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Energy crisis a problem for the wider economy, Energy UK warns as it calls for further action

It is expected the price cap could rise by 50% when announced tomorrow. Image: Getty

It is expected the price cap could rise by 50% when announced tomorrow. Image: Getty

With a day until the next energy price cap is revealed, trade body Energy UK is calling for the government to take action.

In a video released on Twitter, Energy UK CEO Emma Pinchbeck said that the energy industry has been aware that the rise is coming and has been working along with consumer groups to get solutions in place for the general public.

“This remains our priority, but in addition we are calling on the government to take further action as governments all around Europe have done in response to the crisis,” she said.

“When energy prices reach this level, it’s not just a problem for ordinary householders but for the wider economy, for small businesses with cash-flow problems but also as an inflationary risk to every single one of us and to the economy as a whole.”

Pinchbeck added that this is why the trade body believes it's important and justified to intervene, which it hopes will happen when the price cap is announced.

Earlier today is was revealed that Ofgem will be announcing the price cap tomorrow (3 February). It is expected that the price cap will jump significantly, with Cornwall Insight forecasting a rise of 46%. This is due to the high wholesale power prices seen across the latter months of 2021 as well as 2022.

Calls for the government to intervene in the current energy crisis have been increasingly coming in, with charity Resolution Foundation stating last month that the government must take action to avoid a "cost of living catastrophe" as with the increase in the cap the number of households facing fuel stress could reach 6.3 million.

Other suggestions for actions to help resolve the crisis include changes to VAT in the short term and a windfall tax on north sea oil and gas companies.

Meanwhile, last month there were reports that the government is assessing the possibility of cutting the Energy Company Obligation, although this has faced some criticism of being a short-sighted measure.

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