Liz Truss caps energy prices and allows fracking

Dhe new British Prime Minister Liz Truss has presented radical interventions in the gas and electricity markets to keep costs under control for citizens and businesses. With the "energy price guarantee", the energy bill of a typical private household will be frozen at £2,500 (€2,875) a year, the Prime Minister announced on Thursday in the House of Commons in London. At the same time, she wants to issue new oil and gas production licenses in the North Sea and also allow fracking natural gas production on land. In the short term, however, the price freeze is the decisive measure.

Each household saves about 1000 lb, Truss stressed. Without the price freeze, Britain's government-regulated energy bills would have risen from £1,971 to £3,549 from October and, analysts estimate, would have jumped to more than £5,000 or even £6,000 next year. "Extraordinary times require extraordinary measures," said the conservative prime minister about her current intervention. The energy price freeze will dampen the inflation rate by around 5 percentage points and give economic growth a boost.

"Not enough help for families"

The “price guarantee” for private households is now to apply for two years – until the next election at the end of 2024. "We're supporting the country this winter and next," Truss said. For companies, energy bills will initially be frozen for six months. Business associations reacted with relief. "Businesses will welcome this pragmatic intervention to help firms struggling with skyrocketing energy costs," said Jonathan Geldart of the Institute of Directors. The trade union federation TUC, however, criticized the aid package for the citizens as insufficient. There is "too little help for families and too much profit for oil and gas giants".

Truss did not make any specific statements in Parliament about the costs of the measures. Finance Minister Kwasi Kwarteng is due to present a calculation this month. Internally, according to various media reports, there are already government estimates. Economists are guessing up to £100 billion – which would correspond to around 4 percent of annual economic output. According to a rough estimate by the government, it could even be as much as £150 billion, the Times wrote. All estimates are subject to a great deal of uncertainty because they depend on the future development of the gas price. Truss castigated "Putin's war" in Ukraine as the cause of the current problems. The Russian President is using the price of gas as a weapon.

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