Two days after receiving the keys to Downing Street, Liz Truss on Thursday unveiled a massive aid package for households and businesses in the face of soaring inflation and energy prices. The new Prime Minister, conservative with Thatcherite tendencies, has at the same time confirmed tax cuts to stimulate an economy destined for recession at the end of the year. 20 minutes make the point. on these support measures which will cost candy, several media evoking 150 billion pounds.
Energy price freeze
New British Prime Minister Liz Truss unveiled a two-year energy price freeze for individuals on Thursday. Bills for an average household will be capped at £2,500 a year. The measure corresponds to a saving of around 1,000 pounds per year compared to the price increases which were expected on October 1, said Liz Truss, who spoke before Parliament. The latter also announced that energy prices would be frozen for six months for businesses.
Calm inflation
Funding for the energy price freeze is expected to be borrowed from financial markets, which risks adding to debt already skyrocketing during the pandemic. Liz Truss also announced the establishment, with the Bank of England, of a fund of 40 billion pounds to ensure that energy suppliers do not lack liquidity in the face of the volatility of world markets.
However, the cocktail of massive direct aid and tax cuts is frightening the markets, which fear a new serious slippage in public finances after the pandemic.
Boost oil and gas extraction
The new government’s plan also includes lifting the moratorium on hydraulic fracturing and the possible extraction of shale gas and oil in the country, a highly controversial technology with disputed benefits. The previous Prime Minister, Boris Johnson, had himself questioned the impact of “fracking” on energy prices with renewables now cheaper than hydrocarbons.
While the previous government’s strategy already included a revival of exploration in the North Sea, with energy security having eclipsed the climate emergency since the war in Ukraine, the plan presented by Ms Truss hopes for “100 new licenses” of exploration and drilling. Downing Street also wants to increase the share of nuclear power and open new plants in the wake of what the Johnson government already wanted.
Changing course on carbon neutrality?
Liz Truss also announced a review by the end of 2022 of the country’s trajectory towards the goal of carbon neutrality by 2050, to ensure that it achieves it “in a business-friendly and growth-friendly way”. According to several media including the Times, these support measures would amount to 150 billion pounds. That’s more than the £70bn spent on paying the wages of furloughed workers throughout the pandemic.
Liz Truss, who claims to remain “completely committed” to this objective of carbon neutrality, also announced to British MPs the lifting of a moratorium on hydraulic fracturing in the country.