Analysing The Political Economy

Energy Prices - 'Could Persist For Another Year And A Half'

At The Economic Times, we have consistently warned that both the cost-of-living crisis and inflation is not a transitory event as most economists predicted that will somehow disappear after a few months. There is now a whole number of reasons why the Western world is facing up to a new era. Energy prices is just of them.

Michael Lewis, the chief executive of E.On, said that energy prices could persist for at least another year and a half and that the number of households in fuel poverty could double in the autumn. Lewis went on to say that this would equate to“unprecedented” hardship for families who would experience fuel poverty.

Fuel poverty is defined as spending more than 10 per cent of disposable income on energy bills to maintain an adequate standard of warmth.

Rishi Sunak, the chancellor, has, so far, refused to extend some real help to these households and is reportedly looking at ways of imposing a temporary levy on energy companies to ease the cost-of-living crisis.

However, pressure is mounting and a u-turn is more likely for the Treasury to impose a windfall tax on oil and gas companies before the winter arrives.

Seven in ten Britons are in favour of a windfall tax. This is amid a dive in popularity for the Conservative party throughout the Partygate scandal – amongst many others. 62 per cent of the electorate disapprove of the government of Boris Johnson, up 20 points in one year. In addition, 60 per cent think that the most important issue facing the country is the economy, followed by health – both of which are not going well at all.

Energy prices are now a significant political issue just as the economy is expected to enter a recession this year with 7 million people on NHS waiting lists.



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