Current electricity prices in the UK are rising fast. According to Investec Bank Plc, the price ceiling paid by households for energy for the year has crossed £4,000 for the first time. Household spending could jump to £4,210 soon. Before the Ukrainian crisis, the figure remained at just over £1,100. This comes on top of a rate hike by the Bank of England and warnings of an impending recession. 

Bank analysts’ forecasts are an extremely bleak outlook for households. On Thursday, regulator Ofgem said in addition to the data that the price ceiling will be adjusted quarterly, rather than biannually, to better accommodate market volatility. Updating the ceiling more often will allow the British government to more quickly adjust subsidies for citizens to the worsening energy crisis, which should ease price pressures. We see a similar situation today with European electricity prices. 

Rising energy prices have prompted the Bank of England to raise its forecast for peak inflation to 13.3% in October. The regulator warned that costs will remain elevated throughout 2023. The next prime minister will face the daunting task of mitigating the impact and consequences of macroeconomic problems, particularly energy. Johnson’s actions, including geopolitical ones, have blocked effective ways to solve the country’s energy problems.