Vitality disaster: How does the UK’s hovering fuel and electrical energy payments examine with Europe?

Vitality payments within the UK will leap by 80% this winter, the nation’s power regulator Ofgem introduced on Friday, because the Ukraine warfare continues to drive up costs.  

The hike means the common family can pay €4,182 (£3,549) every year to warmth and energy their properties, main NGOs to warn that hundreds of thousands will likely be plunged into poverty — except the federal government steps in. 

However how do UK power costs examine to these throughout Europe? 

These infographics present which European households are forking out essentially the most for his or her fuel and electrical energy payments and people paying the least.

Electrical energy costs

The above chart exhibits how a lot these residing in Europe are paying on common for his or her electrical energy.

Even earlier than at the moment’s hike was introduced, UK households confronted among the highest costs in Europe — practically double France. Solely the Czech Republic was greater than the UK, which was adopted by Italy and Estonia. 

Norway, which has giant reserves of oil and fuel, has the most cost effective electrical energy payments, forward of Switzerland and Malta in second and third, respectively. 

Having not too long ago struck new power offers with Russia, households in Hungary are additionally paying among the lowest charges for his or her electrical energy in Europe.  

The chart relies on information for July and compares costs for households in European capitals. 

To standardise the information — and so make a comparability potential — the costs are adjusted to buying energy requirements (PPS), which eliminates the worth stage variations between international locations by utilizing a man-made frequent foreign money.  

Fuel costs

Utilizing the identical methodology because the earlier infographic, this chart compares fuel costs in Europe. 

Whereas there are some similarities to electrical energy costs — with each Hungary and Serbia paying the least for his or her fuel — most international locations fare in a different way. 

Bulgaria, the Netherlands and Greece are on the unlucky prime spot, with households grappling with power costs approach above the European common. 

The UK, which doesn’t import a single whiff of fuel from Russia, lies in the midst of the chart, though the current value hike is about to push the nation in direction of the higher finish of the pile. 

What has been the long-term pattern for family electrical energy costs?

However are the UK’s greater family electrical energy payments a short lived blip? 

Let’s check out how costs have modified over time in each the UK and EU. 

UK costs have been greater than the EU common for not less than 5 years, with the hole widening within the aftermath of the COVID lockdown and the warfare in Ukraine.

Coinciding with Russia’s invasion in February, costs within the UK have risen far more steeply than within the EU, reaching virtually double the European common in July.

However, with payments hovering lengthy earlier than even whispers of the battle in Ukraine, it seems deeper, extra structural issues are at play within the UK.

Points with how the UK power market is designed and controlled have been cited by consultants as making the nation extra weak to cost spikes.

Some critics say the nation’s totally privatised power market — which will be traced again to Margaret Thatcher’s liberalisation drive within the Nineteen Eighties — is partly in charge. 

What has been the long-term pattern for family fuel costs?

Up till late 2021, the UK loved cheaper fuel than the EU common.  

Nonetheless, since then, Britons have paid considerably greater than these in Europe. The final time in current historical past they paid greater than Europeans was in 2009.

One purpose why costs are rising quicker within the UK is that, whereas the nation solely imports a small share of its fuel from Russia, it depends extra closely on fuel than its European neighbours as a result of it has much less nuclear and renewable power.

The UK additionally doesn’t have as a lot capability to retailer fuel, forcing it to purchase on short-term markets the place there’s higher volatility in costs. 

Whereas fuel costs take off when Russia invaded Ukraine, it’s notable that that they had already begun to speed up far more within the UK than in Europe lengthy earlier than the battle broke out.

COVID, Brexit and a scarcity of efficient power insurance policies and planning by the UK authorities have additionally impacted payments considerably.

So what are European international locations doing about it?

Vitality costs are rising in each European nation, although the fallout for individuals shouldn’t be the identical. 

That is largely attributable to governments stepping in to try to protect households from the seemingly unending surge in fuel and electrical energy costs. 

The UK — ready to know who its subsequent prime minister will likely be — has been criticised for not doing sufficient to assist individuals address the worth will increase. 

In spring the federal government introduced all households will get a £400 rebate on power payments, which means £60 will likely be knocked off power payments each month for six months. 

Nonetheless, power costs have skyrocketed because the measures have been revealed, and from October a typical family will see month-to-month power payments of round £300 a month.

However the scenario shouldn’t be the identical in different main European international locations. 

France

France can also be providing a one-off cost to its residents to assist them face exhausting instances, although at simply €100 that is significantly decrease than within the UK and Italy.

However France has stepped up its sport on the supply, forcing the nation’s state-owned power supplier EDF to restrict electrical energy wholesale value rises to 4% a 12 months. 

This value cap, set to final till 31 December, is likely one of the explanation why the French have among the lowest fuel and electrical energy costs in Europe, as outlined within the above charts. 

Nonetheless, the nation’s largest supply of power is nuclear, which means it’s much less affected by spikes in fuel and oil costs. 

The federal government’s intervention is anticipated to price France €8.4 billion.

France’s Minister of Financial system, Bruno Le Maire, stated in August that entry to a €3 billion euro fund for companies unable to fulfill their power payments could be made simpler. 

Germany

Germany, which is closely reliant on Russian power, has pledged to scale back taxation on pure fuel from 19% to 7%, on prime of measures aimed toward slicing power consumption. 

The German authorities additionally accredited two reduction packages totalling €30 billion to assist its residents with rising power costs this 12 months.

In the meantime, closely subsidised public transport tickets — at €9-a-month — have been supplied to Germans in a bid to alleviate the price of residing disaster and enhance the nation’s inexperienced credentials. 

German households will nonetheless pay virtually €500 extra a 12 months for his or her fuel attributable to a brand new levy — to be imposed from October — serving to utility corporations cowl the price of changing Russian provides.

Italy

In August, Italy accredited a brand new assist bundle price round €17 billion to assist defend individuals and companies from surging power prices. 

This got here on prime of an additional €35 billion put aside since January to combat the price of residing disaster.

Italy has additionally introduced its intention to tax corporations making the most of greater power costs, whereas selling a value cap at a European stage to assist include value spikes.

Hungary

Hungary’s authorities has declared a state of emergency over power, tightening guidelines round value caps. 

In what marked a exceptional U-turn on a key coverage, Hungarian Prime Minister Viktor Orban scraped power value limits for high-usage households, although controls stay in place for these utilizing lower than the common. 

Vitality costs have been frozen in Hungary for nearly a decade, with households having among the lowest fuel and electrical energy payments in Europe since 2013. 

The common Hungarian’s month-to-month electrical energy invoice is available in at round €19, which might be about 5 instances extra if the cap was not in place. 

Vowing that Hungary can have sufficient, Orban has signed new fuel offers with Russia, upsetting the ire of European leaders. 

Spain

Like Italy, Spain has taxed power corporations raking in big earnings from the current power value will increase and pledged to make use of the cash to assist its residents pay their payments.

Madrid has slashed value-added tax (VAT) on pure fuel from 21% to five%, whereas additionally slicing an present tax on electrical energy from 7% down to five%.

The tax discount will start in October and final till the tip of the 12 months, Spain introduced in September. 

In current months, Madrid has elevated the variety of assist plans to try to compensate for the consequences of the rising price of residing for households and companies, with year-on-year inflation topping 10% for the primary time because the Nineteen Eighties. 

Spain at the moment enforces a one-year cap on fuel costs, agreed by the European Fee, which ensures they continue to be decrease than a mean of €50 per megawatt-hour.

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