To prevent businesses from going bankrupt due to skyrocketing energy prices, the British government says it will cap wholesale energy rates for firms this winter.
(AP) LONDON — To prevent businesses from going bankrupt due to skyrocketing energy prices, the British government said Wednesday that it will cap wholesale energy rates for firms this winter.
According to officials, the government would pay approximately half of all business energy bills for six months beginning on October 1 to help businesses “get through this winter.”
“After six months, we’ll reassess it. Prime Minister Liz Truss, who is in New York for the U.N. General Assembly, said, “We’ll make sure that the most vulnerable enterprises, like pubs, like stores, continue to be supported beyond that.
The government’s efforts, according to Treasury Secretary Kwasi Kwarteng, “will stop firms collapsing, protect jobs, and manage inflation.”
The cost of the support package has not been disclosed by officials, although it is anticipated to be in the billions of pounds (dollars).
The announcement came after similar measures to cap domestic energy costs to aid millions of people in heating their homes during a cost-of-living crisis were made earlier in the month.
Inflation in the United Kingdom has reached its highest point in decades as a result of spiraling gas and electricity prices as well as sharply rising food prices. The Bank of England anticipates a recession in the economy in 2019.
Although it marginally declined to 9.9% in August, the consumer price index reached 10.1% in July. The average inflation rate in Britain for many years was approximately 2%.
Once Parliament reconvenes in October, the government is anticipated to push through emergency legislation for the relief plans, with the expectation that the measures will reduce the U.K.’s skyrocketing inflation rate.
The move announced made on Wednesday, according to the British Beer and Pub Association, will act as a “lifeline” for numerous businesses.
According to Kate Nicholls, chief executive of the trade association UK Hospitality, “this action is unprecedented, and it is incredibly encouraging that the government has listened to hospitality businesses facing an uncertain winter.”
On September 8, Truss announced a two-year “energy price guarantee” for households, capping annual heating and electricity costs at 2,500 pounds ($2,872). Beginning in October, the average household bill was predicted to increase by 80% to 3,500 pounds ($4,000) annually, from the existing average yearly price of 1,971 pounds ($2,236).
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