Households in Britain could face a 25% surge in their energy bills by January, This is Money’s Simon Lambert has told the Daily Mail’s Deep Dive podcast.
The leading financial journalist joined Defence Editor Mark Nicol to speculate on whether the world is heading for its worst energy shock since the 1970s.
It comes after a dramatic few weeks for global energy markets. At the weekend, Ukraine brought Moscow‘s main oil refinery to a standstill in its biggest drone assault on the capital yet, defying Donald Trump‘s demand that Kyiv stop hitting Russian fuel supplies.
Meanwhile, Iran-backed Houthi rebels in Yemen have tightened their grip on the Bab el-Mandeb Strait. This vital waterway is one of the last remaining escape routes for Saudi Arabian oil to global markets, with Iran keeping the Strait of Hormuz closed.
Lambert told podcast host Chris Pleasance that he fears politicians and billpayers alike have ‘lulled themselves into a false sense of security’ over the scale of the problem.
He said: ‘There’s a sense that people have been thinking: “Oh, it’s not that bad. We’re surviving this.”
‘But we may have lulled ourselves into a false sense of security here. I know that’s not what anyone wants to hear about their bills.
It comes after a dramatic few weeks for global energy markets. Houthi rebels in Yemen have tightened their grip on the Bab el-Mandeb Strait. The waterway is one of the last escape routes for Saudi Arabian oil
‘The energy price cap has not risen by that much. In April though, there was an instance where actually some of the costs were taken out, which artificially lowered bills.
‘There are warnings now that the energy price cap could go up by 25% in January. That’s a big hike.
‘Natural gas prices have also reached a three year high. Storage levels are markedly lower than they usually are at this time of the year. That spells bad news for the winter.
‘I think we failed to learn the lesson from the last time round [Russia’s invasion of Ukraine] when there was a scramble to fill gas storage.
‘A lot of gas comes out of the Middle East. Also, liquefied natural gas is unable to come out of the region in the same volume as it was. We don’t buy much of that in this country, but Asia buys a lot of it.
‘Asia will have to go elsewhere to try and buy gas, which will push up prices for us.’
Defence Editor Nicol warned there was little sign of relief on the horizon, with Washington no closer to an exit strategy from its war with Iran.
Nor is there an end in sight in Eastern Europe, he said, with Putin and Trump both acting as ‘laws unto themselves’.
He added: ‘Putin and Trump are wedded to the outcomes of these conflicts.
‘Putin’s trying to avoid his head on a stick. While it’s not a life or death matter for Trump, this is about legacy.
Defence Editor Nicol warned there was little sign of relief on the horizon, with Washington no closer to an exit strategy from its war with Iran. Nor is there an end in sight in Eastern Europe, he said, with Putin and Trump both acting as ‘laws unto themselves’
For the UK, Lambert said the crisis could tempt Andy Burnham to gamble on a snap general election
There is a strong economic case for going to the polls before energy bills soar, Lambert explained, with Labour’s manifesto pledges on tax leaving the Government without the tools to cope with the fallout
‘At the moment, his second term will only be remembered for this catastrophic political mistake in Iran.’
For the UK, Lambert said the crisis could tempt Andy Burnham to gamble on a snap general election.
There is a strong economic case for going to the polls before energy bills soar, he explained, with Labour’s manifesto pledges on tax leaving the Government without the tools to cope with the fallout.
Burnham has publicly ruled out an early election, but speculation in Westminster has refused to die down.
‘Better do it now before everyone’s bills go up 25%,’ Lambert said.
‘Labour made this promise not to raise income tax, National Insurance, VAT or corporation tax in 2024. That’s partially responsible for Rachel Reeves and Keir Starmer being out of the door.
‘They have continued the same mistake as the Tories. Instead of being honest enough to raise the main taxes, they tinker around the edges with smaller taxes. This attack on wealth talk, for example, is really unpopular.
‘The rise in employers’ National Insurance has been held responsible for killing off a load of jobs, at the worst possible time.
‘If they stand on a new manifesto and they don’t put “we won’t raise income tax, National Insurance or VAT” in there, then they can pull one of those big levers.
‘They can also leave out a promise to stick by the triple lock, which Labour promised to do, and that is something that’s really hanging over the UK economy. So, it could get them out of a hole.’
Listen to the full episode by searching for Deep Dive wherever you get your podcasts.
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