Section:GDN 1N PaGe:29 Edition Date:190808 Edition:01 Zone: Sent at 7/8/2019 20:42 cYanmaGentaYellowbl
Thursday 8 August 2019 The Guardian •
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FTSE 100 All share Dow Indl Nikkei 225 £/€ £/$
1.2153-0.0042 -0.0016Lower energy price cap will
cut bills over winter by £75
Jillian Ambrose and Jasper JollyEnergy bills for millions of British
households will fall by £75 this win-
ter after Ofgem reduced its price cap on
standard tariff s to refl ect lower costs
for companies.
Under the lower cap, the average
annual energy bill for 11 million homes
will fall from £1,254 to £1,179 through
the winter months from 1 October to
the end of March.
A further four million households
will benefi t from a £25 fall in their
winter energy bill under a separate
cap for pre paid meters. Pre payment
meter customers will pay a maximum
of £1,217, down from £1,242.
The industry’s statutory regulator
said it lowered the price cap to refl ect
falling energy market costs, which
typically make up almost half of the
average household energy bill.
The UK’s tumbling gas andelectricity market prices helped to
wipe out the slightly higher cost of
investing in energy networks and
renewable energy projects, which are
paid for through bills.
Dermot Nolan, the chief execu-
tive of Ofgem, said: “The price caps
require suppliers to pass on any sav-
ings to customers when their cost to
supply electricity and gas falls.
“This means the energy bills of
around 15 million customers on
default deals or pre payment meters
will fall this winter to refl ect the reduc-
tion in cost of the wholesale energy,”
he said.
The regulator introduced the energy
price cap on 1 January after sustained
pressure from the government to stop
energy companies from taking advan-
tage of loyal customers.
Under the price cap, energy com-
panies are allowed to make only £21 of
profi t from the average annual energy
bill, which has dealt a heavy fi nancial
blow to the biggest suppliers.Ofgem estimated the cap would
eff ectively save bill payers £1bn by cut-
ting “overcharging” from the energy
market.
British Gas has taken the brunt of
the fi nancial blow after warning that it
would lose £300m this year as a result
of the cap. Its owner, Centrica, is also
cutting thousands of jobs and hashalved dividend payouts to sharehold-
ers, which include 60,000 individuals.
SSE was also forced to issue a profi t
warning before revealing it had lost
£176m from its supply business by the
end of March, only three months after
the cap was brought in.
A spokesman for SSE said the price
cap is “rife with unintended and unde-
sirable consequences”.
“We believe that vulnerable cus-
tomers who face particular barriers
may require continued support but
wider price interventions are unhelp-
ful,” the spokesperson said.
The company is calling for the gov-
ernment to replace the current cap
with a regularly published benchmark
price which would act as a guide for
consumers to pinpoint a fair price.
Greg Jackson, the chief executive of
Octopus Energy, said: “I’m sure the Big
Six lobbyists will be trying to get the
government to drop the cap, but it’s
proven to be as important in protect-
ing energy customers as the minimum
wage is for workers. ”
Peter Smith, a director at the fuel
poverty charity NEA (National Energy
Action), said more should be done to
protect the fuel poor, including more
tax-payer funded support.
“We must also address the main
causes of fuel poverty, and invest
central government funding back into
energy effi ciency,” he said.Recession fears
in Germany as
US-China trade
war hits exports
Phillip InmanGerman industrial production has
suff ered its biggest annual decline in
nine years after the escalating trade
war between the US and China took
its toll on exports.
Europe’s economic engine, which
has increasingly relied on exports to
Asia to bolster factory output , was left
teetering on the edge of recession in
the second quarter following a 1.5%
fall in industrial production in June
that is expected to be repeated in July.
Output fell across the three months
to June by 1.8% compared with the fi rst
quarter of the year, driven by steep
drops in metal production, machinery
and car manufacturing, the economy
ministry said.
“Industry remains in an eco-
nomic downturn,” the ministry said.
Production in construction fell 1.1% in
the second quarter while energy out-
put dropped 5.9% in the same period.
Analysts blamed the slump largely
on a decline in sales of machine parts
and cars to China and the east Asia,
where falling currency values have
made imports more expensive.
Fiona Cincotta, senior market
analyst at City Index, said: “If tradersneeded further evidence of the slow-
ing global economy, they only needed
to look towards German industrial pro-
duction fi gures.
“As if on cue and adding to traders’
woes, data from Germany showed that
industrial production dropped 1.5%
month on month in June, signifi cantly
worse than the -0.5% decline forecast.”
Fears that the global economy is
sliding towards recession have grippedfi nancial markets in recent weeks. A n
escalation of the trade war between
the US and China heightened tensions.
President Donald Trump threat-
ened to expand the number of Chinese
goods aff ected by punitive tariff s and
accused Beijing of being a currency
manipulator for allowing the yuan todecline in value. China responded by
accusing the US of breaching interna-
tional trade rules.
The German economy ministry
cited Brexit uncertainty as a further
reason for caution.
Ralph Solveen, a Commerz-
bank economist, said : “A look at the
individual sectors shows that the
crisis in the automotive sector is con-
tinuing unabated.” He added that car
production had not recovered from the
slump caused by problems associated
with last year’s switch to a new
emissions measurement standard.▲ German carmakers have been
badly hit by falling demand in Asia
PHOTOGRAPH: NATAN DVIR/BLOOMBERG/GETTYInvestors in
search of safe
haven assets
send price of
gold soaring
Sean FarrellThe price of gold yesterday rose to
$1,500 (£1,235) an ounce for the fi rst
time in six years as investors sought
shelter in low-risk assets amid
mounting concerns about the global
economy.
The spot gold price rose 1.75% to
$1,500.29, its highest level since 2013,
taking the metal’s gains this year to
17%. Gold is considered a safe haven
asset and investors traditionally buy
into it at times of economic or politi-
cal instability.
The value has grown as fears have
increased that tension between the US
and China could become a full-scale
trade war. The US gave assurances that
the next round of trade talks would
go ahead in September, but markets
were also alarmed by interest rate cuts
in New Zealand, India and Thailand.
Weak German industrial produc-
tion fi gures for the second quarter
also raised fears about a contraction
in Europe’s biggest economy.
Other safe haven assets were also
in demand. The yield on 30-year US
treasuries fell to 2.145%, not far from a
record low of 2.089% set in June 2016.
Yields have been turning negative
on government bonds as fears about
the global economy have increased.
Negative yields mean investors are
prepared to pay to park their money
in assets they believe are safe.
Last week, the German 30-year gov-
ernment bond yield went negative for
the fi rst time, and some analysts think
the same could happen for US govern-
ment bonds.
Joachim Fels, an economic adviser
to the bond investor Pimco, wrote on
his blog: “What was once viewed as
a short-term aberration – that credi-
tors are paying debtors for taking their
money – has already become common-
place in developed markets outside
of the US.
“Whenever the world economy
next goes into hibernation, US treas-
uries, which many investors view as
the ultimate safe haven apart from
gold, may be no exception to the neg-
ative yield phenomenon.”
President Donald Trump put pres-
sure on the US Federal Reserve to
reduce interest rates, tweeting that the
central bank should “cut rates bigger
and faster”.
The yen and the Swiss franc, tradi-
tionally seen as low-risk currencies,
rose. The yen rose 0.7% to 105.6800
against the dollar and the franc gained
0.6% to 0.9702.£1,217
The maximum amount prepayment
meter customers will pay this
winter, a drop of £251.5%
The fall in industrial production in
June, contributing to a decline of
1.8% in the second quarterРЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS