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.
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.
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.