It is reported that the UK government will set the annual price limit of UK natural gas at 2,500 pounds in the next two years, which brings the prospect of pound strengthening in 2022 one step closer.
A well-known economist said the move actually kept UK inflation close to current levels and avoided the prospect of a recession.
The pound has been sold in recent months as investors fear that the UK will be one of the hardest hit countries under the dual impact of soaring inflation and a decline in economic growth.
Tras' intervention thus subverts this claim, she said the moves could drop inflation levels by 5 percentage points from their expected peak.
Dutch International Group (ING) economist James Smith said the average energy cap of £2,500 per household in the UK will reduce the overall inflation rate by about 5 percentage points. We now expect a peak of 11% in the fall, while our previous forecast was 16% in January. "In accordance with this proposal, we see 2023 economist Simon French, who said he believes that the decline in inflation will reach about 6.3% compared to non-intervention. The second quarter peaked at 16.5% without EPG, compared with the fourth quarter of 2022 peaked at 10.2%. ”
However, the cost of the energy bill cap is a potential resistance for the UK economy and the pound, as the cost will be financed through borrowing. Trass said there is no calculation of the cost yet, but it will be submitted to Parliament.
Some people Worry, the market may be reluctant to fund such borrowing, creating conditions for the UK debt crisis.
However, Andrew Sentance, senior consultant at Cambridge Econometrics, said that in terms of the UK debt/GDP ratio, This ratio may be declining now due to the impact of inflation on nominal GDP. "So, reasonable measures by governments to limit rising energy prices should be quite sustainable," said Sentans. ”
GBP versus USD daily chart
This article is from Huitong.com
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