In any other week, the Government’s much trailed announcement on energy prices would have dominated the news headlines.
However, for entirely understandable reasons, Prime Minister Liz Truss’s package of measures – which could cost up to £150billion – almost slipped under the radar.
A typical household energy bill will be capped at £2,500 annually until 2024, while businesses will also be supported with a six-month price cap.
As the new PM observed: “We are facing a global energy crisis, and there are no cost-free options.”
Inevitably, the markets reacted strongly as they like few things more than a boost to money supply.
The fear remains that such a bold move will further stoke inflationary pressures. The potential size of the energy bail-out – more than was spent on the furlough scheme during the Covid-19 pandemic – will have serious ramifications for the national debt, money supply and the future economic landscape.
Inflation continues to run higher than expected, currently standing at 10.1%, although it is to be hoped that this will peak before the end of the year.
The new Chancellor, Kwasi Kwarteng, has reiterated his “full support for the independent Bank of England and their mission to control inflation, which is central to tackling cost of living challenges”.
The Chancellor also confirmed that he would meet twice a week with Andrew Bailey, Governor of the Bank of England, from now on to discuss the rising cost of living.
The death of The Queen caused the Bank to postpone the Bank’s Monetary Policy Committee’s decision regarding interest rates until September 22 with some economists suggesting the rate could rise to 2.25% – the highest level since December 2008.
Further rises could be damaging for people who are not sufficiently prepared, although the hope must be that inflation starts to come under control which, in turn, would reduce the need for further hikes.
The Government is expected to lay out its economic course with a mini-Budget sometime in the next few weeks. This should give us guidance as to the intended direction of travel between now and the next General Election, due in 2024.
Her Majesty Queen Elizabeth II
Along with the rest of the nation, we were deeply saddened by the passing of The Queen.
Our thoughts are with the Royal Family as they grieve the loss of our longest-serving monarch.
Our office will be closed on Monday, September 19th – which has been declared a Bank Holiday – reopening as usual on Tuesday 20th.