Fuel Bank Foundation: poorest households facing a summer of hardship
Charities fear that many households will struggle to pay their energy bills, even once the price cap is lowered this summer (update: Ofgem has confirmed bills will fall 7% this summer, a cut worth £129 per year on an average annual bill).
Matthew Cole, CEO of Fuel Bank Foundation, warned this week:
“The drop in the energy price cap from July may sound like good news, but for many people already struggling to make ends meet, it won’t go far enough. Even in summer, when heating isn’t needed as much, energy is still essential; people need it to cook meals, run a washing machine, stay clean, and keep fridges and medical equipment running. These are basic needs, not luxuries.
“The cost of living is still incredibly high, and many people, especially those who are vulnerable or have low incomes, are dealing with energy debt built up over the last few years of sky-high bills.
“A slight drop in prices won’t fix that. People are still being forced to make tough choices — between topping up the meter or putting food on the table.
Key events
PwC: Energy price cap could rise later in the year
The UK energy price cap could rise again later this year, warns Benjamin Gough, Infrastructure & Regulatory Economics Leader at PwC UK.
Gough says:
“Today’s announcement by Ofgem of a reduction in the energy price cap is good news for domestic consumers, who will see an annual reduction in energy spend of £129 compared to the existing cap.
The decision follows a decline in UK natural gas futures, from a two-year peak of 141 p/th in February, with the downward trend driven in part by the UK experiencing a warmer start to spring and increasing volumes of LNG supply in Europe. Gas futures do remain higher than 2024 currently, leaving a possibility that the cap could still rise later in the year.
That would clearly be bad news for poorer households, especially as energy usage rises in the winter as the cold weather bites.
Cornwall Insight have predicted that the cap could rise to £1,727 per year, for a typical bill, in October-December, so only slightly higher than the £1,720/year set for July-September this morning.
[reminder: the cap applies to the cost of a unit of energy, not the total bill].
Independent Age, a charity providing support for older people facing financial hardship, has warned that too many people in later life living in financial hardship won’t be able to heat their homes, despite the drop in the price cap in July.
Independent Age chief executive Joanna Elson, CBE welcomed Keir Starmer’s u-turn on winter fuel payments, saying:
“The UK Government must use the warmer months to prepare for next winter. Older people on low incomes should be supported so that they have enough money to turn the heating on. We welcome plans announced this week to widen the eligibility criteria for the Winter Fuel Payment, linking it to Pension Credit saw far too many people in financial hardship miss out.
We heard dreadful accounts of people going to bed in hats and coats, limiting themselves to just one meal a day to save money, and having to visit public places to stay warm. We urge the UK Government to act quickly and provide clarity on who will be eligible for the next payment. Nobody should be left in the cold next winter.
In the long-term, the UK Government must implement policies that lift older people out of fuel poverty and ensure financial security. The UK Government should extend the Warm Home Discount beyond 2026, increase payments above the present £150 level, and introduce an energy social tariff.
Here’s a chart showing how UK energy bills will dip this summer, but remain rather higher than three years ago…
Pound hits three-year high vs US dollar
The pound has hit a new three-year high against the US dollar this morning.
Sterling is up around three-quarters of a cent to $1.3488, its highest level since February 2022.
The rally partly reflects relief that UK retail sales volumes jumped by 1.2% in April (see previous post), suggesting consumers are continuing to spend.
George Vessey, lead FX and macro strategist at Convera, says there are several positive factors supporting sterling.
Vessey cites:
Closer trade relations with both the US and EU, a string of positive UK economic data surprises and sticky inflation prompting a less dovish Bank of England (BoE) outlook and the de-dollarisation narrative.
The options market has turned more and more optimistic on the pound’s long-term outlook and hedge funds remain bullish, steadily increasing their long positions since January. This rising demand for sterling suggests further upside potential, especially if asset managers shift to overweight positions in the coming months.
The other side of the trade is that the dollar is falling, amid concerns that investors are shifting away from Us assets due to concerns over Donald Trump’s policies.
That has led to a sell-off in Treasury bonds this week, pushing up the interest rate on US debt.
Those worries mounted this week after the US House of Representatives approved a major bill that would enact Donald Trump’s tax and spending priorities and add trillions of dollars to the US debt (already $36trn and rising).
Sun brings biggest jump in British retail sales in four years
Mark Sweney
Sunny spring weather sent shoppers flocking to supermarkets and specialists such as butchers, bakers and alcohol outlets last month, fuelling the strongest quarterly increase in retail sales in Great Britain in almost four years.
Retail sales volumes soared 1.2% in April, well ahead of City economists’ forecasts of an increase of between 0.2% and 0.4%, marking the fourth straight month of sales growth.
The Office for National Statistics (ONS) said that over the three months to the end of April sales rose by 1.8%, compared with the November to January period, the largest quarterly rise since July 2021.
Martin Lewis: The Price Cap is still a Pants Cap
Martin Lewis, founder of MoneySavingExpert.com, has warned that the 7% cut in Britain’s energy price cap is “nothing to shout home about”.
Lewis, a regular critic of the price cap, points out that energy bills this July will still be 10% higher than at the same time last year.
He adds:
Compare that to the cheapest fixes on the market today, which are 18% below the current Cap, proving the Price Cap is a Pants Cap. It was only ever meant to be a back-stop tariff for those unable to switch, yet during the energy crisis it effectively became a regulated price, and still today, 65% of homes are on tariffs dictated by the Cap.
For all but those on pre-payment meters, where sadly there’s little choice, I’d urge people to get off the Cap, use a whole-of-market comparison site, like www.CheapEnergyClub.com to find their cheapest fix. That will instantly cut people’s bills, without any need to wait until July, and if analysts’ current Price Cap predictions prove true, would substantially undercut the Cap in every period for the next year.
Our recent analysis shows, that at every point over the last twelve months, grabbing the cheapest fix on the market would’ve saved you very substantially over the Price Cap.
Lewis also argues it’s incorrect for Ofgem to say that today’s reduction is a drop of £129 a year. He explains:
That’s not correct. The new Price Cap only lasts three months, so quoting an annualised price is meaningless, never mind an annualised price based on typical use.
Miliband welcomes cut to energy price cap
Back in the energy world, Ed Miliband has welcomed the 7% cut to household bills from July announced this morning.
However, the energy secretary also stressed that the Government will continue to work towards clean energy to get off the “rollercoaster of fossil fuel markets”.
Miliband says:
“This fall in energy bills is welcome news for families across the country and will mean that working people keep more of their money in the coming months.
However, we know that it is only through our mission for clean, homegrown power that we can get off the rollercoaster of fossil fuel markets controlled by dictators and petrostates – and give families and businesses energy security and bring down bills for good.
As we take back control, we are doing everything we can to support people – from consulting on expanding the £150 warm home discount to around six million households next winter, to upgrading thousands of homes so they are warmer and cost less to heat, to reforming our energy market so consumers are better protected.”
Telegraph to be sold to RedBird Capital in £500m deal
The future of the Telegraph newspaper appears to finally have been resolved.
The Telegraph is to be sold to a transatlantic consortium led by RedBird Capital Partners, the paper is reporting this morning, under a preliminary deal.
Gerry Cardinale, the founder of the US private equity firm, has reportedly signed an agreement in principle to acquire control of The Telegraph for £500m.
The Telegraph is being bought from RedBird IMI, an investment vehicle majority backed by the United Arab Emirates, who were blocked from taking full ownership of the group last year.
But this may not be the end of the story, as the Telegraph’s Chris Williams reports:
No final agreements are in place, however.
A rival is attempting to disrupt the sale too, and regulatory hurdles await.
Williams adds that Cardinale plans to target “an intelligent centre-Right readership which is not currently well-served”….
International Paper to close 5 sites in UK, putting 300 jobs at risk
Hundreds of packaging jobs are at risk at UK packaging firm DS Smith, following its takeover by rival International Paper earlier this year.
International Paper has announced this morning it is proposing to close five of its packaging sites in the UK. It is also considering relocating one site, and a “small headcount reduction” at two other sites.
International Paper says the plan will “improve efficiencies” and to respond to customer needs amid “tough trading conditions for the industry”. It is consulting with unions and workers.
International Paper, which took over DS Smith in a £5.8bn deal in January, expects the proposals would be implemented by the end of this calendar year and that approximately 300 roles may be affected.
German economy grew twice as fast as initially expected in Q1 2025
As well as cutting UK energy costs (see earlier), Donald Trump can also take credit for growing the German economy!
New GDP data this morning shows that Germany’s GDP rose by 0.4% in January-March, twice as fast as the first estimate of 0.2% growth in the quarter.
That’s the fastest quarterly growth since the third quarter of 2022.
Manufacturing output and exports grew faster in March than initially assumed, as companies scrambled to beat Trump’s announcement of new tariffs in April.
Ruth Brand, President of the Federal Statistical Office, says:
“The reason for the slightly higher growth compared to the initial estimate was the surprisingly positive economic development in March.”
“In particular, production in the manufacturing sector and exports performed better than initially expected.
Carsten Brzeski, global head of macro at ING, says Trump is making “the German economy great again, for now”, adding:
The German economy had its best quarterly performance since the third quarter of 2022, and the reason for it seems to be Donald Trump. As a result of the announced tariffs and in anticipation of ‘Liberation Day,’ German industrial production and exports surged in March.
Net exports and private consumption drove economic activity in the first quarter, while government consumption and inventories dragged on growth.
The Unite union has warned that UK energy bills will still be ‘sky high’, despite the 7% cut to the price cap in July-September.
Unite general secretary Sharon Graham says:
“Ofgem has lowered its cap, but our bills are still sky high and nobody has any faith left in this regulator, which allows multinational companies to extract obscene profits from our energy system.
We urgently need to reverse the market madness and address the real causes of the lingering energy crisis.”
MoneySuperMarket: UK still faces some of the world’s highest energy bills
British energy bills will still be around 50% higher than six years ago, even after the cut to the price cap in July.
Ashton Berkhauer, energy expert at MoneySuperMarket points out that in 2019, the first year of the cap, a typical energy bill was £1,137 per year – this summer, it’ll be £1,720 per year.
Berkhauer says:
“The reduction in the energy price cap is welcome, if overdue, news for families across the country who have been battered by the cost-of-living crisis. However, even with this reduction, the price cap is still almost 50% higher than when it was first introduced in 20191.”
“For over half a decade, British households have been saddled with some of the highest energy bills of any developed country in the world. The average UK household currently pays around 27% more for their energy than their European neighbours. So, while this latest move from Ofgem is a step in the right direction, many households will still be feeling the impact of high energy bills.”
* UK energy price cap for a typical dual-fuel household paying by Direct Debit since its introduction in January 2019. From October 2022 to June 2023, the UK government implemented the Energy Price Guarantee (EPG), capping typical household bills at £2,500 per year.
Market turmoil after US tariffs helped push energy prices down
Donald Trump, surprisingly, can take some credit for the cut in UK energy bills this summer.
Cornwall Insight (the consultancy which correctly predicted today’s 7% cut to the price cap), says wholesale energy market prices fell following the announcement of US tariffs, prompting this morning’s cut to the price cap.
The fall in prices was also due to milder than average temperatures, and other calming influences on the market, such as the prospect of Europe easing its gas storage rules.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, says:
“This fall in the energy price cap is undoubtedly welcome news for households, offering a degree of relief at a time when many are grappling with high living costs, and rising inflation. Lower prices in the warmer months are helpful, but the real benefit could come in October. With energy use typically rising as we head into winter, any drop in bills later in the year would be especially valuable for families trying to manage the high costs in the lead up to the Christmas period.
“While it’s important to celebrate the small wins, the energy market remains unpredictable. We know recent declines in wholesale prices have helped bring the cap down, but global events – from geopolitical negotiations to shifts in trade and weather – can quickly reverse that trend. Plus, even with the cap coming down, bills are still higher than what we used to consider ‘normal’, so support is still very much needed. The outlook may be improving, but we’re not out of the woods yet, and energy affordability must remain a priority.”
Ofgem: Prices remain hgh despite price cut
Energy regulator Ofgem has also warned that prices ‘remain high’, despite the 7% cut to energy costs this summer which it just announced.
Tim Jarvis, Director General of Markets at Ofgem, says:
“A fall in the price cap will be welcome news for consumers, and reflects a reduction in the international price of wholesale gas. However, we’re acutely aware that prices remain high, and some continue to struggle with the cost of energy.
“The first thing I want to remind people is that you don’t have to pay the price cap – there are better deals out there so it’s important to shop around, and talk to your existing supplier about the best deal they can offer you. And changing your payment method to direct debit or smart pay as you go can save you up to £136.
“In the longer term, we need an energy system where prices are insulated from the volatile international gas market, and which ensures more stable prices and energy security. And we’re working closely with government to get the investment we need to reach our clean power and net zero targets as quickly as possible.
“We’re also doing everything we can to support consumers today and pushing ahead with more changes to help consumers. This includes working on ways to support those trapped in energy debt and bringing in reforms to standing charge tariffs for this winter.”
Table: the new energy price cap
Here’s the details of the new energy price cap, just announced:
Britain’s energy price cap cut by 7% this summer
Newsflash: domestic gas and electricity prices for millions of households across Great Britain will fall by 7% from July – the first drop for a year.
Energy regulator Ofgem has announced that its quarterly cap on domestic gas and electricity charges would fall from July by the equivalent of £129 a year for the average home, due to the drop in wholesale energy prices in recent months.
This is the first cut to the quarterly price cap in a year.
The cut, to the maximum cost of a unit of electricity and gas, means a typical annual dual-fuel bill will drop to £1,720. But, there’s no cap on how high a bill can be.
You can see the details from Ofgem here.
Households which buy their energy through variable tariffs will see an impact on their bills when the cap takes effect in July. But bill payers could still face higher bills if they use more than the typical amount of energy.
However, prices would still be higher than a year earlier, and significantly above levels seen at the start of the decade.
Four years ago, for example, the price cap was set at £1,138 for an average household.
Reaction to follow….
Fuel Bank Foundation: poorest households facing a summer of hardship
Charities fear that many households will struggle to pay their energy bills, even once the price cap is lowered this summer (update: Ofgem has confirmed bills will fall 7% this summer, a cut worth £129 per year on an average annual bill).
Matthew Cole, CEO of Fuel Bank Foundation, warned this week:
“The drop in the energy price cap from July may sound like good news, but for many people already struggling to make ends meet, it won’t go far enough. Even in summer, when heating isn’t needed as much, energy is still essential; people need it to cook meals, run a washing machine, stay clean, and keep fridges and medical equipment running. These are basic needs, not luxuries.
“The cost of living is still incredibly high, and many people, especially those who are vulnerable or have low incomes, are dealing with energy debt built up over the last few years of sky-high bills.
“A slight drop in prices won’t fix that. People are still being forced to make tough choices — between topping up the meter or putting food on the table.
Today’s price cap announcement comes just two days after Prime Minister Sir Keir Starmer signalled a partial U-turn on cuts to pensioners’ winter fuel payments, after a backlash.
Ofgem to set latest energy price cap for household bills
Good morning. British households may learn today that energy bills will fall this summer, for the first time in a year.
Energy regulator Ofgem is poised to announce its latest price cap on bills in England, Scotland and Wales this morning, at 7am, and industry analysts predict it will be cut.
The cap limits how much firms can charge customers for units of gas and electricity, and is set every quarter.
This time, experts are forecasting the cap will be cut for the first time in a year, due to recent falls in the wholesale gas and oil prices. That would lower the energy bills of millions of households across Britain in July-September.
Earlier this week, consultancy Cornwall Insight predicted the cap will be cut by 7% – that would slash around £129 off the annual bill for a typical dual-fuel household this summer, from £1,849 under the current limits.
However, it’s important to note that the cap applies to the cost of a unit of energy – there’s no cap on how large a bill a family can run up.
And as Dr Craig Lowery, a consultant at Cornwall, pointed out on Monday, energy bills were still too high for many.
“Prices are falling, but not by enough for the numerous households struggling under the weight of a cost of living crisis, and bills remain well above the levels seen at the start of the decade.”
“The fall is also a clear reminder of just how volatile the energy market remains – if prices can go down, they can bounce back up, especially with the unsettled global economic and political landscape we are experiencing. This is not the moment for complacency.”
The agenda
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7am BST: Ofgem to announce latest energy price cap
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7am BST: Retail sales report for Great Britain in April
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9.30am BST: Latest estimate for how many UK young people are not in education, employment or training
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3pm BST: US new home sales data
