LONDON – On Thursday, Prime Minister of Britain, Liz Truss will control increasing consumer power prices and encourage alternative energy sources as part of a 100 billion pound (RM517.48 billion) plan aimed at mitigating the economic impact of Ukraine’s war.
With Britain in the grip of a long recession caused by a near-quadruple in home energy costs, Truss, who was named prime minister on Tuesday, has vowed she will take urgent steps to safeguard consumers.
Financial markets have been worried by an increase in government borrowing to pay the assistance package, as well as Truss’ commitment to lower taxes. The pound plummeted to levels last seen in 1985 versus the dollar on Wednesday.
Truss is due to present her plan to parliamentarians at about 1000 GMT.
According to Deutsche Bank, the energy price offset and planned tax cuts might cost 179 billion pounds, or over half of what Britain spent on the COVID-19 epidemic.
The government is also expected to set out new sources of energy supply including the issuance of up to 130 oil and gas exploration licences in the North Sea and a scrapping of a ban on fracking if local communities agree.
“We will take action immediately to help people and businesses with bills but also… to tackle the root cause of these problems, so that we are not in this position again,” Truss said in a statement.
“We will set out our plans to deliver on that promise and build a prosperous Britain for everyone.”
Daunting Challenges For Britain
With industrial unrest also spreading, Truss faces one of the most daunting sets of challenges for an incoming leader in Britain’s post-war history.
Her plan is expected to cool inflation – which at 10.1% is already the highest of any leading economy – but it will add more than 100 billion pounds to Britain’s borrowing, putting more strain on public finances with the energy crisis possibly lasting into next winter.
It also marks a major turnaround from her rejection of “handouts” during the early stages of the Conservative Party leadership campaign.
Charities had warned that millions of households face destitution this winter if the cap on average energy prices were allowed to jump 80% in October and again in winter.
Companies are also at risk. Many have received new energy bills that they say threaten to put them out of business.
According to two sources familiar with the government’s discussions, Truss will announce dozens of new North Sea exploration licences in a bid to boost domestic production.
She is also expected to lift a ban on fracking, which involves extracting shale gas from rocks by breaking them up with water and chemicals at high pressure. It was banned in 2019 after the oil and gas authority said it was not possible to predict the magnitude of earthquakes it might trigger.
Neither of the proposals will provide any short-term relief however as it typically takes between five to 10 years from initial exploration until oil and gas is produced from a field. Fracking projects will require a lengthy planning process.
“If we want energy sufficiency, we have to look at every source including clearly new nuclear or more renewables,” the minister for levelling up, Simon Clarke, told Sky News. “We also ought to look at technologies like fracking… There is a balanced approach to this question.” – Reuters