misleading, with bitcoin easily capable of generating sizable demand as an attractive portfolio diversification asset given properties that align more with that of a store of value. Technically speaking, there is formidable support for bitcoin in the $70-$75k area, which should serve as an attractive higher low ahead of the next major upside extension and bullish continuation to a fresh record high beyond $110k.”
Over in parliament, the boss of South West Water’s owner Pennon has said she has “regret” for the pollution incidents caused by the utilities firm.
Chief executive Susan Davy told the Environment, Food and Rural Affairs Select Committee:
“I absolutely regret and do not condone those incidents and pollutions that we had.
“We do not want to harm the environment, that is not the activities that we undertake everyday.
“We have hundreds of treatment works and thousands of pumping stations and from time to time things do go wrong.”
She said there were 194 individual pollution incidents across the group between 2023 and 2024.
Pennon was fined £2.2 million in 2023 for illegal sewage spills spanning four years across Devon and Cornwall.
South West Water was also hit by a cryptosporidium outbreak in Brixham, Devon last year, which forced thousands of households and businesses to boil their tap water before drinking it.
Davy received a pay increase of £300,000, weeks later.
UK environment secretary Steve Reed is now being booed as he answers questions about inheritance tax at the National Farmers’ Union conference, Joanna adds:
Farmers are booing environment secretary Steve Reed as he answers questions about inheritance tax at NFU conference.
— Joanna Partridge (@JoannaPartridge) February 25, 2025
A farmer was applauded when asking Reed what he would say to elderly farmers who feel best tax planning to is die before tax changes come in in April 2026.
A farmer tells Steve Reed that the issue of inheritance tax is "sucking all the air out of the room" when discussing the challenges faced by farmers
— Joanna Partridge (@JoannaPartridge) February 25, 2025
Farmers' leader blasts 'cruel' inheritance tax changes
Back in London, Tom Bradshaw, president of the National Farmers’ Union (NFU), has railed against what he called the government’s “cruel” changes to inheritance tax for agricultural properties in his opening address to the organisation’s annual conference.
Bradshaw also warned that a cashflow crisis is leading farmers to question whether they can keep going until the end of the year, my colleague Joanna Partridge reports.
The government’s inheritance tax changes, announced in October’s budget, are “morally wrong and economically flawed”, Bradshaw told delegates, as he vowed to keep trying to get the policy changed:
He said:
“We will not go away and we cannot go away, we will not give in until ministers do the right thing.”.
Bradshaw said he had received “hundreds” of letters from NFU members worried about the impact of the tax changes on elderly farmers who were expecting to pass down the family farm when they die.
He said:
“I think of the grandson who wrote to me about their 94-year-old grandfather.”
“This isn’t just money, this is blood, sweat and tears. The farm is their life’s work, but as they grow older, the farm has also become their pension, because that’s what they were told to do.
Tax changes are only part of the challenges facing the nation’s farmers, Bradshaw said, listing “bad policy, geopolitics and unprecedented weather” as other pressures, which had left some sectors of UK farming “in the worst cash flow crisis ever”.
He added:
“Many farmers genuinely worry about whether they will make it to the end of 2025.”
Bradshaw criticised chancellor Rachel Reeves for refusing to meet him to discuss the tax changes, joking that he might have a better chance of arranging to see her “in Davos” at the World Economic Forum.
Bradshaw’s speech was followed by environment secretary Steve Reed. Acknowledging the difficult reception he has received at other farming events, Bradshaw said it would have easiest for Reed not to attend.
Farmers silently held up a protest banner during Reed’s speech, asking “How high up your ‘pecking order’ is eating?”.
Demonstrating the strength of feeling among some farmers, several tractors parked outside the QEII conference centre in Westminster honked their horns during his speech.
Updated
Bitcoin and ether sliding
The value of major cryptocurrencies including bitcoin are tumbling this morning, as anxiety over the US economy fuels volatility in the financial markets.
Bitcoin has dropped by roughly 8% in the last 24 hours to around $88,000, its lowest level since mid-November last year.
That means the world’s largest crypto coin has lost around 6% off its value since the start of 2025, having fallen back from record highs of $109,000 late last year.
Ether, the currency for the ethereum network, is also falling, down 10% in the last 24 hours.
The cryptocurrency world is reeling from the biggest digital theft in history, in which $1.5bn of ether was stolen from Dubai-based crypto platform Bybit.
Today’s selloff also comes amid rising volatility in the markets; shares on Wall Street fell on Friday and Monday, on concerns that the US economy may be slowing.
Kathleen Brooks, research director at XTB, says high volatility is weighing on crypto:
Bitcoin is sharply lower and is below $90,000, which is a sign that the current environment of rising volatility is not conducive to cryptocurrency gains.
The gold price, which has risen to fresh record highs in recent days, slipped early on Tuesday, however, it is clawing back earlier losses now that Europe has opened. The low for the day is $2929, but if risk sentiment continues to falter, we expect the gold price to continue to recover in the short term.
After Donald Trump won the US election last November there was speculation that the US would take a more pro-crypto approach, and possibly create a bitcoin strategic reserve.
Naeem Aslam, chief investment officer at Zaye Capital Markets, says:
Since President Donald Trump’s inauguration in January 2025, Bitcoin has experienced a notable decline, dropping over 13% from $106,000 to $92,000.
Trump was supposed to be a good luck for crypto but now it appears that things are totally opposite.
We do also think that this downturn is attributed to geopolitical concerns, economic uncertainties, and unpredictable policy shifts under the new. administration. Additionally, a significant security breach involving the Bybit crypto exchange, resulting in a $1.5 billion theft primarily in Ethereum, has further dampened market sentiment.
Updated
Ryanair predicts higher fares this summer
UK households face mor expensive airline tickets, as well as higher energy bills, this summer.
Budget airline Ryanair’s CEO predicted this morning that summer fares will rise by between 4% and 6%.
Michael O’Leary told a press conference in Warsaw:
“Fares will grow between 4% and 6% this year, so you’ll still be traveling at slightly cheaper prices than in the summer of 2023, but you’ll be a little bit up on 2024”.
O’Leary also predicted that Boeing will catch up on its delivery backlog in time for summer 2026.
Annd he suggested that Ryanair could have up to five million passengers in Ukraine within a year or two of the country’s skies being opened after a ceasefire is agreed.
Automotive analyst Matthias Schmidt said one factor behind Tesla’s sales decline in Germany could be that consumers were waiting for the upgraded Y model, scheduled for the first half of 2025, the Financial Times reports.
However, other experts have also blamed a backlash against Musk’s political involvement, they add.
Elsewhere in Europe, we have confirmation this morning that Germany’s economy contracted at the end of last year.
German GDP contracted by 0.2% in October-December, statistics body Destatis says, confirming an earlier estimate.
Das #Bruttoinlandsprodukt ist im 4. Quartal 2024 gegenüber dem 3. Quartal um 0,2 % gesunken. Für das gesamte Jahr 2024 haben die neuesten Berechnungen den Rückgang der Wirtschaftsleistung um 0,2 % zum Vorjahr bestätigt. Mehr Infos: https://t.co/cVoqrVKeho #BIP pic.twitter.com/hBRtYvoMPW
— Statistisches Bundesamt (@destatis) February 25, 2025
Jochen Stanzl, chief market analyst at CMC Markets, says:
“The GDP data were reported as expected – weak, as anticipated.
The continued decline in investments, particularly in the equipment sector, combined with the significantly lower export figures, could point to structural weaknesses that may hamper the German economy’s ability to recover in the coming quarters.
Despite the negative GDP growth, the increase in selected service sectors and the slightly higher number of working hours indicate that some positive dynamics are emerging in certain segments, which could serve as a catalyst for a future upswing.”
Bloomberg have calculated that Tesla’s sales within Europe slumped to a two-year low in January.
Tesla registered only 1,277 new cars last month in Germany, its lowest monthly total since July 2021.
Sales in France plummeted 63% in its worst showing there since August 2022.
The company also registered fewer vehicles than China’s BYD Co. for the first time ever in the UK. Tesla’s sales slumped almost 8% in an EV market that grew 42% last month.
Der Tesla-Absatz ist im Januar europaweit um 45% gegenüber Vorjahr eingebrochen — während gleichzeitig die Nachfrage nach Elektrofahrzeugen der Konkurrenz stark gestiegen ist. https://t.co/bfQUUhfGK9
— Bloomberg auf Deutsch (@BBGaufDeutsch) February 25, 2025
Tesla sales almost halve across Europe
Sales of Tesla cars across Europe almost halved in January, new data shows, perhaps a sign of a consumer backlash against Elon Musk.
Just 9,945 Teslas were sold across the European Union, the UK and the EFTA region last month, the European Automobile Manufacturers’ Association (ACEA) has reported,.
That’s a 45% plunge compared with the 18,161 Teslas sold in January 2024.
Despite the slump in demand for Teslas, sales of new battery-electric cars grew by 34% to 124,341 units, capturing a 15% market share.
The overall market shrank by 2.1%. Many of the EU’s major markets saw declines, with France (-6.2%), Italy (-5.8%), and Germany (-2.8%). Spain conversely recorded a 5.3% increase.
There have been signs in recent weeks that Musk’s backing of Donald Trump, and his interference in other country’s politics, may be hurting Tesla, one of the companies he runs.
At the start of January, the French president, Emmanuel Macron, accused the world’s richest man of intervening directly in the continent’s democratic processes.
Last month, protesters gathered outside Tesla dealerships across the US in response to Musk’s efforts to shred government spending through the ‘department of government efficency’ (DOGE).
Musk’s move to the right also saw him back Germany’s far-right Alternative für Deutschland (AfD) party in January, ahead of last weekend’s election.
He also claimed that UK prime minister Sir Keir Starmer was “complicit in the rape of Britain”, in a row over grooming gangs.
Updated
The surprise exit of Hein Schumacher will not go down well with investors, explains Chris Beckett, head of equity research at Quilter Cheviot:
“Losing a chief executive after 18 months is never a good thing. For Unilever, especially during a strategy turnaround, it does not suggest things were going well behind the scenes or the business was firing on all cylinders. The last set of results suggested that turnaround had stalled somewhat, with weak guidance and sales growth only likely to improve as the company passes on higher commodity costs.
“Evidence of quick operational improvements are needed when you are embarking on a new strategy, and with new management. The change at the top of Unilever will not see a change in that strategy, which is positive, and guidance has been reiterated. However, the new CEO, current chief financial officer Fernando Fernandez, will have been pivotal in agreeing and implementing that strategy and ultimately is the best the company could do for now. He is well liked and respected and is unlikely to rock the boat, but clearly, as recent results show, work still needs to be done to bring back that momentum.
“Unilever has a long way to go on its road to recovery. The share price offers a bit of headroom to do that, but events such as this will not go down well with investors. Results will be watched even more closely now to ensure there are no signs of cracks within that turnaround strategy.”
Updated
Here’s our news story about the rise in the energy price cap:
The FT are reporting that Unilever’s board decided to oust CEO Hein Schumacher at a board meeting yesterday, having decided that finance director Fernando Fernandez was “better suited” to execute the company’s turnaround plan.
Updated
Shares in Unilever have dropped 2% at the start of trading in London, as investors react to the surprise departure of CEO Hein Schumacher announced this morning.
Chris Venables, director of politics at Green Alliance, says:
“Energy bills are once again being pushed up because of the UK’s exposure to the global price of gas. The only way to lower energy costs for people is to insulate leaky homes and rapidly scale up homegrown renewables.
We urge the government to ensure its Warm Homes Plan and the upcoming spending review properly allocate funding to these measures. It must ignore the siren calls of denial and delay.”
Consumer champion Martin Lewis is urging households to fix their energy bills now, to avoid the increase in bills in April.
He explains that the cheapest fixed deals available on the market are around 4% cheaper than the current price cap – even before the rise 6.4% announced this morning.
Posting on X, Lewis explains:
HOW TO KNOW IF YOU’RE ON A CAPPED TARIFF
If you’re not on a fix or special deal you are likely on the Cap. It applies to firms standard default consumer tariffs, often called ‘Standard Variable’ or ‘Flexible’ tariffs. If you don’t know assume you, like two third of homes probably are.
THE PRICE CAP IS A PANTS CAP GET OFF IT IF YOU CAN - FIX NOW IF YOU HAVEN’T ALREADY
The cheapest year-long standalone fixes right now are about 4% LESS than the current Cap, never mind once it rises in April, so if you get a good fix now you lock in at a cheaper rate for a year, get price certainty, save instantly and save relatively more once we get to April.
Speaking on Radio 4’s Today programme now, Lewis says he’s hearing that “some good tariffs” are being launched this morning – so consumers should wait until lunchtime for making comparisons.
Money Advice Trust, the charity that runs National Debtline, reports that energy arrears are now the second most common debt they help people with, behind only credit cards.
April’s jump in the price cap will probably make this worse.
Steve Vaid, chief executive at the Money Advice Trust, says:
“This latest price rise will only add to the challenges many people face in keeping up with their bills.
“Ofgem must press ahead with their plans for a Help to Repay scheme, to bring energy debt down, while the Government must urgently bring in targeted bill support through an energy social tariff.
“Anyone struggling with their energy bills, or worried about their finances, should contact a free debt advice charity, like National Debtline.”
Charities call for more help with energy bills
Several UK charities are warning that this morning’s rise in the energy price cap (which covers England, Wales and Scotland) will hurt struggling householdss
The Centre for Ageing Better is concerned that millions of older people already struggling on low incomes will be put into even greater difficulty with increasing energy costs, having already lost their winter fuel payments last year.
Millie Brown, Senior Evidence Manager for Homes at the Centre for Ageing Better, says:
“It is so dispiriting to learn that bill payers must brace for another substantial increase to energy prices from April. For those living on the breadline, desperately struggling to meet the basic costs of everyday living, this will be heartbreaking news.
There are millions of older people who no longer qualify for winter fuel payments who live on paltry incomes that do not even cover the basics of a dignified life. They simply will not be able to afford higher energy prices and will cut back usage further, at significant risk to their own health.
If the government, industry regulators and energy providers can’t stop this seemingly inexorable rise in the cost of energy, then we urgently need to see more support offered to help reduce people’s energy usage.
Home improvement services are vital to improving homes for millions of people, we need adequately funded, comprehensive support for people to maintain, repair and adapt their homes across the country.
By acting now to ensure that everyone has the same access to a national network of one-stop shops for home improvement, we can ensure that safe, suitable, and energy-efficient homes are not a privilege but a basic right for all.”
Independent Age chief executive, Joanna Elson CBE, is urging the government to widen elibility for the Winter Fuel Payment, which it means-tested last summer:
“Today’s price cap announcement is more bad news for the older people in poverty that have already been subjected to a brutally long and cold winter. We now know that energy prices will rise again by 6%, from an average of £1,738 to £1,849. People in later life on low fixed incomes have stretched their budgets to breaking point during the colder months, and many tell us they don’t have enough money to turn the heating on full stop. Now, their bills rise yet again to amounts they simply cannot afford.
“History cannot be allowed to repeat itself next winter. The UK Government needs to put in place plans that support older people in financial hardship to turn their heating on. Since the changes to Winter Fuel Payment were made in July, our helpline has seen a massive increase in calls regarding the payment, and many of the people we have spoken to have made drastic cutbacks, such as only living in one room and cutting down on food.
Far too many older people on low incomes don’t receive Pension Credit and are now falling through the cracks – in the short term, the UK Government should urgently review and widen the financial threshold of the Winter Fuel Payment.
Dame Clare Moriarty, chief executive of Citizens Advice, reports that the number of people living in a household in debt to their energy supplier has reached a new high of nearly seven million.
“We’re particularly concerned about households with children, where over one in three struggle to afford bills, rising to more than half of those on low incomes.
“The government can’t let another winter go by without targeted support for those most in need, and there is a way of paying for this. Our recent analysis found energy network companies made billions in excess profits while households have faced soaring bills, and it’s only right this money be used to help fund better targeted bill support and much-needed debt relief.”
Households will be 'understandably irritated' at rising bills
Consultancy Cornwall Insight suggests that the energy price may ‘dip slightly’ in July.
But that would only shave a few pounds off average annual bills, rather than being a meaningful drop.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, explains:
“There is a sense of déjà vu in the energy market as we watch the price cap rise for a third consecutive time, with the volatile international wholesale market once again the main culprit. Households have been promised falls in bills, and many will be understandably irritated with what they may see as a failure of government energy policy. However, the reality is, our gas-led wholesale power market and reliance on international imports limits the impact of what any government policy can have - at least in the short-term - there is only so much you can do when prices are rising across the world.
“That’s not to say the government and the regulator are without options to help lower consumer bills. Ofgem has ongoing consultations looking at the non-wholesale costs included in the cap, and of course the government has levers it can pull from social tariffs to support payments.
We are also seeing initial considerations on structural changes to the cap, with Ofgem’s consultation on a zero standing charge variant announced last week. However, many would argue all of this is merely tinkering with what is - at least for bill payers - a fundamentally broken system.
Unilever CEO Hein Schumacher to step down
Newsflash: Consumer goods maker Unilever has surprised the City by announcing the departure of its CEO, Hein Schumacher.
Schumacher is leaving Unilever, which owns Marmite, Dove and Ben & Jerry’s, having only taken control of the company 19 months ago, in July 2023.
Unilever says he is departing “by mutual agreement” and will leave the company on 31 May 2025.
He is being replaced by Unilever’s chief financial officer, Fernando Fernandez.
Schumacher had been implementing a “growth action plan”, and Unilever’s board indicaate they want Fernandez to accelerate it – a hint that Schumacher wasn’t making changes quickly enough?
Unilever chairman Ian Meakins explains:
“On behalf of the Board, I would like to thank Hein for resetting Unilever’s strategy, for the focus and discipline he has brought to the company and for the solid financial progress delivered during 2024. Hein introduced and led a significant productivity programme and the commencement of the Ice Cream separation, both of which are fully on track.
The Growth Action Plan (GAP) has put Unilever on a path to higher performance and the Board is committed to accelerating its execution. We are grateful for Hein’s leadership, and we wish him the very best for the future.”
Meakins adds that “while the Board is pleased with Unilever’s performance in 2024, there is much further to go to deliver best-in-class results”….
Last year, Unilever announced it would cut 7,500 jobs through a cost-saving programme.
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Government to consult on expanding Warm Home Discount
The UK government is considering giving more support to households with their energy bills.
It is proposing expanding the £150 Warm Home Discount scheme, so that nearly three million more families would be eligible
This would mean one in five families in Britain would get help with their bills through these proposals
Announcing a consultation on the idea, energy Secretary Ed Miliband says:
“This Government is determined to do everything we can to protect people from the grip of fossil fuel markets. Expanding the Warm Home Discount can help protect millions of families from rising energy bills, offering support to consumers across the country.
“This is a Government that will always stand up for working people.
“Alongside this, the way to deliver energy security and bring down bills for good is to deliver our mission to make Britain a clean energy superpower- with homegrown clean power that we in Britain control.”
The government is also planning to accelerate a debt relief scheme which it says will help tackle debt and reduce households’ energy costs.
Ofgem CEO blames international gas prices
Jonathan Brearley, CEO of Ofgem, has blamed “volatile” prices in the wholesale energy sector for pushing up the price cap on British energy bills.
Brearley says:
“We know that no price rise is ever welcome, and that the cost of energy remains a huge challenge for many households.
“But our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills, which is why it’s more important than ever that we’re driving forward investment in a cleaner, homegrown system.
Fuel charity: Nearly half of adults expect to ration energy in coming months
The jump in the energy bills in April will force more families to ration energy, warns National Energy Action, the fuel poverty charity.
It has released a new poll showing that 49% of adults in Britain expect to ration their energy in the coming months.
The NEA’s chief executive Adam Scorer says:
‘For the third time in a row the price cap is rising. Households already faced sky-high bills as a result of the energy crisis, and today’s announcement will add to the burden on the most vulnerable. We already see the impacts of sustained high bills – total energy debt is at record levels and rising, and people are rationing their heating to dangerous levels and going without essentials.
‘National Energy Action is calling for additional targeted energy bill support through a social tariff or an expanded Warm Home Discount; a help-to-repay scheme to support households out of debt; and for the government’s Warm Homes Plan to provide significant investment to insulate the coldest homes for the poorest households.’
Ofgem lifts price cap - the details
Here’s more details of April’s rise in the energy price cap just announced, from Ofgem.
Electricity rates
If you are on a standard variable tariff (default tariff) and pay for your electricity by Direct Debit, you will pay on average 27.03 pence per kilowatt hour (kWh). The daily standing charge is 53.80 pence per day. This is based on the average across England, Scotland and Wales and includes VAT.
Gas rates
If you are on a standard variable tariff (default tariff) and pay for your gas by Direct Debit, you will pay on average 6.99 pence per kilowatt hour (kWh). The daily standing charge is 32.67 pence per day. This is based on the average across England, Scotland and Wales and includes VAT.
Why energy prices have gone up
Rising global wholesale prices for energy are the main reason for the increase. Some people may see a reduction in their standing charges, but this will depend on the region in which they live.
Energy price cap to rise by 6.4%
Newsflash: The energy price cap on bills across Great Britain will rise by 6.4% in April, regulator Ofgem has announced.
This will lift the average annual cost of electricity and gas for a typical household to £1,849 per year, up from £1,738.
This is the third consecutive hike in the cap on gas and electricity charges, and a little higher than analysts had expected.
Here are the details, just released by Ofgem:
[Reminder: the cap limits the amount which a supplier can charge for a unit of electricity or gas].
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The expected increase in energy bills in April will help to push the cost of the global energy crisis caused by Russia’s invasion of Ukraine to £3,000 for the average British household by the summer.
The average annual bill in Great Britain under the latest energy price cap is forecast to be about £750 higher than in the pre-invasion winter of 2020-21, a 75% increase, according to calculations by the End Fuel Poverty Coalition, a campaign group.
The cumulative toll of the price increases in the last four years comes to £3,033, the group said.
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Introduction: Energy price cap to be set today
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Britain’s cost of living squeeze could tighten today when households if energy bills will rise again this spring.
Ofgem, the energy regulator, is due to announce the latest price cap on the cost of a unit of energy at 7am, and analysts expect the cap to go up, due to recent increases in wholesale gas and electricity prices.
Consultancy Cornwall Insight have crunched the data, and estimate the quarterly cap will rise by 5%. That would increase the typical annual household energy bill about £85 to £1,823 per year – it’s currently £1,738 per year.
The government is concerned about the risk of rising energy bills pushing up inflation.
Last week, a Whitehall source told the Guardian they expected bills in England, Scotland and Wales to increase by about £9 a month over the next three months in another challenge to government plans to tackle the cost of living.
Thie prompted energy secretary Ed Miliband to write an urgent letter to Ofgem, saying the price rise means the energy regulator must move faster to protect consumers.
The energy price cap sets the maximum that a supplier can charge for a unit of energy (there’s no cap on how high a bill can go).
The agenda
7am GMT: Energy regulator Ofgem announces UK energy price cap for April-June
7am GMT: Final estimate of German GDP for Q4 2024
9.45am and 2.30pm GMT: Parliament’s Science, Innovation and Technology Committee holds hearings into social media, misinformation and harmful algorithms.
10am GMT: Environment, Food and Rural Affairs Select Committee questions South West Water and Yorkshire Water
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