It has been rather difficult to dissect the current state of the UK economy’s revival.
More specifically, quite how it compares to other major economies across Europe and the world.
The size of the common global economic shocks from the COVID-19 pandemic and Russia’s invasion of Ukraine has been the overwhelming driver of high inflation and slowed growth for most of Europe.
But where are we now, and what is to come?
Inflationary Warnings
Andrew Bailey, governor of the Bank of England, has warned that inflation is set to be higher for longer in the UK. Growth in the economy is set to be weaker too.
A slightly gloomy forecast that has been echoed by the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development, which comprises of 38 member countries.
Andrew Bailey told a European Central Bank forum that –
“The UK economy is probably weakening rather earlier and somewhat more than others… I think that’s been somewhat evident now for a few months.”
He continued on to suggest that he would expect more persistence in the headline rate because of the UK’s energy price cap system. Although it acted to suppress inflation earlier in the year, it has now began to raise it.
Mr Bailey explained that the structure of the price cap could possibly be affecting the timing of the peaks in inflation, but would affect more the timing of the peak rather than its height.
The sterling has fallen against the dollar for the last year, further piling inflationary pressure on for imported fuel and energy. Measures of core goods inflation in the UK are higher than the US too, and markedly higher than in the eurozone.
Post-pandemic challenges
One other key mechanism that has been identified by policymakers is that within the UK, firms see less competition from Europe. This has led to increasing margins and therefore prices. Although Andrew Bailey has said the current figures are hard to be definitive, as post-pandemic supply chain challenges are difficult to distangle from post-Brexit ones.
He concluded that so far a common energy shock can explain most of the inflation that we have seen. The structure of the energy price cap may explain the spike currently, later than the rest of Europe. If inflation numbers stay high in the UK compared to the rest of advanced European and world economies, then fingers may be pointed towards post-Brexit policy changes.
So far, a common energy shock, explains most of the inflation we have seen. The structure of the energy price cap may explain why we have spiked now, later than the rest of Europe. But if over the coming year these inflation numbers stay higher for longer here in the UK than the rest of advanced European and world economies, the shadow of post-Brexit policy changes only really affecting this country will loom large.
Customer Billing – Will I Be Affected?
As already mentioned, energy costs are spiralling – and the price rises are affecting all of us. For UK energy customers it is difficult to say how your bills will be affected due to the serious volatility in the energy markets. It is important to remember that energy prices as a whole are rising, and this will be passed onto consumers through energy bills, making it something to keep a close eye on.
Different suppliers will feel the pinch in different ways so it is crucial to be aware of the current situation your energy supplier finds themselves in. It is possible to view up to date supplier profiles with any recent changes for all of the energy suppliers in the UK, here.
At a time where bills look set to rise due to market volatility, it is also a good idea to ensure that you are not being overcharged for any of your utilities. It can be a tricky task to navigate but there are free online tools to remove the hassle available.
You can find a free online Gas Bill Calculator to see if you are being overcharged, here.
You can find a free online Electricity Bill Calculator to see if you are being overcharged, here.
Energy Solutions by Us, for You
At a time of great uncertainty in global energy markets, it is easy to feel lost in it all.
Keeping up to date with developing situations and the associated ramifications is a tricky and time-consuming job. It is also one that is not likely a priority for you and your business.
So, what do you do?
You partner with energy procurement experts to take the load off of your desk.
Energy Solutions have been trusted brokers for countless businesses for over twenty years, which means we know how to navigate the energy markets during a time of uncertainty.
Contact us today to find out how we can help you and your business
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