Pound rises from pandemic lows on Truss’s plan to freeze energy bills – business live

From 1h ago 08. 29 Pound rises from pandemic lows on Truss’s plan to freeze energy bills Tackling the UK’s energy crisis must be high on Liz Truss’s list, and there are a flurry of reports that the next PM will take rapid steps to freeze bills. This has lifted the pound back by almost a cent this morning, to $1.

16, reversing Monday’s selloff which sent sterling to its lowest since March 2020. Truss is expected to unveil an emergency package to tackle the cost of living crisis, to include freezing energy bills for homes and businesses until January next year at least – and possibly until 2024, according to some reports. Truss allies have been locked in talks with energy bosses, thrashing out details of the price freeze.

One option on the table is that energy suppliers will be able to take out government-backed loans to subsidise bills, with the cost then repaid over years to come. The Times reports that Truss is expected to freeze energy bills for every household and business in the country, before the price cap rises by 80% in October. .

css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} Truss, who will be appointed by the Queen today, is ready to cap the cost of gas used for electricity and heating. This would effectively commit the taxpayer to paying Britain’s energy bills beyond a certain level to stop widespread hardship and bankruptcies.

More here: Truss plans energy bill freeze amid fear of mass bankruptcies The Daily Telegraph is reporting that among the measures under consideration was a scheme – costing tens of billions of pounds – to freeze bills until the next general election in 2024. . css-knbk2a{height:1em;width:1.

5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} The Telegraph understands that, among the moves to tackle the cost of living crisis set to be unveiled this week, Ms Truss could freeze energy bills for all households until 2024. The “huge” policy intervention would last longer and cost tens of billions of pounds more than the Labour Party’s proposal to cap prices at their current levels until early 2023. More here: Liz Truss considering plans to freeze energy bills until next election On Monday, as Europe’s gas crisis intensified, the pound fell within a whisker of its lowest level since 1985.

Sterling dropped to a new post-pandemic low of $1. 444, as the US dollar continued to strengthen. The pound vs the US dollar Updated at 08.

37 BST Key events 5m ago Bloomberg: Truss plans £40bn energy-aid package for UK businesses 21m ago Shares in UK retailers, food groups and pubs rise 38m ago Clarke: ‘major intervention’ on energy bills 1h ago Businesses urge Liz Truss to act fast over soaring bills 1h ago Pound rises from pandemic lows on Truss’s plan to freeze energy bills 1h ago Introduction: UK facing ‘serious questions on fiscal credibility’ and risk of sterling crisis Filters BETA Key events ( 6 ) Liz Truss ( 10 ) UK ( 7 ) Bank of England ( 3 ) 5m ago 09. 34 Bloomberg: Truss plans £40bn energy-aid package for UK businesses Bloomberg are reporting that Liz Truss is finalizing plans for a £40bn support package for businesses, to lower their energy bills. The plan would help firms cope with the soaring energy costs, which are making it unviable for some factories, pubs and shops to keep running as prices rise and winter approaches.

Bloomberg’s Alex Wickham says the incoming prime minister has two options to lower businesses’ energy prices – either fix the wholesale price, or set a guaranteed reduction. . css-knbk2a{height:1em;width:1.

5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} Truss is considering two options, either setting a guaranteed unit price that businesses will pay, or a percentage or unit price reduction that all energy suppliers must offer firms, according to documents seen by Bloomberg. The government would agree to reimburse energy suppliers for their losses and the price of energy charged to businesses would be reviewed quarterly. The policy will be announced this month, and the aim is to implement in October when many companies’ energy contracts are ending, according to the people.

Officials are in the process of drafting emergency legislation. If the program for businesses lasted for six months, it would cost about £40bn, the government estimates [ although this would depend on the wholesale gas market, which is clearly hard to predict! ] EXCLUSIVE: HERE IS TRUSS’S ENERGY AID PACKAGE FOR BUSINESSES — she will discount firms’ energy bills by fixing the wholesale price of gas and electricity — government will meet the difference — it will cost around £40 billion for six months https://t. co/jI7UPBz8Oz — Alex Wickham (@alexwickham) September 6, 2022 Truss is considering two options: — setting a guaranteed unit price that businesses will pay for gas and electricity — or a percentage or unit price reduction that all energy suppliers must offer firms — either way firms’ bills will be reduced https://t.

co/jI7UPBz8Oz — Alex Wickham (@alexwickham) September 6, 2022 The plan for business is cheaper than Truss’s £130 billion proposal to help households because industrial users are typically able to negotiate lower energy prices https://t. co/jI7UPBz8Oz — Alex Wickham (@alexwickham) September 6, 2022 Updated at 09. 38 BST 21m ago 09.

18 Shares in UK retailers, food groups and pubs rise UK companies are rallying on the London stock market this morning, amid hopes that Liz Truss’s administration will provide some desperately-needed help to households this winter. DIY group Kingfisher (+5. 9%), and retail chain Next (+5.

3%) are the top risers on the FTSE 100, with hotel chain Whitbread (+4%) and sportswear group JD Sports (+3. 8%) close behind. They would all benefit if shoppers weren’t quite so squeezed by soaring energy costs.

Pub chains Mitchells & Butler (whose chains include All Bar One and Harvester) and JD Wetherspoon have both jumped 6% on the smaller FTSE 250 index, along with bakery chain Greggs , and pizza chain Domino’s . 38m ago 09. 01 Clarke: ‘major intervention’ on energy bills Chief Secretary to the Treasury Simon Clarke has indicated that Liz Truss’s plan to tackle soaring energy prices will be a “major intervention” to help businesses as well as households.

He told BBC Radio 4’s Today programme: . css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “It will come very shortly and there is a clear commitment to rise to the level of events and to provide early certainty to families and businesses that there will be help available to meet the undoubted challenges that this autumn and winter are going to bring.

“So it will be a major moment I think in terms of drawing a line under the sense of uncertainty which undoubtedly is present in the country at this time. ” But Clarke, who has been tipped to become Levelling Up, Housing and Communities secretary of state, wouldn’t fill in the key details on the plan, saying: . css-knbk2a{height:1em;width:1.

5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “It will be a major intervention and it will be something which is fair, fundamentally fair in terms of how it’s structured to look after, as I say, both the current situation, but also the long-term interest to bill-payers. ” 47m ago 08. 52 Although sterling is recovering f rom its lowest level in almost 30 months, it could suffer further weakness if Liz Truss’s government makes policy mistakes that deepen the UK’s economic problems, warns Neil Wilson of Markets.

com. Wilson says Truss’s ‘mooted fiscal largesse’ (tax cuts) could pose inflation risks, with the consumer prices index already soaring over 10% in July. And on ‘Trussonomic’s, he says: .

css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} And what are we talking about here? It’s kind of trickle-down, watered-down Reaganomics (the state is today is huge and she doesn’t have the freedom to cut it back like he did) – lower taxes designed to boost business investment and consumer spending. She talked about a “bold plan to cut taxes”, which might not help the inflation fight much if it’s not terribly targeted.

Plans to look again at the Bank of England’s mandate have clearly unsettled some and left the pound with another headwind. Uncertainty over the NI Protocol being another, sterling has clearly got lots weighing it down and making it particularly unloved. 1h ago 08.

43 We’re waiting to hear the key details of Liz Truss’s plan to freeze energy bills … including how long it will last, how much it will cost, and how it’ll be paid for, as commentator Sam Freedman explained last night: So we have the Telegraph and Mail tonight saying energy bills are to be frozen until the next election and that will cost £100bn. But on my rough calcs it would be over £200bn on current projections. Something doesn’t add up.

. . .

— Sam Freedman (@Samfr) September 5, 2022 Seems to be two different plans being briefed. A two year freeze and a four-six month freeze. Also unclear if funded directly or via banks (which would increase cost but be off balance sheet).

And if done all through borrowing or through a long term levy on bill payers. — Sam Freedman (@Samfr) September 5, 2022 Oh and not clear if applies just to domestic or also business. If also business then two year freeze would be even more.

You can see the discrepancy as Sun are saying £40bn for 4 months and Tel/Mail £100bn for 2 years. — Sam Freedman (@Samfr) September 5, 2022 1h ago 08. 39 Businesses urge Liz Truss to act fast over soaring bills Businesses have been urging Liz Truss to take immediate action on the energy crisis, warning they face astronomical incrases in their bills.

Guy Adams, who has run the Isle of Barra Beach Hotel in the Hebrides for 16 years, may be forced to close his doors to guests for at least a year as spiralling energy bills make business untenable. The hotelier’s annual electricity bill is projected to rise from about £25,000 to £120,000 on top of a wave of price increases expected from suppliers, who are also facing soaring costs. He says the boutique hotel, which lays claim to be Britain’s most westerly, would have to double the prices it charges it guests next year – to a level Adams believes cash-strapped holidaymakers will not pay – unless Liz Truss turns her “pro-business” promises into rapid action.

. css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “We can’t quote anyone looking to book their holidays next summer because we can’t give them a rate,” he says.

“But we are looking like we would have to more than double our rates. If we do that we would not expect anyone to be able to pay that, given everyone’s costs have gone up. We would have paper rates and no business.

“We must now look at not opening next year – shut down for at least a year. We have no option but to put it on the table given the huge overnight increase in energy costs. It will be cheaper to not open than open.

” Here’s the full story, by my colleagues Mark Sweney and Alex Lawson : ‘It will be cheaper to close’: businesses urge Liz Truss to act fast over soaring bills Read more 1h ago 08. 38 The beleaguered pound has received “a much-needed boost” from reports that incoming Prime Minister Liz Truss had drafted plans to avert an energy crisis, reports Bloomberg. But it also warns that “the jury’s out on how long it’ll last”, given sterling’s weakness, and risks of a UK recession.

. css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} The currency has fallen for three straight months but analysts surveyed by Bloomberg expect it to climb to $1.

19 by March 2023. “Sterling is rising on the argument that the UK economy might not now take such a big hit from energy prices,” said Ray Attrill, head of FX strategy at National Australia Bank Ltd. in Sydney.

“The size of potential fiscal support might mean the Bank of England will be emboldened to go even harder to restrain demand to quell underlying inflation pressure. ” Sterling’s Truss boost may prove fleeting as growth fears weigh https://t. co/1jRQ2gy0eU pic.

twitter. com/hnZOa45nhd — Zoe Schneeweiss (@ZSchneeweiss) September 6, 2022 1h ago 08. 29 Pound rises from pandemic lows on Truss’s plan to freeze energy bills Tackling the UK’s energy crisis must be high on Liz Truss’s list, and there are a flurry of reports that the next PM will take rapid steps to freeze bills.

This has lifted the pound back by almost a cent this morning, to $1. 16, reversing Monday’s selloff which sent sterling to its lowest since March 2020. Truss is expected to unveil an emergency package to tackle the cost of living crisis, to include freezing energy bills for homes and businesses until January next year at least – and possibly until 2024, according to some reports.

Truss allies have been locked in talks with energy bosses, thrashing out details of the price freeze. One option on the table is that energy suppliers will be able to take out government-backed loans to subsidise bills, with the cost then repaid over years to come. The Times reports that Truss is expected to freeze energy bills for every household and business in the country, before the price cap rises by 80% in October.

. css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} Truss, who will be appointed by the Queen today, is ready to cap the cost of gas used for electricity and heating.

This would effectively commit the taxpayer to paying Britain’s energy bills beyond a certain level to stop widespread hardship and bankruptcies. More here: Truss plans energy bill freeze amid fear of mass bankruptcies The Daily Telegraph is reporting that among the measures under consideration was a scheme – costing tens of billions of pounds – to freeze bills until the next general election in 2024. .

css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} The Telegraph understands that, among the moves to tackle the cost of living crisis set to be unveiled this week, Ms Truss could freeze energy bills for all households until 2024. The “huge” policy intervention would last longer and cost tens of billions of pounds more than the Labour Party’s proposal to cap prices at their current levels until early 2023.

More here: Liz Truss considering plans to freeze energy bills until next election On Monday, as Europe’s gas crisis intensified, the pound fell within a whisker of its lowest level since 1985. Sterling dropped to a new post-pandemic low of $1. 444, as the US dollar continued to strengthen.

The pound vs the US dollar Updated at 08. 37 BST 1h ago 08. 27 Investors are also concerned that Liz Truss’s administration could undermine the Bank of England’s independence by changing its mandate to fight inflation.

During the campaign, ally Suella Braverman said Truss would look whether the BoE’s current arrangements are ‘fit for purpose’ David Riley, Chief Investment Strategist at BlueBay Asset Management, says an attack on the Bank of England would worry international investors: . css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} Like many other central banks, the Bank of England has been guilty of being too late to respond to the inflation threat.

But anything that smacks of reducing the independence of the Old Lady of Threadneedle Street would worry international investors that are funding the UK’s big twin budget and trade deficits at time when inflation is the highest amongst the G7 economies. Hard choices rather than wishful thinking are required to boost long-term growth potential of the British economy and maintain confidence in the monetary and fiscal policy framework. The credibility of the new Prime Minister’s economic policy programme will be judged in the bond and foreign exchange markets.

1h ago 08. 26 Introduction: UK facing ‘serious questions on fiscal credibility’ and risk of sterling crisis Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets. Liz Truss takes over a country on the brink of recession, with economists warning of the risk of a 70s- style sterling crisis if the UK loses the confidence of the international markets.

The UK’s next prime minister faces one of the most challenging fiscal outlooks of any new prime minister in recent memory, once she’s been appointed at Balmoral today. One of her first tasks will be to announce a major support package for UK households to tackle the energy crisis. But given her leanings towards tax cuts, Truss must tred carefully to avoid spooking the markest, risking a balance of payments crisis.

Deutsche Bank FX Strategist Shreyas Gopal has warned that the risks of a “sterling crisis” should not be underestimated, telling clients that: . css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} The risk premium on UK gilts [government debt] is already rising, coincident with unusually large foreign outflows.

If investor confidence erodes further, this dynamic could become a self-fulfilling balance of payments crisis whereby foreigners would refuse to fund the U. K. external deficit.

“A balance of payments funding crisis may sound extreme, but it is not unprecedented: a combination of aggressive fiscal spending, severe energy shock, and a slide in sterling ultimately resulted in the U. K. having recourse to an IMF loan in the mid 1970s.

Here’s the full story: UK facing 1970s-style balance of payments crisis under Liz Truss Read more Geoff Yu , FX and Macro Strategist at BNY Mellon , says there will be“devastating socio-economic consequences” if the government doesn’t act to prevent energy bills rising from “barely 3% of median household disposable income to closer to 20%”. All European governments are expected to announce their own meaures – and windfall taxes will need to be part of the solution, Yu says. But as Truss has prioritising tax cuts to kickstart growth throughout her leadership campaign, it will be hard for her not to deliver revenue-based easing.

He writes: . css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} This sets the UK up for some serious questions on fiscal credibility – it is already being tested in bond markets.

We share concerns regarding the right balance of fiscal plans in the UK and expect some degree of fiscal risk premia to feature in the near term. However, we think fears of unfunded tax cuts and energy subsidies precipitating a fiscal collapse are not justified. Yu adds that the markets are questioning Truss’s argument that productivity improvements will pay for tax cuts – as she must face a general election in two years.

A closely-watched survey of UK purchasing managers yesterday showed that the UK private sector shrank in August, suggesting a rising recession risk. UK economy on brink of recession as Truss takes over, figures show Read more The energy crisis is also forcing Britons to cut back on spending. The British Retail Consortium (BRC) has reported this morning that sales volumes tumbled last month, with retailers relying on price rises to lift their sales.

Helen Dickinson OBE, Chief Executive at the British Retail Consortium, reports that parents cut back on spending for the new school year, as household budgets tightened. . css-knbk2a{height:1em;width:1.

5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “Retail sales growth slowed in August compared to the previous month as consumers reined in spending amidst the spiralling cost-of-living. While inflation in retail prices is lower than general inflation at over 10%, this still represents a significant drop in sales volumes. For the first time in recent months, clothing sales were sluggish as summer events ended, and parents held back on back-to-school spending.

White goods and homeware remained hardest hit, but products such as air fryers and knitwear did get a boost as thrifty consumers prepare for soaring energy bills. ” The agenda 7am BST: German factory orders for July 8. 30am BST: Eurozone construction PMI report 9.

30am BST: UK construction PMI report 10. 30am BST: Business, Energy and Industrial Strategy (BEIS) committe hearing on the cost of living crisis 3pm BST: US ISM services PMI Topics Business Business live Economics Stock markets FTSE Sterling UK cost of living crisis Reuse this content.