Closing post
Time for a recap.
Evidence is growing that the UK economy is weakening, while the eurozone is also lurching deeper into trouble … as the US pushes ahead.
UK business activity shrank for the first time in over a year this month, according to the latest poll of purchasing managers, in a sign that corporate confidence has been hit by last month’s budget.
Chris Williamson, chief business economist at S&P Global Market Intelligence, says:
Business optimism has slumped sharply since the General Election, dropping further in November to hit the lowest since late 2022.
Companies are giving a clear ‘thumbs down’ to the policies announced in the Budget, especially the planned increase in employers’ National Insurance contributions.
UK retail sales also took an downturn turn last month, dropping by 0.7% in October led by a decline in turnover at clothing stores.
The weak data hit the pound, which dropped to a six-month low below $1.25 against the US dollar.
It all piles the pressure on Rachel Reeves, who last night held an event with senior women in finance in a bid to improve the “measly increase” in women in top jobs.
The picture is also deteriorating in the eurozone, where the services sector has now joined manufacturing in contraction. German business activity fell at the quickest rate for nine months, while the French economy is shrinking at the fastest pace since January.
But the US private sector is growing at the fastest pace in two and a half years, with American factories stockpiling products ahead of new tariffs on imports.
UK households face a 1% rise in energy bills in January, after regulator Ofgem lifted its quarterly price cap.
Charities warned that strugging families would find it hard to warm their homes this winter.
Cryptocurrency prices jumped, after SEC chair Gary Gensler announced he would step down in January, clearing the way for Donald Trump to appoint a more crypto-friendly successor.
Spain has fined five budget airlines, including Ryanair, a total of €179m (£150m) for charging passengers for hand luggage and seat reservations, prompting the Irish carrier to say banning the practices would “destroy” the ability to offer cheap tickets.
The chief executive of Northvolt has resigned, after the Swedish battery startup filed for bankruptcy protection in the US.
And in the media world, National World, the owner of the Scotsman and Yorkshire Post and underbidder in the auction for the Telegraph titles, has received a buyout proposal from its largest shareholder, Media Concierge.
Updated
Expectations for the US economy among Republican supporters have surged this month, while Democrats are much gloomier.
That’s according to the University of Michigan’s consumer sentiment index, just released, which highlights the two groups’ incongruous views of how president-elect Trump’s policies will influence the economy.
Overall, the consumer sentiment index rose by 1.3 points this month, up to 71.8 points from October’s 70.5. However, that’s also 1.3 points lower than the preliminary estimate earlier this month, of 73.
Surveys of Consumers director Joanne Hsu says:
Current conditions saw insignificant changes this month across the political spectrum, consistent with the fact that the resolution of the election exerted little immediate impact on the current state of the economy.
Ultimately, substantial uncertainty remains over the future implementation of Trump’s economic agenda, and consumers will continue to re-calibrate their views in the months ahead.
US company growth hits 31-month high
Boom! Growth in the US economy has hit its highest level in two and a half years this month, following this month’s election.
There was a “marked upturn in growth of business activity in November”, according to the latest poll of purchasing managers at American companies.
It shows that growth this month was a 31-month high, with output buoyed by the sharpest rise in demand for two-and-a half years.
That’s a much brighter picture than we’ve seen in the US or the eurozone this morning.
US factories are stepping up their purchases of imported inputs as they seek to front-run tariffs, the survey shows, which is putting pressure on supply chains.
Business confidence also picked up, with firms’ expectations of output in the coming year rose to the highest since May 2022.
S&P Global, which compiles the survey, attributes this optimism to the prospect of lower interest rates, improved economic growth, and more supportive business policies from the new administration in 2025.
Chris Williamson, chief business economist at S&P Global Market Intelligence, says:
“The business mood has brightened in November, with confidence about the year ahead hitting a two-and-a-half year high. The prospect of lower interest rates and a more probusiness approach from the incoming administration has fueled greater optimism, in turn helping drive output and order book inflows higher in November.
“The rise in the headline flash PMI indicates that economic growth is accelerating in the fourth quarter, while at the same time inflationary pressures are cooling. The survey’s price gauge covering goods and services signalled only a marginal increase in prices in November, pointing to consumer inflation running well below the Fed’s 2% target.
Stocks have opened higher on Wall Street, on the final trading day of the week.
The Dow Jones industrial average has gained nearly 0.5%, or 197 points, to 44,068 at the open. Almost every one of the 30 companies on the index is up, led by Nike (+2.1%) and IBM (+1.5%). Chipmaker Nvidia is the only laggard, down 1.3%.
The broader S&P 500 index is up 0.2%, while the tech-focused Nasdaq is flat.
The chief executive of Northvolt has resigned, after the Swedish battery startup filed for bankruptcy protection in the US.
Peter Carlsson, who has led Northvolt since 2016, will step aside with immediate effect, the company said on Friday. Carlsson said Northvolt, which is widely seen as a leading player in European efforts to build an electric vehicle battery industry, needs to raise between $1bn (£800m) and $1.2bn in order to restore the business.
Northvolt has built a factory in northern Sweden where it hopes to use green energy to produce hundreds of thousands of EV batteries each year. It was the most prominent of a host of European startups hoping to challenge the dominant Asian battery industry.
However, the company has tipped into crisis in recent months as cash ran dry and it experienced problems getting its first factory up and running properly.
More here…
Thales denies allegations over bribery and corruption probe
Defence firm Thales has just told the Paris stock market that it denies allegations of misconduct, following a joint UK-French investigation.
News broke last night that Thales, the multinational aerospace and defence electronics contractor, was being investigated by the UK’s Serious Fraud Office and its French equivalent, Parquet National Financier (PNF), over suspected bribery and corruption.
In a statement to the stock market, Thales says:
Thales confirms that the Parquet National Financier (PNF) in France and the Serious Fraud Office (SFO) in the United Kingdom have initiated an investigation in relation to four Thales entities located in France and the UK, regarding the performance of a contract in Asia.
Thales denies the allegations brought to its knowledge.
The Group is fully cooperating with the PNF in France and the SFO in the UK.
Thales complies with all national and international regulations.
Shares in Thales have fallen 6% so far today.
While the pound is sliding, shares on the London stock market are rising.
Hopes of faster cuts to UK interest rates have helped push up the share prices of construction firms such as Barratt Redrow (+3.5%) and Vistry (+3.6%).
Shares in retailers are also higher, with B&M up 4.1% and Sainsbury’s 3.4% higher, despite this morning’s drop in UK retail sales.
They may be benefitting from a pick-up in UK consumer confidence this month, according to the latest poll from GfK, which found that consumers have turned less pessimistic following the government’s first budget and the U.S. presidential election and they are showing more appetite for spending in the run-up to Christmas.
UK competition regulator could launch new probe into Apple and Google
The UK’s competition regulator is gearing up to launch a new probe into Apple and Google.
The Competition and Markets Authority’s (CMA) independent inquiry group has carried out an in-depth assessment of the mobile browser markets and has provisionally concluded that they are not working well for UK businesses and millions of phone users.
The group is recommending that the CMA board consider investigating Apple and Google’s mobile ecosystem activities using new digital markets powers.
The group has provisionally found that Apple’s rules restrict other competitors from being able to deliver new, innovative features that could benefit consumers. Other browser providers have highlighted concerns that they have been unable to offer a full range of browser features, such as faster webpage loading on iPhone.
Apple, though, denies it is holding back innovation in smartphone browsers.
It says:
“We disagree with the findings in the report regarding Safari, WebKit, and in-app browsing on iOS.
“We are concerned that the interventions discussed in the report for future consideration under the Digital Markets, Competition, and Consumers Act would undermine user privacy and security and hinder our ability to make the kind of technology that sets Apple apart.”
The euro could have further to fall once the financial markets fully price in Donald Trump’s upcoming second presidential term, argues George Saravelos of Deutsche Bank.
He told clients last night that “Trump is only 30% priced”, and that the euro could fall to parity against the US dollar – from $1.04 today – or lower, once the markets adjust further to the likely net fiscal spending, tariffs and immigration clampdowm.
Saravelos says:
The bottom line is the market is still not pricing a lot of Trump.
We remain bullish on the dollar and would view EUR/USD levels of 1.00 as pricing the intensity of the Trump policy mix at closer to 50%, with potential for even greater downside depending on what happens next year.
The euro is seemingly in free fall. Deutsche Bank's George Saravelos this morning after surprisingly weak PMIs: "We remain very bearish on EUR/USD. Trump is only 30% priced...Germany at risk of secular stagnation." pic.twitter.com/R98aLwOPCY
— Lisa Abramowicz (@lisaabramowicz1) November 22, 2024
Here’s a chart showing the details of today’s UK PMI report:
National World, the owner of the Scotsman and Yorkshire Post and underbidder in the auction for the Telegraph titles, has received a buyout proposal from its largest shareholder.
Media Concierge, the biggest player in the Irish newspaper market with 22 local titles including the Derry News, Limerick Leader and Kilkenny People, has submitted a non-binding proposal valuing one of the UK’s biggest regional and local newspaper groups at £56.2m.
The cash offer by Media Concierge, which is controlled by the media tycoon and racehorse owner Malcom Denmark and owns a UK direct marketing business, represents a 40% premium to National World’s closing share price on Thursday.
The proposal to take the business private fuels doubt about whether National World will be able to compete for the Telegraph should the preferred bidder, the New York Sun owner Dovid Efune, fails to secure financing before exclusivity expires at the end of the month.
More here:
FCA calls on life insurers to improve bereavement handling times
The Financial Conduct Authority has hit out at life insurers over “unnecessary delays” in settling claims for bereaved customers, and threatened to take action if the industry fails to improve.
The regulator said that while there was evidence that some insurers provide good service to bereaved customers, they need to settle claims quicker and improve how they measure customer experience.
It found that on average, firms took between 53 and 122 days to process a claim, from start to finish, for a term insurance policy, within 36 days for group life cover, 20 days for over 50 plans, and 53 days for whole of life.
The FCA said it will now be “engaging with industry to collectively improve customer outcomes” and address its findings. It will then do further work to understand what kind of changes have been made, and warned it “will take action if it doesn’t see improvements.”
Matt Brewis, director of insurance at the FCA, said:
The loss of a loved one can be intensely stressful and we expect firms to offer the right support to help their customers during this difficult time.
We expect all life insurers to act on our findings and avoid unnecessary delays with claims.
Updated
Investors have hiked their bets on another cut to eurozone interest rates before the end of 2024, following the slump in activity at European companies highlighted in today’s PMI report.
Money market pricing suggested that investors now price a 50% chance of a 50 basis point rate cut (ie, half a percentage point) at the ECB’s December meeting, up from 20% before the data, according to Reuters.
A 25 bps cut (a quarter of one percentage point) is fully discounted.
Bank stocks have been hit by the weak PMI data from the UK and the eurozone today.
Financial companies are leading the fallers on the FTSE 100 share index in London, with Barclays down 3.1%, Standard Chartered off 2.7% and NatWest losing 2.2%.
The pan-European Stoxx 600 Banks Index is down 2%, and hit the lowest since 9 October.
Today’s (disappointing) UK PMI data is the first real test of Rachel Reeves’s budget, says Sanjay Raja, chief UK economist at Deutsche Bank, as well as “unfolding geopolitical events” around the world.
Raja explains:
PMI output indices slipped in November. Notably, the services headline print moved down to a stagnant 50, with the headline manufacturing print slipping further into contraction territory at 48.6. Overall, the composite output index fell into negative territory for the first time since Octover 2023.
Underneath the hood, we are seeing stress on hiring plans. Both the manufacturing and services sectors reported falls in hiring plans. And (input) prices – particularly for services – have started to firm – as businesses digest the Budget tax implications.
Pound and euro hit by bad data
The torrent of bad economic news from the UK, and the eurozone, this morning has hit the pound and the euro.
Sterling has hit a new six-month low, dropping below $1.25 against the US dollar this morning as traders reacted to the news that UK private sector output is falling this month, and that retail sales fell in October.
That’s a fall of almost a cent today, and the lowest level since mid-May. It has now lost almost 10 cents since the end of September, when one pound was worth $1.34.
The euro has slumped to its lowest level against the US dollar since November 2022, after today’s PMI data showed the eurozone private sector is shrinking. It’s down three-quarters of a cent, to $1.04.
Kathleen Brooks, research director at XTB, says:
It’s been a bad day for economic data this side of the Atlantic. European and UK PMIs fell into contraction territory for November, and UK retail sales for October were much weaker than expected.
This does not paint a pretty picture for the European and UK economies in Q4, and contrasts sharply with the outlook for the US, the Atlanta Fed’s GDPNow estimate of Q4 YoY GDP is 2.6%.
Updated
The budget and Donald Trump’s election win may both have triggered the fall in activity at UK companies last month, says Elias Hilmer, assistant economist at Capital Economics.
Hilmer explains that November’s PMI report suggests the UK’s real GDP growth is contracting in the middle of the final quarter of this year.
Hilmer told clients:
The fall in the Composite PMI suggests that tax hikes announced in the Budget seem to have restrained some private sector activity. Equally so, the prospect of new tariffs imposed by the incoming Trump administration may have weighed on activity too.
Indeed, S&P Global said that respondents cited subdued consumer demand as well a worsening domestic and geopolitical uncertainty as a constraint to activity. Overall, November’s PMI points to GDP falling by 0.2% 3m/3m in the middle of Q4.
PMI suggests UK economy is 'slipping into a modest decline'
S&P Global’s Chris Williamson adds that this morning’s PMI report suggests the economy could be contracting, saying:
“The November PMI is indicative of the economy slipping into a modest decline, with GDP dropping at a 0.1% quarterly rate, but the loss of confidence hints at worse to come – including further job losses –unless sentiment revives.
UK private sector is shrinking as firms give 'thumbs down' to the budget
Newsflash: UK business output is contracting this month for the first time in over a year, as the tax increases announced in last month’s budget hit companies.
Data firm S&P Global says British firms are giving “a clear thumbs down” to the measures in Rachel Reeves’s first budget, such as the increase in employers’ national insurance contributions.
Its flash UK PMI Composite Output Index, which tracks activity across the UK economy, has dropped to a 13-month low of 49.9 this month, down from October’s 51.8.
That shows a marginal contraction (50 points = stagnation), but is at least better than in the eurozone (see earlier post).
UK companies reported that new order growth fell to its lowest for one year amid “widespread reports of fragile business confidence”.
UK retailers warned this week that the budget would drive up their costs, and lead them to cut staff – today’s PMI report has found that service providers “overwhelmingly” linked weaker optimism to forthcoming increases in payroll costs.
Chris Williamson, chief business economist at S&P Global Market Intelligence says:
“The first survey on the health of the economy after the Budget makes for gloomy reading. Businesses have reported falling output for the first time in just over a year while employment has now been cut for two consecutive months.
Although only marginal, the downturns in output and hiring represent marked contrasts to the robust growth rates seen back in the summer and are accompanied by deepening concern about prospects for the year ahead.
Business optimism has slumped sharply since the General Election, dropping further in November to hit the lowest since late 2022. Companies are giving a clear ‘thumbs down’ to the policies announced in the Budget, especially the planned increase in employers’ National Insurance contributions.
Updated
Eurozone business activity shrinks in November
Newsflash: The eurozone’s private sector is shrinking this month at the fastest pace since January, as companies struggle to secure new orders amid political instability.
A new survey of decision makers at companies across Europe has found that activity in the service sector decreased for the first time in ten months, while the downturn in manufacturing deepened.
The eurozone’s two largest countries are having a dire month: German business activity fell at the quickest rate for nine months, while the French economy is shrinking at the fastest pace since January.
Data firm S&P Global, which compiles the poll of purchasing managers, reports that confidence in the outlook for output has dropped to the lowest for just over a year.
New orders at eurozone companies fell for the sixth month running, leading firms to cut back workforce numbers as they ran down their backlog of work.
Its HCOB Flash Eurozone Composite PMI Output Index has fallen to 48.1 for November, down from 50.0 in October, with any reading below 50 showing a contraction. That’s the lowest reading since January.
“Things could hardly have turned out much worse,” says Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, adding:
The eurozone’s manufacturing sector is sinking deeper into recession, and now the services sector is starting to struggle after two months of marginal growth.
It is no surprise really, given the political mess in the biggest eurozone economies lately – France’s government is on shaky ground, and Germany’s heading for early elections.
Throw in the election of Donald Trump as US president, and it is no wonder the economy is facing challenges. Businesses are just navigating by sight.
Updated
Government urged to fix "cruel and dangerous" energy pricing system
Campaign group Fuel Poverty Action has warned that thousands of people will die because they cannot afford to keep warm this winter.
Following the news that the UK energy price cap will rise in January, Jonathan Bean, spokesperson for Fuel Poverty Action, says the most vulnerable households are suffering under the current system:
“Millions of us are freezing today in cold damp homes, as energy prices remain 65% inflated and 2.5 million low-income pensioners lose heating support. Many will end up in hospital, and thousands will die.
“Ofgem pricing punishes the most vulnerable, with four times higher pricing for those with only electric heating, and cruel standing charges. Energy firms exploit the millions stuck with only storage heaters, whilst giving the cheap energy tariffs to affluent households with electric vehicles.
“The Labour government needs to fix our cruel and dangerous pricing system, which is harming millions of us whilst gifting energy firms billions in profits
Reeves pushes to improve 'measly' rise of women in top finance jobs
The great and the good of women in finance were invited to Number 11 Downing Street last night in a bid to improve the “measly increase” in women in top jobs.
The chancellor, Rachel Reeves, convened prominent City women in a bid to reinvigorate the Women in Finance charter, first launched in 2016.
The signatories agree to drive up the proportion of women in senior roles towards parity with their male counterparts as soon as possible.
With the present rate of progress this will not be achieved until 2038, with women currently in just a third of the top jobs, a source of frustration for the high flyers in the room as they traded tales over tea and sandwiches.
Reeves said:
“At the moment, it will still take another 14 years until we have an equal number of women and men on the leadership team in financial services. And I hope that whoever is standing here in 14 years can say it didn’t take 14 years.”
“Diversity in boardrooms is not a tick-box exercise. It’s an economic imperative.”
Dame Amanda Blanc, chief executive of Aviva, called for figures across the sector to redouble their efforts, otherwise, the industry was telling its talented women “they’re not worth helping”, with “painfully slow” progress.
The single percentage point annual increase in female representation at the top was “measly” she said, adding she was eager to help others improve their efforts:
Blanc says:
“We hit our target at Aviva and that’s not showing off and we did it by applying the same discipline that we do to our financial targets of profit of sales...It can be done, but it takes a lot to do that.”
Crypto jumps as Gensler quits SEC
Cryptocurrency prices are rallying today after America’s top financial regulator announced his resignation.
Securities and Exchange Commission chair Gary Gensler will resign on 20 January, the SEC announced last night, the day when Donald Trump will be inaugurated as US president.
Gensler has been a critic of the crypto industry during his stint at the SEC, calling it a “wild west” riddled with fraud and investor risk back in 2021.
It’s likely that his replacement will be more friendly to the sector, given Trump has pledged to make the US “the crypto capital of the planet“.
Bitcoin has extended its rally, hitting $99,500 for the first time this morning. Ether is up over 7% in the last 24 hours, while ‘meme coin’ doge is up 2%.
According to Coindesk, the total market capitalisation of crypto coins is now a record $3.4tn, having added 4.5% in the past 24 hours.
Budget airlines fined for cabin luggage fees
Over in Spain, the Consumer Rights Ministry has upheld fines imposed on budget airlines for policies such as passengers extra for cabin luggage.
Ryanair, easyJet, Vueling, Norwegian and Volotea have been fined €179m (£150m), with the ministry dismissing appeals from the company’s after penalties were announced in May.
Reuters has the details:
The fine set on Ryanair was the highest at €108m, while IAG’s low cost unit Vueling was fined €39m, easyJet €29m, Norwegian €1.6m and Volotea €1.2m.
Pound hits six-month low
The pound has dropped to a six-month low against the US dollar, after this morning’s weaker-than-expected retail sales report.
Sterling fell as low as $1.255, its weakest level since 14 May, extending recent losses as economic worries have risen.
The dollar has also been strengthening since Donald Trump won this month’s US election; traders believe his policies to deport undocumented immigrants and impose trade tariffs would be inflationary, leading to higher US interest rates.
The 0.7% drop in retail sales across Britain last month are the latest sign that the economy is losing momentum.
A Reuters poll of economists had forecast a monthly fall of 0.3% in sales volumes from September.
The 0.7% drop was the sharpest since June when sales fell by 1.0% month-on-month.
UK retail sales hit by budget uncertainty
Retail sales across Britain have dropped, as uncertainty before last month’s budget hit consumers.
The Office for National Statistics has reported that retail sales volumes fell by 0.7% in October, ending a three-month run of growth.
The decline was driven by a decline in demand at “non-food stores” such as clothing outlets, where sales fell by 3.1%.
Retail sales fell 0.7% in October 2024, following a rise of 0.1% in September 2024.
— Office for National Statistics (ONS) (@ONS) November 22, 2024
The strongest fall was within clothing stores, which fell by 3.1% over the month.
Read more ➡️ https://t.co/TvxOiwJLkl pic.twitter.com/E0gklXZaLn
The ONS says that “retailers reported that Budget uncertainty affected sales”.
The drop in clothing sales followed growth in previous months, as shoppers had taken advantage of end of season sales.
ONS senior statistician Hannah Finselbach said:
“Retail sales fell back in October following three months of growth. The fall was driven by a notably poor month for clothing stores, but retailers across the board reported consumers held back on spending ahead of the Budget.
“However, when we look at the wider trend, retail sales are increasing across the three month and annual periods, although they remain below pre-pandemic levels.”
A Labour Party spokesperson has blame the previous government for the rise in energy bills inked in for January, saying:
“The Conservatives trashed Britain’s energy security by leaving us exposed to global shocks and working people are still paying the price. From banning onshore wind to failing to deliver new nuclear, their reckless decisions sent bills soaring.
“Labour is fixing the mess the Conservatives created, with our clean energy mission that will protect consumers and boost our energy security.”
We should remember, though, that former PM Liz Truss freeze energy bills at an average of £2,500 a year two years ago. That protected households from even higher bills, as the Ofgem cap (which was trumped by the ‘Truss cap’) actually rose over £4,000 per year in early 2023.
Citizens Advice fears that households with children and those on lower incomes will struggle to keep warm this winter:
Alex Belsham-Harris, head of energy policy at Citizens Advice says:
“Energy prices remaining relatively stable over winter will offer cold comfort to millions across the country already struggling to afford bills. It comes as people are falling further and further behind on their energy bills, with the amount owed to suppliers now a record £3.7 billion.
“As colder weather sets in, we’re particularly worried about households with children and those on lower incomes, who are most likely to struggle with their heating costs.
“Without government action, millions are at risk of being left in the cold this winter and beyond. We’re calling for the urgent introduction of energy bill support that is targeted at people who need it most.”
As temperatures across Britain plummet, a fourth winter of the energy bills now crisis looms large in people’s minds, says Simon Francis, coordinator of the End Fuel Poverty Coalition.
Francis says it is “vital” that ministers bring in more support for vulnerable households, explaining:
“The decision to introduce a price cap change in the middle of winter was taken by Ofgem in 2022 and was described as an inhumane policy at the time. No wonder it has been opposed by campaigners ever since as households will have to find more money to keep themselves warm at the worst possible time.
“Already the average household will have paid over £2,500 extra for their energy than had we not been so exposed to volatile energy markets.
“To make matters worse, the new Government has cut back the levels of support available to some of the most at-risk elderly households.
“While we welcome the Government’s long term plans to boost home energy efficiency to bring down bills and to improve energy security by stabilising prices, these reforms will take time to take effect and will be no comfort to those struggling this winter.
“That’s why it is so vital the ministers bring in more support for vulnerable households this winter and speed up plans to bring in a social tariff for next winter - a move that is backed by the vast majority of voters.”
National Energy Action: Government support is essential now
National Energy Action chief executive Adam Scorer is calling on the government to take steps now to help strugging households with their energy bills.
Following this morning’s news that the price cap will rise in January-March, by 1.2%, Scorer says:
‘Today’s news that the price cap is rising by 1% will impact millions of vulnerable households. Bills are around 50% higher than pre crisis levels.
‘With temperatures now plunging and far less support available many are getting deeper into debt trying to keep warm. Now we know there will be no let up into January and beyond. Targeted government support is essential to save millions from the misery and danger of a cold home.’
On Wednesday, we reported that energy suppliers will spend £500m helping customers with their energy bills this winter, in a deal brokered by the government.
But the government has also removed the winter fuel payment for millions of pensioners, which is expected to push 100,000 pensioners in England and Wales into relative fuel poverty.
ENERGY PRICE CAP TO RISE IN JANUARY
Newsflash: Energy regulator Ofgem has announced that the price cap on British gas and electricity costs will rise next year, as feared.
The average annual energy bill in England, Scotland and Wales will rise to £1,738 per year from January, putting more pressure on household finances – at a time when cold weather drives up demand for energy.
That will push up the average annual cost of energy by £21, or by £1.75 per month, for the January-March quarter.
Tim Jarvis, director general of markets at Ofgem, says:
“While today’s change means the cap has remained relatively stable, we understand that the cost of energy remains a challenge for too many households. However, with more tariffs coming into the market, there are ways for customers to bring their bill down so please shop around and look at all the options.
“Our reliance on volatile international markets - which are affected by factors such as events in Russia and the Middle East – means the cost of energy will continue to fluctuate. So it’s more important than ever to stay focused on building a renewable, home-grown energy system to bring costs down and give households stability.
“In the short term though, anyone struggling with bills should speak to their supplier to make sure they’re getting the help they need and look around to make sure they’re on the best, most affordable deal for them.”
As explained in the introduction, the cap applies to the unit cost of energy (there’s no limit on high an individual bill can rise).
The increase for the January-to-April cap comes on top of a 10% rise for the period between October and December, when it was £1,717 a year.
For comparison, prices will still be around a third higher than three years earlier. In October 2021, the cap was set at £1,277 per year.
Updated
Charities fear impact of higher energy bills
Charities are concerned about the impact another rise in energy prices will have.
David Southgate, policy manager at disability equality charity Scope, says:
“This is a bitter pill to swallow for the many disabled people who face sky-high bills because they have no choice but to use more energy.
Life costs a lot more when you’re disabled, because of needing to use more heating to stay warm and healthy, or charging vital equipment like wheelchairs and breathing machines.
Our disability energy support services are hearing from disabled people who have cut back everything they can and racked up huge amounts of debt.
The Government urgently needs to step in and bring in discounted energy bills for disabled people.”
Introduction: Households set to learn if energy bills will rise again from January
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Britain’s long-running cost of living squeeze may tighten this morning, when households across the country learn whether average energy bills will rise, or fall, in January.
Regulator Ofgem is due to announce how Britain’s price cap will change in January-March at 7am today, and analysts fear the cap will rise slightly.
The cap sets the maximum that suppliers can charge their 29 million household customers per unit of gas and electricity. It is calculated based on the wholesale price of energy, which are still above historic averages despite dropping back from the highs seen shortly after Russia’s full-scale invasion of Ukraine in 2022.
Importantly, the cap is on the unit price of energy – it’s not a limit on how large a bill could be.
It was originally introduced five years ago to protect consumers who did not shop around for their energy, but once prices rose it became the default tariff for providers and now most households pay prices at the level of the cap.
The current cap, which runs from October to December, works out at £1,717 per year for an average household’s dual-fuel bill.
On Monday, energy consultancy Cornwall Insight said it had calculated that the price cap will rise by 1% for January-March, to £1,736 a year. Cornwall have a good track record of getting this maths right – we’ll find out shortly if they’re correct this time…
Craig Lowrey, principal consultant at Cornwall Insight, said:
“Supply concerns have kept the market as volatile as earlier in the year and additional charges have remained relatively stable, so prices have stayed flat.
“While we may have seen this coming, the news that prices will not drop from the rises in the autumn will still be disappointing to many as we move into the colder months.”
The agenda
7am GMT: Energy regulator Ofgem to set price cap for January-March 2025
7am GMT: UK retail sales report for October
9am GMT: Eurozone ‘flash’ PMI report for November
9.30pm GMT: UK ‘flash’ PMI report for November
2.45pm GMT: US ‘flash’ PMI report for November
