The UK is exploring a radical intervention in the power market, under which the state would make payments to energy suppliers when wholesale gas prices rise sharply in a bid to soften the blow to consumers.
The proposal, which is being promoted by energy companies, was described by government insiders as “plausible” and “logical”, but they admitted there were downsides to such a step.
Under the initiative, energy suppliers would receive payments from government when wholesale gas prices exceeded a certain threshold to avoid passing the increase on to consumers.
Some suppliers said the proposal — known as a temporary price stabilisation mechanism — could be self-funding over the course of several years as energy companies would have to return money to the government when wholesale prices traded below the agreed level.
Chancellor Rishi Sunak accepted this could leave the taxpayer heavily exposed if wholesale prices remained high, but he has been discussing ways to mitigate a cost of living crisis with Boris Johnson, officials said.
Five more stories in the news
1. Intelsat chief set for $4m ‘golden goodbye’ Stephen Spengler, the outgoing chief executive of Intelsat, will earn a minimum $4m cash and share payout when he retires after one of the world’s largest fixed satellite operators emerges from Chapter 11 bankruptcy protection this year.
2. US airlines warn 5G rollout will cause ‘chaos’ The imminent rollout of high-speed 5G telecoms services could ground flights across the US, an industry lobby group for America’s largest airlines warned yesterday, as it urged government agencies to intervene to avoid “chaos” for passengers and “incalculable” disruptions to supply chains.
3. Russia’s sanction-proofing weakens western threats Moscow’s effort to reduce its reliance on the global financial system, which investors have dubbed the “Fortress Russia” strategy, could make western threats of sanctions a less effective deterrent from an attack on Ukraine. The EU’s appetite for Russian gas has also made any restrictions on energy exports potentially self-damaging.
4. UK inflation expected to hit 30-year high December’s inflation reading tomorrow is expected to reach a 30-year high, as upward cost pressures spread across the economy. Economists polled by Reuters forecast inflation to hit 5.2 per cent, the joint highest since the early 1990s and up from a decade-high of 5.1 per cent in November, before it peaks in April.
5. Tory MPs relay voters’ outrage over No 10 parties Conservative MPs conveyed a furious backlash from voters over the Downing Street parties scandal yesterday, as a survey suggested a significant number of party activists thought Boris Johnson should quit. Dominic Cummings, Johnson’s former consigliere turned potential nemesis, has roiled Westminster with a steady drip of revelations.
The world’s poorest countries will have to repay an estimated $35bn to lenders in 2022, according to the World Bank, after many rebuffed international relief efforts and turned to the capital markets to fund pandemic responses.
Novak Djokovic could also be barred from playing at the French Open, the government said, after Australia cancelled his visa over his vaccination status.
The chief executive of Moderna said a combined booster shot for Covid-19 and flu could be available “in some countries” towards the end of 2023.
Despite the rapid spread of infections, Pakistan is resisting a lockdown as the government seeks to avoid exacerbating an economic crisis.
The day ahead
Paris Fashion Week The annual fashion extravaganza returns to the catwalk after two years of hybrid virtual events, starting with menswear. (AFP)
Nord Stream 2 Germany’s foreign minister Annalena Baerbock arrives in Russia a day after visiting Ukraine, having indicated that the Nord Stream 2 gas pipeline, which is complete but has yet to be certified, will not go ahead if Russia invades its western neighbour.
Economic data The latest Zew survey, which gauges German investors’ and analysts’ six-month economic outlook, is out. The UK releases its latest labour market statistics and monthly insolvency data, while Opec has a monthly oil market report. (Zew, FT)
What else we’re reading
Has Sony achieved its entertainment ambitions? For years, Sony either created or bought the instruments to achieve its goal of becoming the world’s most fully integrated entertainment company. Critics argued the $157bn symbol of corporate Japan could never quite make the orchestra play in harmony. That now appears to be changing.
Horta-Osório’s flying visit On Sunday afternoon, António Horta-Osório was told that the Credit Suisse board he had chaired for just over eight months no longer supported him after serial Covid-19 quarantine breaches. For the Portuguese banker, who was brought in to turn round the scandal-ridden Swiss lender, it was an ignoble end to his short tenure.
Sloane arrangers Forty years ago, Ann Barr and Peter York wrote The Official Sloane Ranger Handbook, a guide to the styles and stances of a particular subset of the British upper-middle classes — the “typical Brit” recognisable by their dress codes and speech patterns. What’s changed? Is Sloane taste a hidden enclave defying fashion, or has it gone the way of everything else in the Instagram age?
What happened to London’s lost woods? Although it is hard to envisage today, until the end of the 18th century, extensive oak woodlands stretched for seven miles across what is now suburban south London. What remains of them is the nearest ancient woodland to central London.
Why blaming your staff publicly is always a cheap shot Fostering a culture of culpability makes it harder for teams to learn from their mistakes, writes Andrew Hill. Public staff-shaming is a misuse of authority and undermines the shamer by exposing their unwillingness to take responsibility for tasks they delegated.
Things to do in Tokyo
Kathy Matsui is one of Asia’s top financial executives, and her groundbreaking work on gender parity helped shape Japanese government policy. She shares her guide to Tokyo, highlighting female leaders in the fields of art, design and food.