If U.K. energy prices continue to skyrocket on their current trajectory upward, global analysts warn Britain’s inflation could top 22% in 2023. This could impact millions of private sector pensioners due to annual increases being capped well below the double-digit inflation rates.
U.S. investment bank Goldman Sachs predicts inflation could peak at 22.4% and gross domestic product could drop by 3.4% if energy costs keep rising at their current pace. Meanwhile, The Bank of England is warning British households that the energy price cap will soar as much as 80% in the fall which would spike the average annual household energy bill to £3,549 (up from the current £1,971) beginning October 1. Britain’s energy regulator, Ofgem, announced the new price cap is due to rising wholesale gas prices, which have surged 145% in the U.K. since early July.
Approximately 4.5 million private sector pensioners are expected to be heavily impacted due to annual increases being capped at a maximum of five percent each year, which is well below the expected double-digit inflation rates. That means the average 66-year-old pensioner will miss out on £1,200 per year over the next two years and £25,000 over a lifetime.
Although some slight relief is expected with the government promising £400 off energy bills for all, the second installment of a £650 payment for vulnerable households, and £300 for all pensioners, Goldman also warned that the U.K.’s deepening cost-of-living crisis will likely cause it to fall into a recession in the fourth quarter of this year.
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The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
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