Closing post
Time to recap….
UK consumer confidence has fallen this month, as households report that their current finances continued to deteriorate in November, while pessimism about the financial outlooks for the year ahead has risen.
Britain and the United States have signed a new agreement for civil nuclear collaboration at the COP29 summit, that could speed up the development of new technologies.
Thames Water has £23bn of assets that are in urgent need of repair and the supply of water to its 16 million customers is “on a knife-edge”, a Guardian investigation has found
Sources have also warned that Thames Water’s IT ‘falling apart’ and is being hit by cyber-attacks.Economists at the CEBR have calculated that Donald Trump could wipe 1% off the UK economy by imposing new import tariffs.
The rise in UK employment costs is going to hit growth and wages next year, Goldman Sachs have forecast.
UK households will also face a 1% rise in energy bills in January, when the price cap is next changed, analysts at Cornwall Insight have calculated.
The average asking price on a UK home has dropped by more than £5,000 this month as the autumn budget caused housing market jitters.
UK and US sign civil nuclear collaboration deal
Britain and the United States have signed a new agreement to collaborate on civil nuclear technology at the COP29 summit.
The agreement, signed by UK Energy Secretary Ed Miliband and US Deputy Secretary of Energy David Turk today, aims to pool billions in research funds and share information on advanced nuclear technologies.
The goal is to speed up the development of new technologies, such as advanced modular reactors, to help decarbonise industry and boost energy security.
The new agreement will come into force from 1 March 2025.
Energy Secretary Ed Miliband says:
“Nuclear will play a vital role in our clean energy future.
“That is why we are working closely with our allies to unleash the potential of cutting-edge nuclear technology.
“Advanced nuclear technology will help decarbonise industry by providing low-carbon heat and power, supporting new jobs and investment here in the UK.”
The UK government says the agreement builds on a pledge made last year at COP28 to triple nuclear energy capacity globally by 2050.
It expects this new agreement will also be signed by Canada, France, Japan, Republic of Korea, Republic of South Africa, China, Euratom, Switzerland and Australia.
You can track the latest action at COP 29 here:
Grangemouth oil refinery owners reject US-led approach as closure looms
The owners of Scotland’s only oil refinery, which is scheduled to close next summer, have reportedly rejected a US-led approach about a possible bid.
A consortium said to be led by Robert McKee, an American energy industry veteran, wrote to Petroineos, the owner of the Grangemouth site, to express an interest in buying it, according to Sky News.
But the approach has been rejected by Petroineos, which is 50%-owned by Sir Jim Ratcliffe’s petrochemicals empire.
The consortium is understood to comprise The Canal Group, which is reportedly developing a green energy refinery in Texas, and Trading Stack, a Middle East-based commodities trader, Sky say.
Petroineos is planning to shut Grangemouth by the end of June next year, a move that could cost 500 employees their jobs.
Thames Water’s IT systems are in the spotlight again today, with sources telling the Guardian they are so antiquated they have been easy for cybercriminals to attack.
My colleague Anna Isaac reports:
“The software we use is older than me, and some of the hardware is older than my dad,” says Siddharth*. He is one of a team fighting a daily battle to sustain ancient IT infrastructure at Thames Water.
Sometimes the defences are breached. Thames, the UK’s largest water and waste treatment company, is on a “knife-edge” according to sources, with its resilience in doubt because it depends on an array of creaking – often Victorian – infrastructure.
While plenty of attention has been paid to its pipes, trunk mains and sewage overflows, less well understood is another big problem: its computer systems. Some IT systems date back to the 1980s, and have long been declared obsolete.
More here:
*Names have been changed
Trading has begun cautiously on Wall Street.
The S&P 500 stock index has inched up by 4 points to 5,874, a gain of less than 0.1%, while the tech-focused Nasdaq is 0.2% higher.
Tesla are among the top risers, up over 7% following reports that President-elect Donald Trump’s transition team are planning to make a federal framework to regulate self-driving vehicles a top priority for the U.S. Transport Department (see earlier post).
Nvidia is a leading faller, down 2.5%, after reports of overheating snags with its Blackwell chip (see earlier post).
Updated
Top European Central Bank policymakers are concerned that new US tariffs could hurt growth.
ECB vice-president Luis de Guindos told an event in Frankfurt that trade tensions could damage Europe’s economy, saying:
“The balance of macro-risks has shifted from concerns about high inflation to fears over economic growth.
The growth outlook is clouded by uncertainty about economic policies and the geopolitical landscape, both in the euro area and globally. Trade tensions could rise further, increasing the risk of tail events materialising.”
Bundesbank president Joachim Nagel is also concerned, telling an event in Tokyo that tariffs promised by Trump would upend international trade.
However, Nagel was not too concerned that they could push up inflation, saying:
“Global integration would have to decrease substantially to cause a noticeable rise in inflationary pressures.
“And, so far, we have not seen this.”
Shares in Nvidia are down almost 2% in premarket trading, on reports of an overheating problem with its new Blackwell chips.
Website The Information reported yesterday that the Blackwell graphics processing units – designed to be used in artificial intelligence systems – has an overheating problem when connected together in Nvidia’s customised server racks.
Nvidia has reportedly asked its suppliers to change the design of the racks “several times” as it tries to overcome the problem. More here.
Blackwell, launched earlier this year, is targetted at datacentres that train AI models such as the latest generations of GPT, Claude and Gemini, and which run AI chatbots.
Revolut, Britain’s most valuable fintech firm, has been granted a UK trading licence by the FCA.
The decision will allow Revolut to offer new trading products and features for UK customers next year, thought to include trading of UK and EU stocks and ETFs.
Until now, Revolut has operated its Trading feature in the UK as “an Appointed Representative with a Principal”, meaning it could allow retail customers to buy and sell shares listed in the US.
Yana Shkrebenkova, Head of Wealth and Trading UK at Revolut, explains:
“Today’s announcement is a significant milestone for Revolut Trading. Having launched our successful investment product five years ago, we strive to bring best in class investment products to our customers in the UK. We know that there is so much more our Revolut Trading customers want from our platform and we are working hard to deliver on this, rolling out new features safely and considerately.
Revolut was granted a UK banking licence – with “restrictions” – in July, after a three-year wrangle with regulators.
Bitcoin is slipping back from its recent record highs today.
The world’s largest cryptocurrency is down 2% today, at $89,000, away from the record high of almost $93,500 set last week.
The dip comes after a dormant bitcoin wallet that had been inactive for 14 years sprung into life last week. Some 2,000 bitcoin, worth almost $180m, were moved from the wallet.
Yesterday, a Satoshi-era Bitcoin wallet holding 2,000 $BTC ($178M) woke up after 14 years of dormancy!
— Spot On Chain (@spotonchain) November 16, 2024
In the past 24 hours, this wallet has deposited all its $BTC to exchanges, including:
• 1,038.87 $BTC ($92.93M) to #Coinbase
• 591.46 $BTC ($52M) to #BitFlyer
• 369.66 $BTC… pic.twitter.com/fDIzQX8Dqj
The sudden activity caused a lot of excitement in crypto circles, as its last transaction took place in 2010 – when one bitcoin was worth less than a dollar.
Bitcoin has been on quite the rally in the last fortnight; it was trading below $70,000 on 5 November, the day of the US election, but started rallying once Donald Trump’s victory was clear.
Bill Blain, market strategist at Wind Shift Capital, suggests Bitcoin may have been experiencing “a classic greater fool moment”, saying:
As Bitcoin soars 30%, there are signs long-term holders’ wallets are being opened to sell as new buyers are persuaded to pile-in on stories about deregulation, crypto as an asset, and the usual get rich scams. Classic pump and dump.
Tesla shares higher on report Trump could ease self-driving rules
Shares in Tesla have jumped almost 7% in pre-market trading, following a report that Donald Trump’s administration could ease US rules for self-driving cars.
According to Bloomberg, the Trump team plan to make a federal framework for fully self-driving vehicles one of the Transportation Department’s priorities,
As Bloomberg point out, that’s good news for leading Trump supporter Elon Musk:
If new rules enable cars without human controls, it will directly benefit Elon Musk, the Tesla Inc. chief executive officer and Trump mega-donor who’s become a powerful fixture in the president-elect’s inner circle. He’s bet the future of the EV maker on self-driving technology and artificial intelligence.
More here: Trump Team Is Seeking to Ease US Rules for Self-Driving Cars
While Tesla’s shares are on track to jump when trading begins in under two hours, shares in Uber – who could lose out if Tesla succeeds in launching autonomous robotaxis – are down 2.7% in pre-market.
The Czech Republic’s top central banker is concerned that consumer prices around the worlw will be more volatile than in the past.
This will mean tighter monetary and fiscal policies than before to keep inflation near target, Czech central bank Governor Ales Michl believes.
In remarks posted on the Czech National Bank’s website on Monday, Michl says:
After a period of high inflation, we are now entering a phase of higher inflation volatility around central bank targets, with an upside risk.
Michl argued that there had been excessive money creation in the run-up to the Covid-19 pandemic, because interest rates were kept near zero for over a decade after the financial crisis.
He told a central banking conference in Mexico City:
This has led to persistent inflationary pressures.
To address this, the policy mix should consist of two elements: firstly, maintaining interest rates higher than pre-COVID levels for a prolonged period; and secondly, governments must balance their budgets. Failure to do so could risk a second wave of inflation, with another cost shock potentially acting as a trigger.
Donald Trump’s immigration pledges may be the real macro threat to economic growth, rather than tariffs, suggests Neil Shearing, group chief economist at Capital Economics.
Shearing told clients:
As the dust settles on Donald Trump’s stunning election victory, attention has quickly turned to his policy pledges and their implications for the US economic outlook.
Global policymakers and investors are understandably focused on his pledges to raise tariff barriers across the board – and by significant amounts in some US trading relationships. But the economic hit from efforts to raise trade barriers isn’t likely to be as large as many fear.
The major threat from Donald Trump’s pledges will instead come from his stated intention to remove millions of migrant workers from the US.
One of Britain’s biggest housebuilders, Vistry Group, still reeling from two profit warnings, is also under pressure from shareholders over its boss’s multiple roles and corporate governance concerns.
Greg Fitzgerald, Vistry’s chief executive, also chairs the company, which breaches corporate governance code guidance. It means he is running both the business and the board of directors.
At the company’s last general meeting in May, Fitzgerald’s re-election was only backed by 79.3% of shareholders - with more than a fifth voting against or abstaining.
Vistry, formerly known as Bovis Homes, said in a statement today:
“The board has actively engaged with shareholders both before and after the AGM in respect of a range of corporate governance matters and has a detailed understanding of shareholder views.
The board understands that the primary concerns from some shareholders was in relation to the combination of the role of the CEO and chair, which was a departure from the UK Corporate Governance Code.”
The housebuilder said it had appointed a senior independent director, Rob Woodward, to “provide additional oversight on governance matters and serve as an alternative point of communication for investors and the other non-executive directors”. He has held a series of calls with shareholders to discuss corporate governance.
Vistry said the results of an external assessment of the combined role of CEO and chair will be published in is 2024 annual report. It said that through the process, shareholders “have expressed different perspectives”.
“The company remains committed to ongoing dialogue with shareholders and will continue to engage to ensure that the company understands shareholders’ views and is able to consider feedback, as well as to provide clarity on the company’s approach to succession planning going forward.”
It is not only Fitzgerald’s combined role that has raised eyebrows. He owns a 40% stake in the Devon-based developer Baker Estates and has banked £5.2m in the past three years, while also owning shares in Ardent Hire, which supplies forklift trucks to Vistry, according to the Sunday Times.
Corporate governance experts have raised concerns about Fitzgerald’s multiple roles and stakes in related companies, raising potential conflicts of interest, and “inadequate disclosures” by Vistry, according to the paper.
A Perth-headquartered goldminer has agreed to give the equivalent of £130m – more than its entire cash reserves – to the government of Mali after its chief executive and two other employees were detained by authorities in the West African country.
Resolute Mining CEO Terence Holohan and the other two employees – all British citizens – were unexpectedly detained on 8 November in Mali’s capital of Bamako, at the conclusion of a meeting with government mining and tax officials.
The meeting was to progress what Resolute described as unsubstantiated open claims against the company regarding taxes, custom levies, maintenance and management of offshore accounts.
To resolve the matter, Resolute said on Monday it had paid Mali $80m out of its $157m in cash reserves, and promised to pay another $80m more in coming months.
Updated
FCA bans director over GBH conviction and cover-up
Britain’s financial watchdog has banned a company director after he failed to tell them he had been imprisoned for grievous bodily harm.
The Financial Conduct Authority has banned Ari Harris from working in financial services, following his failure to disclose he had been jailed for three years in 2022.
Harris, the FCA says, stabbed a man twice in the neck with a kitchen knife in 2018, during a confrontation in a public carpark, and pleaded guilty to GBH.
He, and his firm Reeds Motors, should have notified the FCA of his offending, conviction and custodial sentence. Instead, the regulator, says they provided false and misleading information to cover up the fact that he was in prison.
In a ruling today, the FCA says:
Following an application in October 2022, the FCA asked the firm why it needed an additional approved person. Both Mr Harris and the firm stated that this was required as Mr Harris was currently overseas and looking into a business abroad.
Mr Harris continued to mislead the FCA during a telephone call, failing to mention that he was actually in prison at the time.
The FCA has concluded that there is “a severe risk of an erosion of public confidence” if those who are convicted of violent offences and who “lack honesty, integrity and reputation” are permitted to continue working in the financial services industry.
Updated
Spirit Airlines files for Chapter 11 bankruptcy protection
Over in the US, Spirit Airlines has filed for bankruptcy protection today after being dragged down by mounting debts and losses.
Spirit, which has been struggling to recover from the drop in travel demand caused by the Covid-19 pandemic, has announced it is entering Chapter 11 proceedings as part of a debt restructuring deal.
Spirit, the biggest budget airline. in the US, has lost more than $2.5bn since the start of 2020 and faces looming debt payments totaling more than $1bn, Associated Press reports.
The company has reassured customers it will continue operating while the restructuring is conducted, telling them:
We are writing to let you know about a proactive step Spirit has taken to position the company for success.
Spirit has entered into an agreement with our bondholders that is expected to reduce our total debt, provide increased financial flexibility, position Spirit for long-term success and accelerate investments providing Guests with enhanced travel experiences and greater value.
Part of this financial restructuring includes filing a “prearranged” chapter 11.
Eurozone trade balance rises as UK imports drop
The eurozone’s trade surplus with the rest of the world has widened, partly thanks to a drop in imports from the UK.
Data firm eurostat has reported that the eurozone recorded a €12.5bn trade surplus with the rest of the world in September, up from €9.8bn in September 2023.
Eurozone exports rose by 0.6%, to €237.8bn, while imports from the rest of the world fell by 0.6% to €225.3bn.
While European companies shipped €28.5bn of goods to the UK, up 2%, there was a 10.7% drop in imports from the UK, to €13.1bn.
Imports from the US, Switzerland, Norway, Japan, India and Brazil also fell year-on-year:
GMB: Thames Water ‘in perilous state’
The UK government is being urged to “act fast” over the Thames Water crisis, after the Guardian reported that water supplies are “on a knife-edge” due to serious underinvestment.
Our investigation has found that Thames has failed to tackle serious safety concerns or upgrade vital IT systems, meaning that £23bn of its assets that are in urgent need of repair.
It appears Thames is in a worse financial state than previously admitted, and neither its managers nor regulators appear to have grasped the perilous state of some of its reservoirs and pipes.
As my colleague Anna Isaac reported:
Sources described how concerns about the company’s governance and operations had been raised at the highest levels of management. Yet they claimed that the problems had not been tackled, suggesting that the scale of the turnaround required at Thames may have been underestimated.
“Operations have been hollowed out and cut to the bone,” a senior source at Thames said. “We’re putting the public at risk by failing to invest in the most basic needs.”
They added that, in their view, management had not moved quickly enough to address problems such as weakening explosive infrastructure – such as containers holding the gas produced by sewage – and cracks in reservoirs. They said Thames’s management and the regulator, Ofwat, had been slow to address these problems, allowing them to escalate.
The Guardian: Thames Water repairs crisis
— George Mann (@sgfmann) November 17, 2024
leaves supply ‘on knife-edge’ #TomorrowsPapersToday pic.twitter.com/NLyt4OOuIz
Gary Carter, GMB National Officer, says Thames’s previous owners have left it “in a perilous state” (it has £15bn of debt), adding that ministers should be ready to put it into a special administration regime if new investment isn’t agreed:
“Thames needs committed long term investment just to keep operating, never mind stop the leaks and cut the sewage spills. “Then it must be held to account and deliver for customers, with its skilled workforce central to the turnaround.
If that investment isn’t forthcoming then the Government must act fast and put Thames into special administration.
Ministers can’t sit back and watch the car crash.”
UK consumer confidence drops in November
UK consumer confidence has fallen this month, as households grow gloomier about their financial prospects.
The latest poll of consumer sentiment, just released by data firm S&P Global, shows that households reported that their current finances continued to deteriorate in November, while pessimism about the financial outlooks for the year ahead has risen.
Households across the UK reported further pressure on their everyday spending, which ate into the amount of cash they had available to spend. It has fallen again this month, at a faster rate than in October.
Debt levels rose in November for the first time in three months, the survey found.
A gauge of job security also declined, which could be driven by the increase in employer National Insurance contributions announced in the Budget.
The poll shows that the budget, at the end of October, has not lifted confidence among households.
Worryingly, confidence dropped this month despite the Bank of England cutting interest rates two weeks ago, just as S&P Global began polling households.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said:
“November is seeing households grow somewhat gloomier again, failing to build on the underlying improvement seen in the months leading up to the General Election.
Consumer confidence has fallen back since spiking higher in July amid the election buzz, as ongoing pressure on household finances has resulted in squeezed spending, higher debt and lower savings.
A key concern going forward will be the labour market. Rising incomes and busier workplaces have underpinned much of the improvement in consumer sentiment over the past two years, but job security is showing signs of waning. Any intensification of job worries, spurred perhaps the recent measures announced in the Budget, including higher employer National Insurance contributions, could result in a further loss of consumer confidence. This would likely in turn hit consumer spending and economic growth.
Updated
Goldman Sachs: NICs rise will hit wage growth in 2025
Analysts at Goldman Sachs have predicted that the increase in employers’ national insurance contributions will weigh on the economy in 2025.
In their outlook for the UK economy next year, just released, Goldman say they think growth is likely to cool later in 2025.
They believe that wage growth will slow, as firms pass on the impact of higher NICS bills onto their workforce.
Goldman say:
We expect consumer spending growth to moderate in H2 next year as real disposable income growth falls back. This partly reflects slowing real wage growth; we expect private sector pay increases to cool, partly because of the employer National Insurance Contributions increase being passed on to consumers.
Net interest is likely to become a headwind as effective mortgage rates continue to drift up while deposit rates gradually decline. And there is likely to be a continued drag on disposable income from the ongoing freeze on personal income tax thresholds.
Trade tensions under the Trump administration will also hurt the UK economy next year, Goldman predict, even if Britain avoids tough new tariffs.
They say:
Although our base case is that the US only imposes very limited tariffs on the UK, the threat of more significant tariffs is likely to generate uncertainty in the near term, which should weigh on demand.
And we expect that uncertainty around tariffs will notably reduce Euro area growth, which is likely to generate spillovers to the UK.
Begbies Traynor also reveals that their employment costs are expected to rise by £1.25m due to the increase in employers’ national insurance contributions.
The company is “reviewing options to mitigate the impact where possible”.
Budget measures and high interest rates to push up insolvencies
The higher employment costs announced in last month’s budget are likely to push more companies into financial trouble, insolvency advisers Begbies Traynor warned this morning.
Begbies Traynor also cautioned that firms will be hurt by the prospect that UK borowing costs remain high for longer than hoped.
In a trading update, Ric Traynor, executive chairman of Begbies Traynor Group, told the City:
“Additional headwinds for UK business from increased employment costs and the prospect of higher for longer interest rates are likely to extend the period of elevated insolvency levels, increasing the need for advice and support from our insolvency and business recovery professionals.”
Begbies has already been busy; it has reported a 16% increase in revenues and adjusted pre-tax profits for the six months to the end of October.
Ric Traynor says:
“We have made a very good start to the year with double digit growth in revenue and profits driven by positive momentum across the group. This gives us confidence that we will deliver market expectations for the year as a whole.
Reeves’s decision to raise employers’ national insurance contributions (NICs) has been criticised by retailers, especially in the services sector, and disability charities. The UK minimum wage is also increasing from April.
Marks & Spencer have warned that budget measures could cost it more than £60m next year, while Sainsbury’s expects to pay another £140m in NICs, which could push up prices on the shelves.
The Bank of England expects interest rates to fall more slowly, as inflation is likely to be higher due to the measures in the Budget.
Updated
Trump tariffs could hit UK GDP, warns CEBR
Donald Trump could knock almost 1% off the size of the UK economy if he imposes new tariffs on imports into the US, analysts have warned.
The CEBR thinktank have calculated that if the US imposes a 20% tariff on all imports, and a 60% tafiff on China, it could reduce the UK economy by 0.9% by the end of the Trump administration, even if other countries don’t retaliate.
The CEBR cautions that Trump’s re-election could reshape global dynamics, “particularly in trade, energy, and environmental policy”.
There is also a risk that energy prices are pushed higher (leading to higher bills) if retaliatory action is taken agaisnt US tariff.
The CEBR say:
During Trump’s first term, the Brent-WTI price differential peaked at $7.34 per barrel in 2019, roughly a 118% increase from the start of his administration, despite a drive to boost domestic oil and gas production. This was largely driven by buyers’ reluctance to purchase US energy exports.
However, shifts in global energy dynamics mean significant oil price rises are less likely this time around. China, once a major importer of US energy commodities, now sources discounted supplies from Russia, while its domestic economic slowdown has dampened its energy demand. OPEC also has spare production capacity, given it is currently implementing an output cut of 2.2 million barrels a day to support prices.
The easiest way for the UK to avoid Trump tariffs would be to agree to a Free Trade Agreement, the CEBR adds. This could reduce existing trade barriers, as well as dodging new tariffs.
CEBR adds:
Unfortunately, the major sticking point to a deal remains food standards, and tariffs may be used to pressure the UK to accept US demands in this regard.
Last weekend, one of Trump’s senior advisers said the UK “has to choose” between the European Union and US economic models, and that the next president would be more willing to clinch a free trade agreement with the UK if it turns away from the EU’s “socialism”.
Today’s prediction that energy prices for those on default tariffs will rise again in January are another kick in the teeth for households, says Richard Neudegg, director of regulation at Uswitch.com.
“This price hike would mean the average household on a standard variable tariff would pay 1% more on their rates from January, just at the time when households typically use the most energy.
“The price cap is supposed to protect consumers, but millions face paying more during the coldest months of the year.
Neudegg adds that customers can fix their bills below January’s predicted price cap level*, saying:
“There are now a range of fixed deals available that are significantly cheaper than the predicted price cap for January, so it is well worth running a comparison to see how much you could save. Right now, the average household could save up to £120 per year against the current price cap by switching to a fixed deal.
“Consumers who are worried about paying their energy bill should check what energy help they are eligible for, and contact their supplier who may be able to offer support.”
* – reminder: Cornwall Insight expect prices to drop in April and October, when the quarterly cap changes again.
Updated
Oil rises as Russia-Ukraine tensions intensify
The oil price is rising this morning, after the conflict between Russia and Ukraine intensified last weekend.
Brent crude, the international benchmark, is up 0.3% at $71.26 per barrel, having hit its lowest level since the start of October on Friday.
The rise follows the fierce missile and drone attack launched by Russia last weekend at Ukraine’s energy grid, which killed seven people and forced nationwide electricity rationing to be introduced today.
Ukrenergo, Ukraine’s principal energy supplier, said blackouts and consumption restrictions would be introduced “in all regions” as engineers tried to repair as much of the damage to power facilities as possible.
Russia has also accused Joe Biden’s administration of “trying to escalate the situation to the maximum”, after the White House lifted the ban on Ukraine using long-range missiles to fire into Russian territory yesterday.
Here’s the details of Cornwall Insight’s forecasts for Britain’s energy price cap from January.
Cornwall: 'disappointing' that prices won't drop in January
This morning’s prediction of a small rise in energy bills in January will be “disappointing”, says Dr Craig Lowrey, Principal Consultant at Cornwall Insight, especially as the weather gets chillier.
“Our final price cap forecast for January indicates, as expected, bills will remain largely unchanged from October. 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.
“Fuel poverty has occupied political agendas for years, with little long-term progress. This winter, millions of households say they will not heat their homes to recommended temperatures, risking serious health consequences. With it being widely accepted that high prices are here to stay, we need to see action. Options like social tariffs, adjustments to price caps, benefit restructuring, or other targeted support for vulnerable households must be seriously considered.
“Long-term, our transition away from the volatile global wholesale market toward sustainable, home-produced renewables can help to secure our energy future. Although the transition does require upfront investment, it promises lower bills down the line. The government needs to keep momentum on the transition while acknowledging that immediate support is essential for those struggling now. Inaction is a choice to leave people in the cold.”
Introduction: Energy price cap tipped to rise 1% in January
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Household energy bills across Great Britain are set to rise at the start of next year, analysts predict, putting more pressure on household finances.
Officially, the price cap for January-March 2025 will be set on Friday morning by regulator Ofgem, limiting what energy providers can charge in England, Scotland and Wales.
But analysts at Cornwall Insight have crunched the numbers, and predict that the cap for a typical dual fuel household will rise to £1,736 per annum in January, up from the current level of £1,717 per year set in October.
This is a rise of 1% from the current price cap – a blow to hopes that bills might drop at the start of 2025.
Importantly, though, the cap limits the amount that a consumer can be charged for each unit of energy – not a ceiling on potential bills, which are usually higher in the winter as households spend more to keep warm.
Cornwall Insight, whose calculations are based on the wholesale price of energy, say:
The cap level is a reflection of a relatively volatile wholesale market, influenced by supply concerns tied to geopolitical tensions, maintenance on Norwegian gas infrastructure, weather disruptions, amongst other smaller factors.
Despite prices stabilising in comparison to the past two years, the market remains very sensitive to global events. This is leaving prices substantially above historic averages.
At the end of September, Cornwall had expected the price cap would dip in January, but wholesale energy prices have been higher than hoped.
Last Friday, the month-ahead price of UK gas rose to a one-year high of almost 120p per therm.
Gas prices rose last week, after Austrian group OMV warned of a potential disruption to supplies from Russia. On Saturday, Gazprom did indeed stop supplies to Austria, after OMV won a €230m arbitration award against Russia’s state-owned natural gas company.
Looking further ahead, Cornwall currently forecast the cap will drop slightly in April 2025 and again in October 2025.
The agenda
8am GMT: Bundesbank President Joachim Nagel gives speech
10am GMT: Eurozone trade balance for September
3pm GMT: US Nahb Housing Market Index
