UK inflation forecast to hit 18.6% next year, energy bills may rise to £6000

https://www.ft.com/content/778e65e1-6ec5-4fd7-98d5-9d701eb29567

by cirrus-clouds • 4 years ago

103 232 4 years ago

Summary of the FT article:

- Investment bank Citigroup forecasts UK inflation will hit 18.6 per cent in January 2023 — the highest peak in almost half a century — because of soaring wholesale gas prices.

- The bank predicted that the country’s retail energy price cap — which limits how much the average household pays for heating and electricity — would be raised to £4,567 in January and then £5,816 in April (approx $6880, €6850) compared with the current level of £1,971 a year. It added that the shifts would lead to inflation “entering the stratosphere”.

- UK and European wholesale natural gas prices are already trading at close to 10 times normal levels and other forecasters have also raised their inflation predictions.

- The energy regulator Ofgem will on Friday (26 Aug) announce the energy price cap for the period between October and January, which most analysts expect to rise to more than £3,500 for a household with average usage of energy — an increase of 75 per cent on current levels.

Related article from Reuters: Europe's efforts to shield households from soaring energy costs https://www.reuters.com/business/energy/europes-efforts-shie...

LatteLazy5• 4 years ago

A Mix of Brexit, an aging population, massive underinvestment in basically everything, covid mishandling and huge debt means the UK is around year 0 of a lost decade. I will leave if I can.

cirrus-clouds3• 4 years ago

On top of that, we have a zombie goverment with no solutions or urgency to tackle the cost-of-living crisis.

LatteLazy5• 4 years ago

And our political system basically guarantees the same people will be in charge until Jan 2025?! 2015 me would never have believed how rapidly things could fall apart.

parenthesis• 4 years ago

Don't worry! Move up here to Scotland. The SNP assures us that all our problems will be solved as soon as we are independent!

(Edit: I probably shouldn't have made this comment. Let's just say I am not disagreeing with you.)

ThePadawan• 4 years ago

Thank you for still making it.

I often make comments I feel I need to, and later succumb to the stupid social network reaction of "oh no 3 people downvoted it, surely that means 3 people hate me and no one agrees".

Sometimes things need to be said regardless.

breckenedge• 4 years ago

Since this is also related to higher energy prices, do you think the invasion on Ukraine is also a contributing factor? Although if that were the case, we’d also see as high of inflation in other European countries?

toomuchtodo• 4 years ago

Moving to a European country with less industry and a moderate climate closer to the Med would blunt energy costs for someone (lower energy demand = less energy spend).

rsynnott2• 4 years ago

That's definitely a contributor, but, as you say, it's generally worse in the UK than in other large European countries. This whole thing is a bit of a perfect storm for the UK.

weberer2• 4 years ago

Yes, we're seeing inflation rates across the board above 10%, which is where the UK sits today. Estonia is the highest at 23%.

https://www.statista.com/statistics/225698/monthly-inflation...

Throwawayaerlei• 4 years ago

CF Industries shut down their two nitrogen fertilizer plants in the U.K. back in September 2021 due to high natural gas prices.

LatteLazy5• 4 years ago

It's definitely a contributing factor. The thing is, other nations just have to deal with high gas prices. The UK has to deal with high prices AND:

* being reliant on gas for both heat and power

* a collapsing pound driving prices higher in local currency

* no supply guarantee since we left the EU (we are now "at the end of the pipe")

* some of the most energy inefficient housing in Europe after decades of not investing or taking climate change seriously

* very high taxes, very low spending on poor people and a big deficit (so we have no room to bail out users)

* no domestic storage so we are just constantly exposed to spot prices

And that's just the issue around Russian gas. We also have dozens of other economic chickens coming home to roost...

twelfthnight• 4 years ago

Honest question: Where would you go?

Aromasin• 4 years ago

I've recently started the move over to the Netherlands. The things that were keeping me in the UK (the last vestiges of our socialist governmental policies) have been torn to shreds by the current Tory government. I've also lost any hope that the British public will try to fight for it back. It feels like people are accepting a slip back into feudalism with open arms.

azangru2• 4 years ago

Peter Zeihan thinks that the US is in the best position to weather the coming years :-)

LatteLazy5• 4 years ago

Most places. I wouldn't work in the Middle East for moral reasons.

I'd go to the US or Canada happily. I'd go to the EU. Singapore has a company office and Australia is great from what I saw on holiday.

I have a chat scheduled with my boss in Sept, I might start sounding out a transfer.

throwaway67342• 4 years ago

I understand where you're coming from, but try not to get too pessimistic. The UK has made i through much worse and come out the other end.

data_maan7• 4 years ago

Past success is not a good predictor. Probably the Roman senators at the end of the Roman Empire also thought "oh well, we've been dragging our feet lately, but somehow things will work out".

I would say the most likely outcome is a further diminishing of the UKs international importance, together with some risk of Scotland breaking apart.

Latty11• 4 years ago

I recently went to a small event for a friend, and among the 30-40 young professionals there, this was the resounding mood: the country is fucked and only getting worse, is there a way out? Just generally no one expects things to get better. Standard of living is going down the drain, building stability by buying a house comes with absurd cost.

I think we are heading for a tipping point. Public services are probably already past a point where staff quitting is piling more work on those left, resulting in more people quitting. I suspect there will be a terminal snowball which guts the NHS at least and leaves it unable to function (by design of the Tories, of course).

I suspect the brain drain will be similar. Young people don't want to live in some tax haven, they want a country that functions. Brexit has made it harder, but people will find a way eventually. People were talking Canada, the Netherlands, etc... (Notably for here, very much not the US which is seen as having all of the same problems the UK has).

satysin• 4 years ago

I moved from the UK to [redacted]. While I could not predict the pandemic nor the war in Ukraine I did expect things to get worse in the UK post-Brexit which is why when the UK voted to leave back in 2016 my wife and I started planning to move. It took a couple of years to get things all sorted and we moved in August 2018.

We are actually back in the UK this week visiting family who asked if we miss living here and my wife and I just looked at each other and said "nope!" in unison. It is hard to explain it in a short post here but the UK just doesn't feel "like home" to me anymore.

I am not saying [redacted] is perfect. But our quality of life is much higher in [redacted] than it was in the UK and we are both very happy we followed through and moved.

NickRandom2• 4 years ago

https://www.cnbc.com/2022/08/22/citi-projects-uk-inflation-t...

(alternate link)

jdkee• 4 years ago

“ It appeared that there had even been demonstrations to thank Big Brother for raising the chocolate ration to twenty grams a week. And only yesterday […] it had been announced that the ration was to be reduced to twenty grams a week. Was it possible that they could swallow that, after only twenty-four hours? Yes, they swallowed it. [...] The eyeless crature at the other table swallowed it fanatically. passionately, with a furious desire to track down, denounce, and vaporize anyone who should suggest that last week the ration had been thirty grams. Syme, too-in some more double complex way, involving doublethink-Syme, swallow it. Was he, then, alone in the possession of a memory?”

George Orwell, 1984.

tankenmate4• 4 years ago

Hope is in such short supply in large parts of the UK that false hope, demonstrably false hope, and even doublespeak-esque cynically lying false hope can take hold.

And so a chunk of the masses vacillate between "I believe virtually everything I read, and I think that is what makes me more of a selective human than someone who doesn't believe anything."[0] and "Game over man, Game Over."[1]

[0] This is Spinal Tap

[1] Aliens

CommanderData• 4 years ago

We have a corrupt government and media that itch each others back. There's still a complete lack of urgency.

A potential new prime minister trying to defend profits of energy companies recently on TV just shows you the Modus operandi of the political class.

It might push people to riots in the streets.

mellosouls• 4 years ago

Didn't happen with the bankers 10 years ago, I'm not sure that normal people have the inclination or fight.

blowski• 4 years ago

Some would say they rioted in the ballot box, via the Brexit referendum.

yourusername• 4 years ago

While a lot of people lost money during the banking crisis a lot of people were unaffected. The current inflation crisis means the bottom quartile will probably start to go hungry and be unable to afford to heat their homes. It's not like those people were saving 20-30% of their income 2 years ago and they're now spending 20% of their income on heating and their groceries got 20% more expensive and fuel (for driving) increased by 50-100%.

sudden_dystopia• 4 years ago

True but that was “just” a bad recession, but we never actually recovered from it. Now we are the brink of global war, reeling from Covid supply chain issues, and stagflation all on top of a world economy that has been propped up by central banks for the past decade while simultaneously exploding the money supply and essentially making internet rates zero.

This is the world on modern monetary theory. Not even once.

mattmanser• 4 years ago

Most UK cities had big occupy protests, we had one in my city in the UK for quite a while.

ninjin• 4 years ago

Best of luck. Although I would state that the English Civil War in many ways could be argued to be a mislabelled real revolution [1].

[1] https://en.wikipedia.org/wiki/English_Civil_War#Whig_and_Mar...

Edit: For context, the parent previously stated that this perhaps may become the first real revolution in Britain.

gyre007• 4 years ago

I don’t believe Brits are capable of revolting against this. They did hit the streets in anti-lockdown protests though, which is ironic because in the grand scheme of things that (lockdown) was temporary, but this inflation wave will be madly felt for quite long.

pydry7• 4 years ago

The lockdown protests kind or proved to me that while english people are getting angrier overall, they seem to be getting progressively dumber about how they lash out.

I could foresee riots again like the 2010 ones but I doubt it'd do to much change other than lead to some imprisoned people and property damage.

So, unlike, say, the poll tax riots i doubt itll lead to any meaningful British/English political changes.

It may add fuel to Northern Ireland joining Ireland/Scottish independence though.

wesleywt• 4 years ago

The anti-lock down protesters were a fringe group. An energy crisis is different matter. It will not only affect the lunatic fringe, this will affect everyone.

philk10• 4 years ago

They hit the streets with the Poll Tax riots

cirrus-clouds3• 4 years ago

Imagine if French citizens were facing energy bills as high as the UK (£5,816, €6850). French citizens would never tolerate such levels.

From Reuters: "France has committed to capping an increase on regulated electricity costs at 4%. To help do this the government has ordered utility EDF (EDF.PA), which is 80% state owned, to sell more cheap nuclear power to rivals"

(Source: https://www.reuters.com/business/energy/europes-efforts-shie...)

ojhughes• 4 years ago

The only thing that would cause us Brit’s to riot is a change to caravanning laws

bko4• 4 years ago

From the article:

The investment bank predicted that the country’s retail energy price cap — which limits how much households pay for heating and electricity — would be raised to £4,567 in January and then £5,816 in April, compared with the current level of £1,971 a year.... Nabarro said Citi’s new forecasts had taken account of a 25 per cent increase in wholesale gas prices last week and a 7 per cent rise in wholesale electricity prices.

No price controls can account for the fact that energy prices are up a lot globally. Pretending they're not up and keeping the price cap in place is worse. First it doesn't discourage energy usage. That's a big purpose of prices in a market economy. Second, when something is priced below market price it inevitably leads to shortages. This will have to be addressed through some kind of political action that will be sub-optimal. Rather than a young person seeing higher energy prices and adjusting their AC, while an old person may choose to pay the higher price, you'll see ham-fisted conservation measures.

If you're against having the customer's price reflect more closely the market price, you have to propose an alternative. Do you want people to use less? If so, how do you do that? Or do you want people to continue using the same, pretend the high prices don't exist and just pay for it through taxes? Either way, the money will have to come from somewhere or rationing will have to take place. There's no free lunch

minimaul2• 4 years ago

This is well beyond ‘market prices will fix this’ - market prices will mean a very large chunk of the population will literally be unable to afford to cook dinner and heat their houses.

We already don’t have AC in summers which are growing more and more extreme (regularly over 90F, and sometimes over 100F) - there’s nothing there to turn off.

Edit: Big power retail companies in the UK are making record profits, and so is generation.

Tax that aggressively to start with.

mvc2• 4 years ago

No price controls can account for the fact that energy prices are up a lot globally.

Sure, but how would these energy companies fancy being under the thumb of Putin.

If they want to benefit from the spoils of free markets with consumers who haven't died from covid then they must pay their fair share to maintain them. So whether it's a cap on the prices they can make, or a tax on their profits. Doesn't really matter. The burden cannot be met only by energy consumers.

tomjen33• 4 years ago

The problem is that there isn't enough gas being produced because of the war. The solution to this is to make the gas companies pay war profiteering taxes (say 98%) as their income is soaring because of a war, and use the money to invest in other ways to heat homes. Scotland has a lot of coal, why not start looking at creating coal gas?

Heat pumps would be better, but there is already an insane queue for those.

jollyllama• 4 years ago

The ever-prepared Swiss are preparing for the possibility of riots this winter. https://www.blick.ch/politik/oberster-polizeidirektor-fredy-...

Hyperinflation and energy crisis are here.

rvieira3• 4 years ago

I live in the north of England where temperature varies from 38F in Jan to 57F in August. It's pretty chilly for me, so I tend to spend a considerable amount of gas throughout the year. I'm renting a house, so deep work like insulation gets complicated.

My point is that even with a comfortable salary, I will feel ~£600/month in energy. I can only fear for people that earn much less than me.

Symbiote2• 4 years ago

Why have you converted the temperatures to Fahrenheit? It hasn't been used in BBC weather forecasts in Britain since the 1960s.

rvieira3• 4 years ago

People living in the UK already know the north is chilly, no need to quantify it. I have the impression that the overwhelming majority of HN is from the US, and "chilly" can mean different things depending where you're from.

ghostwriter• 4 years ago

it reminds me of this BBC video from 70s regarding the public opinion on the metric system https://www.youtube.com/watch?v=ykthWUdkhu0

missedthecue3• 4 years ago

Probably for the convenience of the userbase here.

jjgreen• 4 years ago

Used to be that Brits commonly used a dual temperature system, cold weather in Centigrade (brr, -5 outside), hot weather in Fahrenheit (phew, 85 today, what a scorcher!).

andyjohnson0• 4 years ago

I live in the north of England where temperature varies from 38F in Jan to 57F in August

38F = 3½C

57F = 14C

Not sure why you used Farenheit, but I live in the north too and it's colder and warmer than that. Currently 22C (61F) here in rainy Manchester.

rvieira3• 4 years ago

I'm sorry but I don't understand the comment.

First, I'm not in Manchester, considerably more northern, so why try to compare?

Secondly, Manchester's average temperature in August is close to 16C (https://en.wikipedia.org/wiki/Manchester#Climate).

Thirdly what is strange about the temperature on a given day being higher than the average?

gspetr• 4 years ago

Not sure why you used Farenheit

People from Europe likely already have a vague idea of what the temp is like in northern parts of it, and 45% of HN is from US according to https://news.ycombinator.com/item?id=3298905

frumper3• 4 years ago

your 22C conversion is off, 22C = 71F

misja111• 4 years ago

Better buy some warm clothes. Or otherwise you can always hope for global warming to save the day ;)

TrackerFF• 4 years ago

Hopefully the current energy crisis (in Europe) will further accelerate development in renewable energy.

Seems much of Europe is still chained to LNG, and that demand is even wreaking havoc in countries which have been previously quite self-sustained, or really don't use LNG much themselves - with Norway being a good example.

pydry7• 4 years ago

Unfortunately we'd need another 5 years to really make a difference whereas the gas crisis is going to hit us in months.

Someone12342• 4 years ago

True. But 5-years ago this national security reliance on foreign gas prices was well known, and little was done in the intervening time. The worry is that when the current crisis subsides that inaction will yet again fall back into favor.

The solutions are, in part:

- National gas storage reserve (to buffet price/supply spikes somewhat).

- Expansion of green energy.

- Programs to reduce usage (e.g. home and business improvements).

Luckily for the UK extremely efficient heat pump based heating/cooling solutions that offer greater than 100% efficiency exist[0]. It is just a matter of the political will to covert away from gas to electricity and then retrofitting homes.

[0] https://www.energy.gov/energysaver/heat-pump-systems

TrueGeek• 4 years ago

The best time to install a solar panel is 5 years ago. The second best time is today.

alkonaut• 4 years ago

If energy costs a lot, then anyone who can offer to sell energy production obviously has an attractive product. The problem as I see it is that what's needed is plannable capacity. While there is always need for more capacity, what we need most is capacity that works regardless of whether there is water in the rivers or wind in the turbines. And that's not easy. Biomass and Biogas for example.

ephbit• 4 years ago

Biomass and Biogas for example.

Right.

And this has a very important implication. For home owners who're currently deciding which heating technology to replace an oil or gas furnace with.

Biomass and Biogas will be needed urgently in the near future to supply powerplants (of utility order of magnitude) that can then stabilize the electrical grid against the fluctuations that are going to be caused by more and more wind and solar power.

The way I see it - as enticing as it may be - to replace an oil/gas furnace with a wood pellet powered one in our current situation is the wrong choice in the long-term.

The prices for electricity will rise further, yes, but the crucial role of biomass and biogas as one means to stabilize the grid will IMO lead to even greater price increases for the latter.

data_maan7• 4 years ago

There is nothing that needs to be developed for renewables per se, it is already available: https://en.m.wikipedia.org/wiki/100%25_renewable_energy

It just needs to implemented!

Just imagine how much the politicians suck: Science has given them the solution for the energy problem, science has showed how to even make it economically, and has done that already years ago. All politics would have to do is implemented. But they cannot even do that ...

Lyapunov• 4 years ago

Hydro isn't available everywhere and wind as well as solar are unreliable. Energy storage in the required dimension is an unsolved problem too. So whatever you're trying to say here is unfounded.

missedthecue3• 4 years ago

The problem for europe is that solar panels, windfarms, and nuclear power plants don't produce natural gas. Electricity is great, but it's not a replacement for natural gas by itself. In Germany, only 25% of natgas usage is accounted for by electricity production.

tialaramex2• 4 years ago

It isn't difficult to synthesise methane (which is what natural gas is). You "just" need lots of energy. If the problem was "Even if we have plenty of electricity, how will we get methane?" the answer is you just synthesise it. Right now Europe's problem is keeping the lights on and their people alive in the coming winter.

Like many European countries, it is usual to heat German homes with gas boilers. You could (and if we don't want even worse climate change, must) replace those with electrical heating, most likely heat pumps with resistive backup. A heat pump doesn't care whether the electricity powering it is from a solar panel or a wind farm or what.

trashtester4• 4 years ago

Electricity, if the price is low enough, can fully replace almost every use case for natural gas. This will require some level of investment, of course, such as replacing gas ovens with electric ovens (or better, heat pumps) as well as replacing gas machinery with electric alternatives for most industries.

There MAY be a few cases where alternatives are harder to find (where you need the chemistry of the gas rather than the energy), but that is a pretty small percentage overall.

But to produce energy at prices that are competitive to typical prices for NG is pretty hard without either coal or cost efficient nuclear, at least in colder climates. Solar is perhaps close to becoming cheaper in sunny, dry areas further south, but wind power looks like a poor alternative at the scale needed, since it's so unreliable. Maybe one day batteries or other storage will be cheap enough that we can store wind power for a week or more, but for now, it looks like the only low-CO2 option is nuclear.

trgn• 4 years ago

Europe is going to come out strong out of this whole mess.

The political unity so quickly after the start of the war was unexpected (and admirable).

Ten years from now, Europeans will drive electric (if they'll drive at all), solar panels will be everywhere, and the continued flex-work-from-home revolution will have created an enormous amount of extra time for everybody. They'll be comfy in their sustainable homes and healthy cities, those few years of inflation a memory only.

It's a tough transition, that eventually every country needs to make, but Europe will be ahead of the rest of the world by miles.

And in the US, 10 years from now, the next gas price spike will again have people start to whine (yet again), we'll still be coughing on fumes when dropping our kids of at their school, the energy grid will continue to be unreliable in face of every minor or major natural disaster, and we'll wonder why nothing really materially has changed (and then blame the government).

TacticalCoder• 4 years ago

Ten years from now, Europeans will drive electric (if they'll drive at all)

Most cars sold in Europe aren't electric: only 13%. Average car life in Europe is 11 years or something like that. So, no, ten years from now Europeans won't be all driving electric, far from it. Also something like 2/3rd of all europeans live in suburbs or rural: so, yes, they'll still be driving (or using horses). People enjoying the public transports in cities are a minority.

grnmamba• 4 years ago

Given the current uncertainty that people will be able to heat their homes in the winter, the threat of widespread power outages, and the rising cost of living across the board: No, it won't come out stronger. Once the first blackout hits, support for economic sanctions against Russia will evaporate, and people will demand a return to their previous living standards. The idea of a green fantasyland without cars is fiction.

tomjen33• 4 years ago

The price to drive an electric car has spiked recently.

We are in this shit because of Putins war (75% of the blame), Europes general hatred of having a military (15%, say), and finaly Biden not being willing to use military force directly to stop Russia.

We can't do anything about the first, it will take decades to solve the second, but if Biden was willing to take of the gloves, Donbas and Crimera + a good chunk of Southern Russia could be in Ukranian hands come spring.

Then we could open up for their gas fields and end the problem.

Russia will try to push the narrative that this will mean a direct confrontation between them and NATO, but having seen how they do in Ukraine, this hardly matters.

Yes Russia have nukes, and some of their rockets no doubt work, but this scenarios does not trigger their criteria for use of nukes.

timeon2• 4 years ago

The political unity so quickly after the start of the war was unexpected (and admirable).

It was there for few weeks. But soon everyone was blaming others for the situation and not doing enough.

viraptor2• 4 years ago

Hopefully the current energy crisis (in Europe) will further accelerate development in renewable energy.

Or investment into basic insulation and house upgrades. Single glazing and simple brick is still very common in the UK. Many houses could use much less energy if they didn't lose lots of it through the windows and ceilings in the first place.

omnimus2• 4 years ago

UK is not europe anymore :x. European north and center is highly insulated. By law in most coutries.

timeon2• 4 years ago

Wish I was optimistic like you. The other possibility is that there will be more coal (Germany, Poland, Czech Republic are already heavy producers). Norway may cut EU and UK from their electricity production (it seems to be #1 topic there and there were already articles comparing current network with NAZI-era plans on NRK). etc.

chrisstu2• 4 years ago

A looming catastrophe in the UK and the government is doing nothing. I've seen some crazy stuff here over the last 12 years but this is next level.

data_maan7• 4 years ago

No, it is definitely doing something: Arresting people that protest for housing insulation.

ehvatum• 4 years ago

They’re arrested for being street-blocking twats, to the cheers of everyone with somewhere to be. Pooling donations to install insulation would have been fine. But no. No interest in that.

weberer2• 4 years ago

What should they do?

azangru2• 4 years ago

and the government is doing nothing.

What do you think the government should do?

Latty11• 4 years ago

Tax those who can afford it to help those that can't.

At some point if the rich continue to demand sacrifice of the poor to prop up their gathering of wealth, it'll be guillotines in the streets. Historically Britain's upper class has been sensible at offering compromise to avoid extreme change, but it appears the current crop think their control of the media is enough to keep the population placid while they suffer.

So far, they appear to have been right. Who knows how long that'll continue as things get significantly harder for the average person.

numeric83• 4 years ago

Do what the energy companies are suggesting - fix the cap at or about the current price. Establish a government backed fund that will ensure the continued operation of the energy companies. Accelerate the already underway efforts looking at realigning how the UK energy market works (that is - reduce and/or eliminate the link between gas and electricity pricing - due mainly to our over-reliance on CCGT generation). As energy wholescale costs fall over the coming years the energy companies re-pay the support costs.

It does mean we customers will endure higher energy costs for longer - but it will greatly soften the impact on the massive spikes we are set to see over the next 6+ months. It will also have the knock on effect of reducing inflationary pressures, making the need for rapid interest rate rises less likely, reducing borrowing costs.

Look again at what can be done to further enhance and accelerate investments in alternative energy production and storage. This includes looking at tackling planning regulations which so often tie up critical infrastructure projects in the UK for years (sometimes decades), too much nimbyism. Often by peeps who moved next to an existing facility (be it a windfarm, a nuclear plant, etc.) and then complain when it's suggested the plant be extended ... shocker ... who'd have thought that could happen! Invest in a massive, nation wide home insulation scheme - properly invest, not the silly little schemes they've tried so far. Which were badly thought out and badly implemented, and probably full of corruption and wastage.

At the same time continue (and back-date) the "windfall" tax on exploration and production - this wasn't "profit", this was "free money". The companies did not generate this income from improved working practices, efficiency drives, deployment of new technologies, etc. etc. - it was in nearly all senses a windfall. The oil majors are unlikely to invest it ("we don't even know what to do with all this income!" ...), and even if they did it will have absolutely no impact on the lives of UK citizens for years and years - the problem exists now, it needs a solution now.

The whole situation is made more infuriating given the UK produces 50% (+/-) of its own gas. But thanks to our exposure to the prevailing market and the ease of transport to the continent we are suffering as much (heck, more than) many other nations in Europe.

chrisstu2• 4 years ago

Read what numeric83 said. I couldn't have put it better myself. The longer they leave it the worse it gets. But human nature means they won't act until the train hits them in the face.

_448• 4 years ago

With two candidates for the next UK PM having polar opposite views on how to fix the economy, who do you think is more correct in their proposal: Sunak or Truss?

kshacker2• 4 years ago

Care to explain the opposite views? They both come from the same party so presumably have lot in common as opposed to Labor and LibDems.

philipwhiuk2• 4 years ago

Truss thinks trickle down economics of cutting taxing to business will generate growth and stimulate prospects for poor people.

Sunak thinks taxing businesses and the well off so that we can fund support to the less well off is the right approach.

Labour and Lib Dems are further left in that they want to cut off any growth in electricity prices and maybe nationalise electricity firms.

Latty11• 4 years ago

Assuming one has to be "more correct" is a fool's errand. You are talking about the dregs of an already corrupt and ideologically (rather than evidence) driven party that was further culled to only those who were willing to support the current inept and corrupt PM.

The Tories are so out of ideas and people with any talent or charisma, they think these two are the best they have to offer. Both have literally nothing to address this except doubling down on fantasy economics that we can see hasn't worked up to this point.

simonswords822• 4 years ago

Neither one will be held accountable for what they ultimately do so what does it matter what they say prior to appointment?

jongjong2• 4 years ago

I've been whining about how unjust and non-meritocratic the current economy has been for the last 5 years and look at that... These insane inflation numbers are proving me right. I'm quite sure the inflation will continue too. My detractors were in fact gaslighting me the whole time, as I suspected.

The people at the top today are incompetent and lack principles. No better than the corrupt dictators of uncivilized nations. I almost get satisfaction seeing them driving that sinking ship all the way to the seafloor. That's the most meritocratic thing I've seen in a decade.

evandijk702• 4 years ago

Why are these numbers proving you right? Those people that made an decision to transition to a sustainable lifestyle by:

- Isolate their house and/or live in a small, well isolated apartment

- Buy solar panels and a heatpump.

- Save gas by wearing an extra sweater and setting the thermostat a bit lower.

are affected far less by this massive inflation.

Of course, for the 37% in the UK that do not own a house (probably because they cannot afford it) and/or convince their landlord to isolate their property, it is unjust.

Since more people own their house than rent it seems that this particular inflation wave makes the economy more just rather than less just, given that the biggest polluters are hit the the hardest.

jongjong2• 4 years ago

Inflation means that currency is losing value. That's what happens when people receive money that they don't deserve (I.e. they didn't actually provide an equivalent amount of value back to society); it ends up devaluing the currency. IMO, what we're seeing is the tip of the iceberg. It just took some time for reality to catch up. If I'm right, inflation will only get worse because the mis-allocation of resources only seems to have become worse. I'm not seeing any improvement - I'm seeing people doubling down on bad decisions; people with money appear to be increasingly erratic. I'm not seeing anyone adjusting their strategy.

tialaramex2• 4 years ago

The word you probably want is "insulate". A thermally insulated house (it's common to skip the word "thermally" but we can insulate for noise for example) will retain heat better and thus be less expensive for the same volume to heat during a cold winter.

If the house was isolated that might actually make heat loss worse, because it suggests other homes are quite distant. For example my sister's house is an "end terrace" so one wall of it won't lose much heat since the other side is somebody else's house and no doubt they also keep warm in the winter. In contrast my mother's house is perched up on a hill, I wouldn't quite describe it as "isolated" but certainly she's going to spend a lot of money heating it.

M2Ys4U4• 4 years ago

Even for the people that own their own home there's also the capital required to install insulation, solar panels or a heat pump.

How many of those home owners do you think have tens of thousands of pounds just laying around that they can spend on those upgrades? (and that's after taking in to consideration the grants available)

data_maan7• 4 years ago

Three things:

1 Renewables: The solution exists already but no gov't (in particular the UK) is implementing it: https://en.m.wikipedia.org/wiki/100%25_renewable_energy

2 The UK gov't rather is arresting people demonstrating for housing insulation. This is probably the dumbest thing a gov't can do, since insulation is a "bipartisan" issue and everybody would profit from it.

3 On top of this the UK is on the verge of picking a fight with the EU and risking a trade war by its illegal and unilateral changes to the Brexit agreement. NI political issues aside, no sane gov't would do that at this point in time.

automatic61312• 4 years ago

If you glue yourself to a road, you could be supporting an end to pedophilia, but I'll still cheer the coppers arresting you so I can go where I want.

data_maan7• 4 years ago

Somehow this sounds to me like you would rather support pedophilia than see your precious right to "go where you want" restricted.

Standard hedonism of the typical climate change deniers here. Go on, people, nothing to see ...

Reason0772• 4 years ago

"Renewables: The solution exists already but no gov't (in particular the UK) is implementing it"

The UK govt has done better than most on renewables in the past decade. Wind energy in particular. In 2020, wind power supplied 24.8% of all UK electricity, and this will continue to increase as major new wind farms - some of the largest in the world - come online in the coming years:

https://en.wikipedia.org/wiki/Wind_power_in_the_United_Kingd...

The UK grid should begin to have periods of 100% fossil-free generation by 2025:

https://www.nationalgrideso.com/news/great-britain-track-per...

data_maan7• 4 years ago

You say "better" but you're not giving a comparison.

The UK doesn't appear anywhere in the ranking on the Wikipedia link of countries with >90% electricity from renewables.

You're last link also pertains to electricity only BTW (you make it sound like all energy is considered) and the UK aims for 2025 to have "periods" of fossil-free electricity generation, while other countries do that already today and not just for "periods".

I'm sorry, but the UK sucks.

My only consolation to you is that a number of other western countries also suck.

throwaway220328• 4 years ago

We should probably ban loads of our low paid workers from entering the country, print a load of money and give it to people, tell the remaining workers to stay at home, change all of our working practices so that they don't match our infrastructure, and unilaterally sever trade with partners that sell us energy.

What could possibly go wrong?

yrgulation4• 4 years ago

"ban loads of our low paid workers"

wait until you learn how much lower people are getting paid now that they depend on a work visa. hint: a lot less than europeans coming in pre-brexit.

ak_1112• 4 years ago

You need to factor in the cost of training them and their quality of service. For example European drivers usually have better English skills or have worked in similar coffee shops before, used to driving in Europe, familiar with cleaning and construction regulations, ...

bko4• 4 years ago

I agree with the printing a lot of money being a problem. But in terms of low cost labor, I don't think that labor expenses are a huge expense to energy production.

throwaway220328• 4 years ago

Our inflation is not solely due to energy costs.

rich_sasha• 4 years ago

There are whole sectors of economy begging for employees, or curtailing services due to lack thereof. Some people are perhaps happy with that but it must be impacting inflation.

Childcare and retail come to mind if you like examples.

spaceman_20202• 4 years ago

Inflation aside, does anyone think that they’ve really screwed with society with the lockdowns, the money printing, the vaccine mandates, and the work from home mandates?

Everything feels very broken. Nobody wants to work. Even people who have been asked to come to the office are screwing off at least 1-2 days of the week and no one is able to do a thing.

A massive group of people are essentially walking around with zero faith in their government. If they’re not hostile, they’re apathetic.

Money is still completely wonky. All older economic indicators have stopped meaning anything because money has stopped meaning all that much.

Healthcare feels even more broken than before. You’ve got more deaths than ever and chronic sufferers are the worst hit.

I feel very pessimistic when I look at the world right now. Everything feels very chaotic and I don’t see a way out of the disorder.

throwaway220328• 4 years ago

Yes, this matches how I feel.

The world was just very different pre-2020. It's all just gone phone call nonsense. Everyone is slacking off, productivity is through the floor, endless queues for everything, shortages, public transport use way down, etc.

I haven't even had a proper full time job since then because as far as I can tell literally 0 work from office jobs exist any more. They just went extinct.

The idea of even using an indicator like inflation to capture this is weird because there's been a qualitiative, not quantitative, change in what life is. It's not just "before but a different % of things".

phantomathkg2• 4 years ago

Explain why you think people is slacking, please?

viraptor2• 4 years ago

Nobody wants to work.

True since at least 1894 https://twitter.com/stephenlautens/status/155123736437847654...

nicbou• 4 years ago

It feels like that among my friends. Our situations are comfortable but there's nothing to look forward to, so we just coast. It's not like we can afford a house or any sort of retirement. Everyone seems quite cynical, but not willing to kill the mood by talking about it.

It's just weird.

t0bia_s• 4 years ago

Well... Faith in economy and money is falling down. Hopefully society realize what is really important in live. I thing we live in changing times. Which is interesting actually and I'm really surprised how we adopt to the new values.

But yes... Lockdowns are major reason of so called "inflation". Caused by few corporates. But I'm not sure if majority reflects that.

O__________O• 4 years ago

For selection of non-paywall sources, click Google News search below:

https://www.google.com/search?q=UK+inflation+to+hit+18.6%25+...

phantomathkg2• 4 years ago

http://archive.today/t0oH2

rdevsrex• 4 years ago

As many pundits have noted, the UK needs to negotiate good trade deals before its bargaining positions weakens further. Looking at the forecast, it might already be too late for that.

linuxftw2• 4 years ago

Inflation isn't causing this. Inflation is devaluing of the currency. What's causing this is increased acquisition costs due to public policy.

6K seems reasonable for a family's annual energy bill. Frankly, it seems on the lower end for such a climate. What's really absurd in the UK is property prices. You'd be able to afford all the energy you desire if you weren't paying 10x what it should cost for housing.

TomNomNom• 4 years ago

I strongly disagree that nearly 20% of the median household income (£31,400 [0]) is reasonable for a family's annual energy bill. Median income for the poorest 20% is £14,600 - the chances they could afford £6k a year on energy are slim.

Are you really suggesting that housing costs should average around £1400 per year (about one tenth the average annual rent [1]), but energy costs more than 4 times that amount are reasonable?

[0] https://www.ons.gov.uk/peoplepopulationandcommunity/personal...

[1] https://homelet.co.uk/homelet-rental-index

linuxftw2• 4 years ago

Are you really suggesting that housing costs should average around £1400 per year

Relative to wages in the UK, absolutely. The working class is getting absolutely fleeced over there.

I strongly disagree that nearly 20% of the median household income

Same thing here, there's two sides to every equation. The UK has to import almost all of it's energy, importing is expensive.

It seems to me, global energy demands are outstripping supply, and energy is going to become a permanently larger portion of everyone's budget. The way of life we've enjoyed the last 70+ years in the western world, that life is quickly changing.

arcturus173• 4 years ago

On exactly what assumptions and calculations could you come to the conclusion that 6k GBP / year is reasonable energy spend for an average household in the UK?

simonswords822• 4 years ago

I know it might seem obvious to some that the bill is annual but I wish BBC/FT et al would be clear that this is an annual figure

blitzar2• 4 years ago

Its a catch 22 - people are too stupid to understand £0.50 per kWh up from £0.28 per kWh will be the new price cap so they do the really stupid average annual bill. However, it turns out people see the headline say £3,000 or whatever, and believe that is what their bill will actually be, irrespecitve of their usage.

HunchedOver• 4 years ago

The young will be expected pick up the tab for the old, despite owning none of the assets.

It would not be a surprise if there are policies announced to further tax the young to give 'Granny' more free money off her bills (the existing winter fuel allowance is not means tested), and further free transport round major cities (over 60s travel London free). Then there's the echoes of the lockdown nightmare, mass punishment of the young so the old could feel safer.

The response to any complaints about this generational vampirism is always of course; "you'll be old one day". Inheritance is rare to appear, all too often you hear that Granny has given it all to the local cat sanctuary. Patience is running thin and apathy is higher than ever.

If you're young, this country actively punishes and steals from you, then tells you to stop complaining. Finding hope in anyone under 60 is a tough task.

beeboop• 4 years ago

We already see indirect youth tax in the USA in the form of social security - millennials will never see the benefits from their life-long contributions that the current retired age group is seeing. As it is currently benefits will decline 22% in 2034, and even further by the time millennials hit 65+.

dogma11383• 4 years ago

In the UK national insurance is 13.5% from the employee and 15.5% from the employer…

And all you get is £170 a week pension if you are lucky.

So the social security equivalent in the UK comes to about 28% of the salary of most UK workers.

It does only kick in if you are paid more than £240 a week for the employee part and £170 for the employer part, and does taper off for the employee to 3.5% for income above £4300 a month but for all intents and purposes this hold true for most workers.

jwilk• 4 years ago

Archived copy without paywall:

https://archive.today/t0oH2

UK inflation forecast to hit 18.6% next year, energy bills may rise to £6000

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