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Britain faces 22% inflation in January as energy giants are expected to rake in £17 BILLION EXTRA profits over the next two years, driven by Ofgem’s price cap
- Investment bank Goldman Sachs predicted inflation will reach 22 percent by 2023
- Leaked treasury figures show energy giants will make an extra £170bn
- The numbers will pressure the next prime minister to enter a windfall
Britain could have 22 percent inflation this winter, leaving millions unable to pay the bills and companies out of business, while energy companies are expected to make an additional £170 billion in profits, putting pressure on the next prime minister for a windfall. to impose tax increases.
Goldman Sachs said inflation will double as the energy bill price cap continues to rise on rising gas prices, with rising food costs and the weak pound also contributing to the crisis sending the UK into recession.
It came as leaked treasury forecasts, published by Bloombergrevealed that the spiral of crisis will benefit energy giants as oil and gas producers earn an additional £170 billion as families face a choice between food and heating this winter.
Boris Johnson, speaking in Dorset on his farewell tour yesterday, has admitted the outlook is bleak but predicted the country and its ‘heroic’ citizens would return next year.
He said: ‘It will be difficult in the coming months. It will be difficult until next year. And that’s because of Putin’s war in Ukraine. Be absolutely no doubt, the gas prices [are] driven by what Putin did in Ukraine. But we’ll get through this.’
The forecasts of £170 billion in profits for energy companies will be handed over by Treasury officials to the next prime minister on September 6, putting pressure on them to levy another windfall to ease the energy crisis this winter.
A tax at the current windfall rate of 25 percent would bring billions of pounds to the Treasury to help help households through the cost of living crisis.
However, the likely winner of the conservative leadership contest, Liz Truss, has repeatedly said she is against new taxes and wants to cut taxes instead in an effort to create economic growth.
Ms Truss said a windfall tax on energy giants huge profits would “send the wrong message to investors.”
Charts show how utility bills could hit the staggering £7,263 next year
UK gas prices skyrocket after Russia began cutting supplies to Europe, sparking a global shortage as EU leaders scramble for supplies
EU prices are at near record levels amid fears Russia may soon turn off the gas tap completely, as leaders are already discussing energy rationing
BP said in August that profits had hit a 14-year high as the gas giant made £6.9 billion between April and June, up from £2.3 billion a year ago.
Shell’s profits reached almost £10 billion over the same period, while Centrica – the UK’s largest gas supplier – made profits fivefold to £1.3 billion. Both companies paid out millions in dividends to their shareholders.
Ofgem announced this week that the energy price cap would rise to £3,549 for average UK households, making bills unaffordable for people across the country.
US investment bank Goldman Sachs has forecast that the price cap could rise another 80 percent next year.
The bank added that inflation could also reach 22.4 per cent by 2023, which would lower UK GDP by 2.3 per cent.
A windfall imposed in May is expected to bring in £5bn in its first year.
Legislation passed in July allows the tax to run until 2025 – it allows companies to reduce the impact of the tax if they invest in oil and gas production that could increase the supply of energy.
The government has so far rejected the imposition of the windfall tax on electricity producers, because rising gas prices have pushed up the price that producers can charge.
Some electricity producers have seen their profits increase even if they supplied less energy.
The leaked figures show that 40 percent of the £170 billion extra profit is made by energy producers.
The Treasury said it did not recognize the numbers and pointed to the money that would be raised by May’s windfall tax.