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
Key events
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
Anna Isaac
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%.
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.
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
