Britain’s new Prime Minister, Liz Truss, announced on Thursday her measures to counter the energy crisis, which include a two-year price freeze for households, ending the moratorium on fracking and re-examining climate targets. from England.
The price freeze saves the average family about £1,000 ($1,150) a year, compared with an 80% increase in the tariff cap that will replace Boris Johnson in October.
He told some MPs, who interrupted him several times during his speech, that companies and institutions such as schools and hospitals would receive “six months of equivalent assistance.”
“It’s time to be bold. We face an energy crisis (…) and these interventions will come at a cost,” he warned, after avoiding questions from the opposition the previous day about how he thought about financing policies. Increasing the UK’s already very high public debt.
Truss said the government would pay energy companies the difference in price, without giving a figure of how much the Treasury could spend: He expects Finance Minister Kwasi Kwarteng to present a budget this month.
The road to carbon neutrality
Truss, a former executive of oil giant Shell, who advocated ultra-liberal policies during his campaign to become the new leader of the Conservative Party, has vehemently opposed imposing more taxes on energy companies to help families.
Among the measures announced Wednesday is the temporary removal of energy taxes, which the UK has committed to achieve by 2050, aimed at financing the transition to carbon neutrality that Truss says he wants to reexamine.
Guaranteed to be “fully committed” to the idea of achieving zero net CO2 emissions by that date, the new prime minister said he wanted to ensure that this did not place an undue burden on companies and consumers.
Truss did not specify how much the total package would cost, which several British media outlets estimated at £150 billion.
That’s more than double the £70bn spent on paying workers who were unemployed during the pandemic quarantines.
It also represents a radical shift from Truss’s campaign, which describes public aid as a useless “palliative” to address underlying problems.
But in the face of rising cost of living, the situation has become untenable. Environmentalists, NGOs and unions have warned of a humanitarian catastrophe if nothing is done about it.
The UK is very dependent on the price of gas, which has increased sevenfold in a year, mainly due to supply problems related to the war in Ukraine.
Truss also announced the creation of a £40 billion fund with the Bank of England to provide liquidity to energy providers in the face of global market volatility.
More hydrocarbon extraction
Despite the cost, the head of government and the new finance minister have assured that the policy will have “significant benefits” for a British economy that is on the verge of recession and inflation is already above 10% and is expected to eventually reach 14%. of the year.
Truss and Kwarteng said in a statement that the new measures would reduce inflation by four to five percentage points.
Paul Dales of Capital Economics says this “should lower inflation and limit the extent of the recession, but would cause interest rates and government debt to rise.”
The Prime Minister also announced an increase in permits for oil and gas extraction in the North Sea and the end of the moratorium on hydraulic fracturing, a controversial fossil fuel extraction method that has so far been banned in the UK.
The construction of nuclear power plants and the production of renewable energy will also be encouraged.
“Decades of short-term thinking on energy issues” and the inability to secure its supply make the UK, which relies heavily on gas imports to meet its energy needs, vulnerable to price crises, Truss said.
source: Noticias
