World

British households on Friday faced an eye-watering 80-percent hike in electricity and gas bills, in a dramatic worsening of the cost-of-living crisis before winter as the country awaits a new leader.

Regulator Ofgem said its energy price cap, which sets prices for consumers who are not on a fixed deal with their supplier, will increase from October 1 to an average £3,549 ($4,197) per year from the current £1,971.

Worse is expected to come in January, when Ofgem next updates its cap, with average bills predicted to top £5,000 — or more. 

Ofgem blamed the increase on the spike in global wholesale gas prices after the lifting of Covid restrictions and Russian restrictions on supplies.

But it sparked outcry about the effect on already financially squeezed households, pensioners and the sick — and growing calls for people not to pay.

“Everybody’s gonna have trouble,” said Diane Skidmore, 72, who lives in social housing in south London and makes do on £600 a month.

She told AFP she would turn off her heating in winter and use blankets and jumpers to try to keep her rocketing bills down.

The chief executive of Marie Curie cancer care charity, Matthew Reed, said terminally ill people it helps need specialist medical equipment and warned they “could freeze to death this winter without further support”.

UK inflation is already in double-digits and forecast to strike 13 percent in the coming months due to runaway energy bills.

Inflation is at its highest level since 1982, with industrial action over pay growing, and the country is predicted to enter recession later this year. 

The near-doubling in the energy cap will likely tip millions into fuel poverty, forcing them to choose between heating or eating, anti-poverty experts say.

“Some parents are coming to us in tears, terrified about how they are going to feed their children,” said Rossanna Trudgian, head of campaigns and public affairs at Action for Children charity.

More than 115,000 have pledged to protest on October 1, said the Don’t Pay action group, which wants bills reduced to affordable levels.

Ofgem boss Jonathan Brearley acknowledged the difficulties. “I talk to customers regularly and I know that today’s news will be very worrying for many,” he said.

– ‘Zombie’ government –

The rampant cost-of-living crisis has dominated the race between Liz Truss and Rishi Sunak to succeed Conservative Prime Minister Boris Johnson.

Political opponents have accused him of leading a zombie government and doing nothing to address the problem since his resignation in July.

Household and business consumers, energy suppliers and opposition politicians said urgent action is needed to avoid putting the most vulnerable in desperate situations.

A University of York study recently estimated two-thirds of UK households are at risk of fuel poverty by next year. 

But Johnson, who has been on holiday twice in recent weeks, has promised to leave major fiscal decisions to his successor. 

The winner will not be announced for another 10 days. 

Foreign Secretary Truss says she favours tax cuts over “handouts” but her challenger, former finance minister Sunak, said that will worsen inflation and has instead proposing further direct support.

The government has so far offered help including £400 being taken off every household’s energy bill later this year as well as other targeted support to pensioners and those on disability benefits.

Finance minister Nadhim Zahawi told Sky News of the £37 billion support package: “We know that’s not enough. We’ve got to do more,” without giving details.

Leaders of devolved parliaments in Wales and Scotland and opposition parties have called for an immediate freeze on the price increase.

– ‘Catastrophe’ –

Anti-poverty think tank The Resolution Foundation has demanded “radical” measures to prevent “a catastrophe” this winter, warning of “serious physical and financial damage to families across Britain”.

With many poorer households relying on more costly pre-payment meters, the foundation predicted thousands could see their energy cut off entirely. 

It is calling for poorer households to be offered a “social tariff” with a 30 percent discount.

Adam Scorer, chief executive of fuel poverty charity Energy Action, also told Sky News that the government must double its support package and work with the regulator to introduce a social tariff” for vulnerable households.

European stock markets wobbled Friday ahead of a speech by Federal Reserve boss Jerome Powell that is expected to reiterate his plan to ramp up US interest rates to fight soaring inflation.

London equities edged up despite news that UK domestic energy bills will rocket even higher this year on surging wholesale gas prices as Britain’s cost-of-living crisis worsens.

Yet Frankfurt and Paris stocks slid on fears of a eurozone energy crunch in the coming peak-demand winter as Russia curbs supplies.

Europe’s benchmark Dutch TTF gas contract dipped Friday one day after soaring to 324 euros per megawatt hour, not far from the record high struck in March after key gas producer Russia invaded Ukraine.

All eyes are now on Powell’s remarks later Friday at the annual symposium of top bankers and finance chiefs at Jackson Hole, Wyoming.

Most expect him to confirm that more hikes are on the way as officials try to bring inflation down from painful highs not seen in four decades.

– Choosing words carefully –

“I have no doubt Powell will have chosen his words very carefully today, all too aware of the consequences of even the smallest deviation in his intended message,” said OANDA trading platform analyst Craig Erlam.

“It’s a little ridiculous that markets put so much weight on such things but that is the situation we are in and I expect the Fed chair will be very clear in the message he wants to send.”

The key issue now is how much the bank will tighten over the coming months, with expectations for a half-point lift next month, after two three-quarter moves in June and July.

Elsewhere, Asia was buoyed by signs of progress in talks between US and Chinese regulators that could see tech titans including Alibaba and JD.com avoid a delisting in New York.

Hong Kong enjoyed a surge in tech shares thanks to news that China-US regulatory talks were progressing.

More than 200 Chinese firms have for months had the threat of a New York delisting hanging over them as they are caught in a wide-ranging row between the world’s two biggest economies.

But reports said Thursday that Beijing had called on top accounting firms to prepare to bring US-listed companies’ audit papers to Hong Kong, to be reviewed by US officials.

US lawmakers set a 2024 deadline for the removal of businesses that do not comply with listing rules and the latest move could provide a big step in avoiding that.

– Key figures at around 1045 GMT –

London – FTSE 100: UP 0.1 percent at 7,483.55 points

Frankfurt – DAX: DOWN 0.3 percent at 13,227.02

Paris – CAC 40: DOWN 0.3 percent at 6,364.56

EURO STOXX 50: DOWN 0.2 percent at 3,666.09

Tokyo – Nikkei 225: UP 0.6 percent at 28,479.01 (close)

Hong Kong – Hang Seng Index: UP 3.6 percent at 19,968.38 (close)

Shanghai – Composite: UP 1.0 percent at 3,246.25 (close)

New York – Dow: UP 0.2 percent at 32,969.23 points (close)

Euro/dollar: UP at $0.9982 from $0.9974 on Thursday

Pound/dollar: DOWN at $1.1792 from $1.1832

Euro/pound: UP at 84.65 pence from 84.31 pence

Dollar/yen: UP at 136.94 yen from 136.49 yen

West Texas Intermediate: UP 1.5 percent at $93.49 per barrel

Brent North Sea crude: UP 1.1 percent at $100.44

burs/rfj/lth

Finns are being urged to turn down their thermostats this winter, take shorter showers and spend less time in their beloved saunas, as Europe faces an energy crunch following Russia’s war in Ukraine.

The nationwide power saving campaign was announced this week Russia has cut gas supplies to Finland and other European countries in recent months, causing energy prices to soar.

Called “A degree lower”, the campaign will be launched on October 10, Kati Laakso, a spokeswoman at state-owned company Motiva which promotes sustainability, told AFP on Friday.

The company is behind the campaign together with the Finnish government and energy authority.

In addition to lowering their heating and taking shorter showers, Finns will be encouraged to cut back on sauna time. 

With an estimated three million saunas for 5.5 million people, the steam bath is a traditional Finnish institution. Bathers gather together in the nude in temperatures of around 85 degrees Celsius (185F).

With energy prices soaring, the campaign will also urge Finns to spend less time on entertainment electronics, turn off garage heating and save on petrol by driving slower.

“These are just some options. We hope that people will voluntarily follow the recommendations and understand the situation, that we are heading into a difficult winter,” Laakso said.

“Maybe people don’t need to turn on the sauna everyday. Maybe just once a week”, she added. 

This is the first time an energy saving campaign has been introduced in Finland since the 1970s oil crisis.

In May, Russian energy giant Gazprom halted supplies to neighbouring Finland after Helsinki refused to pay its bill in rubles, which Moscow had demanded in a bid to side-step financial sanctions and force European energy clients to prop up its central bank.

In 2021, Gazprom supplied about two thirds of the country’s gas consumption but only eight percent of its total energy use. 

Gasum, Finland’s state-owned energy company, said it would use other sources, such as the Balticconnector pipeline, which links Finland to fellow EU member Estonia.

Britain announced Friday a vast 80-percent hike in electricity and gas bills, in a dramatic worsening of the cost-of-living crisis before winter as the country awaits a new leader.

Regulator Ofgem said its energy price cap, which sets prices for consumers who are not on a fixed deal with their supplier, will in October increase to an average £3,549 ($4,197) per year from the current £1,971.

Worse is expected to come in January, when Ofgem next updates its cap, with average bills predicted to top £5,000 — or more. 

“The increase reflects the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic and have been driven still higher to record levels by Russia slowly switching off gas supplies to Europe,” Ofgem said.

The announcement sparked outcry from charities which said financially-squeezed households faced one of the “bleakest Christmases” for years.

UK inflation is already in double-digits and forecast to strike 13 percent in the coming months due to runaway energy bills.

Inflation is at its highest level since 1982, with industrial action over pay growing, and the country is predicted to enter recession later this year. 

The near-doubling in the energy cap will likely tip millions into fuel poverty, forcing them to choose between heating or eating, anti-poverty experts say.

“We know the massive impact this price cap increase will have on households across Britain and the difficult decisions consumers will now have to make,” said Ofgem boss Jonathan Brearley.

“I talk to customers regularly and I know that today’s news will be very worrying for many.”

– ‘Zombie’ government –

The rampant cost-of-living has dominated the race between Liz Truss and Rishi Sunak to succeed Conservative Prime Minister Boris Johnson.

Political opponents have accused him of leading a zombie government and doing nothing to address the problem since his resignation in July.

Household and business consumers, energy suppliers and opposition politicians said urgent action is needed to avoid putting the most vulnerable in desperate situations.

A University of York study recently estimated two-thirds of UK households are at risk of fuel poverty by next year. 

But Johnson, who has been on holiday twice in recent weeks, has promised to leave major fiscal decisions to his successor. 

The winner will not be announced for another 10 days. 

Foreign Secretary Truss says she favours tax cuts over direct “handouts”. 

She wrote in the Daily Mail on Friday that her “immediate priority will be to put more money back in people’s pockets by cutting taxes” if she wins.

Former finance minister Sunak has argued tax cuts will worsen inflation, instead proposing further direct support.

The UK government has so far offered help including £400 being taken off every household’s energy bill later this year as well as other targeted support to pensioners and those on disability benefit.

Leaders of devolved parliaments in Wales and Scotland have called for a freeze on the price increase.

Scottish First Minister Nicola Sturgeon tweeted that the “rise must be cancelled” and the government should agree with energy companies on a package to cover the costs.

Her Welsh counterpart Mark Drakeford backed calls from his Labour party for a freeze on bills and windfall taxes on oil and gas giants.

Gas comprises a major part of Britain’s energy mix, with tens of millions of homes relying on gas-powered boilers for their heating.

– ‘Catastrophe’ –

Anti-poverty think-tank The Resolution Foundation has demanded “radical” measures to prevent “a catastrophe” this winter, warning of “serious physical and financial damage to families across Britain”.

With many poorer households relying on more costly pre-payment meters, the foundation predicted thousands could see their energy cut off entirely. 

It is calling for poorer households to be offered a “social tariff” with a 30 percent discount.

French energy giant EDF has urged the government to double its energy support package to Britons, with its managing director for UK customers, Philippe Commaret, telling AFP that the hike would be “catastrophic”.

Adam Scorer, chief executive of fuel poverty charity Energy Action, also told Sky News that the government must double its support package and work with the regulator to introduce a social tariff” for vulnerable households.