Lease Truss promises to fix fuel prices 2022-23
Liz Truss has taken over as the new British Prime Minister. In view of the unprecedented pressure under which he took charge, he announced several steps at the outset. The most important of these is the price of fuel. Liz said she plans to set a limit on household fuel costs.
British observers are looking at this matter of Lease Truss very seriously. According to them, if this announcement is implemented, the rate of inflation will not increase much; That means the UK recession will not be as deep. News from The Guardian
UK research institute Capital Economics says that this package will be effective even if it is expensive. Neil Shearing, the agency’s chief economist, said this meant inflation would pick up next month, but not in January. Although then the price range is supposed to increase. This will reduce the severity of recession by half.
Shearing said, “If the new government fixes household gas and electricity prices, inflation may rise to 11 percent in October, although the forecast is that inflation may rise to 14.5 percent in January.” Even then there may be a recession, but we estimate that the contraction of GDP may not be 1 per cent, but 0.5 per cent.
Lease Truss plans to keep household fuel costs under £2,500. Basically this cost will be 1 thousand 971 pounds, with everyone will be given at least 400 pounds in support. And it will cost the government about 90 billion or 90 thousand pounds. The government will collect this money from ordinary taxpayers, not as fuel bills.
To this end, the British government will make legally binding agreements with energy companies. Through this the wholesale price of fuel will be determined.
Liz Truss came up with a big challenge
Liz Truss took office on September 6. The timing is not good for him. On this day, it was reported that the manufacturing sector of the United Kingdom contracted in August. S&P Global and the Chartered Institute of Procurement and Supply (CIPS) reported on the manufacturing contraction. Also said, this contraction has intensified. Along with the manufacturing sector, the condition of the service sector is also not good. It has been said that the service sector of the country has become weak.
According to a joint report by S&P Global and CIPS, UK companies are facing additional costs of doing business. This situation has arisen mainly due to the increase in the price of energy due to the war between Russia and Ukraine. Although the country has set limits on household fuel consumption, it does not apply to businesses.
The country’s Purchasing Managers’ Index S&P/CIPS fell below 50 in August. The value which was 52.1 in July has come down to 49.6 in August. If it is above 50, it can be understood that the private sector is expanding.
Meanwhile, UK inflation is now over 10 percent. It is also known that the consumption expenditure of the common people has decreased in this reality. Associations of retail traders there said that people’s purchases decreased in August.
According to the British Retail Consortium (BRC), sales growth was 1 percent year-on-year in August, compared to 2.3 percent in July.