Just two days after entering Downing Street, UK Prime Minister Liz Truss on Thursday (September 8th) announced a massive bailout package to relieve tens of millions of UK businesses and households in risk of bankruptcy or “energy poverty”.
From October, household energy bills should not exceed an average of 2,500 pounds sterling per year (2,882 euros), while they were likely to climb to more than 3,500 pounds per year this autumn – and to more than £5,000 a year from the start of 2023. This very significant aid should last two years – until 2024, the year of the probable future British general election, which is probably no coincidence.
The support offered to companies will be less generous and limited to six months. But it will not be reserved for SMEs: all companies will be able to benefit from it, regardless of their size, as long as they have not secured fixed supply contracts and are subject to the exponential rise in the price of energy, fueled by that of gas.
“After six months, we will continue to support the sectors most in difficulty, in particular our pubs”, promised Liz Truss, in the House of Commons. The plan “will give visibility to households and businesses, it will make it possible to limit inflation and boost growth”, added the leader.
No superprofit tax
The government hopes that by capping energy bills, peak inflation could be reduced by five points. Inflation was at 10.1% in July; the Bank of England forecasts it at 13% by the end of 2022, with no intervention until then to reduce retail energy prices. Contrary to custom, Downing Street refused on Thursday to quantify this huge rescue plan, while experts put forward the minimum amount of 150 billion pounds – including 90 billion just for household aid. Is this a desire not to worry the financial markets, when the British currency is already at its lowest against the dollar, and when the contours of the financing of this enormous envelope are not yet very clear?
Liz Truss, an ultraliberal great admirer of Margaret Thatcher (1925-2013), in power between 1979 and 1990, in any case categorically ruled out recourse to a windfall tax, a tax on superprofits from energy companies to fund its bailout.
These superprofits worth tens of billions of pounds are generated by the explosion in the price of fossil fuels, the result of restrictions on the supply of Russian gas to Europe, Vladimir Putin thus avenging the sanctions imposed by the West following the outbreak of his war in Ukraine.
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