Britain’s government said Wednesday it will cap wholesale energy bills for businesses this winter to ensure companies don’t go bust amid soaring energy prices.
Authorities said the government will pick up nearly half of all business energy bills for six months starting Oct. 1 to ensure companies “are able to get through this winter.”
“We’re going to review it after six months. We’ll make sure that the most vulnerable businesses like pubs, like shops, continue to be supported after that,” said Prime Minister Liz Truss, who is in New York to attend the U.N. General Assembly.
Treasury chief Kwasi Kwarteng said the government measures would “stop businesses collapsing, protect jobs and limit inflation.”
Officials have not provided details on how much the support package will cost, but it is expected to run to billions of pounds (dollars).
The news followed similar measures announced earlier this month to cap domestic energy prices to help millions of people heat their homes amid a cost-of-living crisis.
Spiraling gas and electricity bills, together with steeply rising food costs, have driven inflation in the UK to its highest level in decades. The Bank of England expects the economy to go into a recession next year.
The consumer price index hit 10.1 per cent in July, though it decreased slightly to 9.9 per cent in August. Britons were accustomed for years to an average inflation rate of around two per cent.
The government, which predicted the measures would cut the UK’s soaring inflation rate, is expected to push through emergency legislation for the relief plans once Parliament returns in October.
The British Beer and Pub Association said the move announcement Wednesday would provide a “lifeline” for many businesses.
“This intervention is unprecedented, and it is extremely welcome that government has listened to hospitality businesses facing an uncertain winter,” Kate Nicholls, chief executive of trade body UK Hospitality, said.
Truss announced a two-year “energy price guarantee” for consumers on Sept. 8 that caps average household bills for heating and electricity at 2,500 pounds ($2,872) a year. The household average was expected to rise to 3,500 pounds ($4,000) a year beginning in October, an 80 per cent jump from the current average annual bill of 1,971 pounds ($2,236).