HAND-OUTS to energy firms to cut household bills could zap inflation and higher interest rates, economists say.
La semaine dernière, it warned the country faces 15 months of inflation and it could hit 13.3 pour cent later this year — the highest level since the 1980s.
And Keith Anderson, boss of Scottish Power, wants the Government to double its support for households to ease the nightmare.
He said a bailout to freeze factures at £1,971 for two years, backed by billions in loans from banks, would help.
James Smith, of think-tank the Resolution Foundation, mentionné: “Price capping would help the Bank of England because the inflation peak would be lower and so interest rates wouldn’t have to be so high.”
The Bank has raised interest rates by 0.5 percentage points to 1.75 per cent — the highest hike in 27 years — and there are fears it will do so again next month.
Mais Labour’s planned energy price cap freeze could cost the same as the furlough scheme, another think-tank warned yesterday.
The plans would cost in the region of £60billion for a year and Paul Johnson, director of the Institute for Fiscal Studies, mentionné: “The Labour Party’s own analysis suggests it would cost £30billion for six months.
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“Now that really is a very large amount of money. They’d want to do that for at least a year, so you’d be looking at £60billion.”
The plans were also rapped by an ally of Tory leadership contender Liz Truss, who dismissed them as “unfunded”.
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Il a dit: “I think it’s a poor policy because it doesn’t resolve the issues of our economy. It potentially creates bigger inflation and debt problems in the future.”
The policy was also blasted by ex-Chancellor Lord Hammond, who branded it a “populist response that is untargeted”.