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The latest information on the risks facing gas and electricity supplies suggests there is an increased risk of blackouts this winter – but they can be prevented.

National Grid’s Electricity System Operator’s (ESO) updated report on the pressures facing power generators revealed contingency plans for three-hour blackouts in areas where gas-fuelled power falls short of demand.

A separate National Grid Gas Transmission study suggested that the country would be relying more on LNG (liquefied natural gas) supplies from the US and Qatar this winter.

That is because of uncertainty over whether traditional EU imports would be available because of the squeeze on supplies in the bloc following Russia’s war in Ukraine – intensifying pressure on the UK power grid as a result.

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How would planned blackouts work?

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Here, Sky News examines the pressures on UK supplies, what may be done to help keep the lights on and just how perilous the country’s situation could become if a prolonged cold snap arrives.

How worried should I be about the outlook reports?

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There is no getting away from the fact that these updates make for worse reading that the “early view” released by the ESO in July.

Then, it did not foresee the prospect of the lights going out, despite obvious pressure on supplies across Europe.

Thursday’s warning could not be starker, which is why they hope the risk of blackouts can be averted through an energy-saving scheme that will pay households not to use electricity-heavy products during peak hours and keep five coal-powered generators, that would otherwise have closed, open and on standby. More on the energy-saving scheme later.

Why is gas the main concern?

Gas-fired power stations account for more than 40% of UK electricity generation while gas is also responsible for heating the vast majority of homes.

Natural gas supplies have been severely disrupted since the war – forcing wholesale prices up and threatening much of continental Europe with shortages as most, such as Germany, have previously relied on gas from Russia.

While the UK holds its own in the warmer months, thanks to a mix of nuclear, wind, North Sea gas output and imports from Norway, Qatar and the US, we tend to lean more on the continent during winter to balance the gap between supply and demand.

This is because we lack gas storage.

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How rising costs will affect you

But we have more gas than we need…

It’s true. Currently.

The UK has been exporting gas at record volumes since late spring to help EU nations fill their storage after Vladimir Putin turned off the taps.

The lack of gas storage, however, means that we tend to rely on imports in times of high demand such as winter.

Only 70% of British gas supplies last time around came from the North Sea and Norway. It meant that supplies via ship of LNG and from the continent accounted for the rest.

Read more on Sky News:
Plan for three-hour power blackouts to prioritise heating in event of gas shortages
Amid energy security and price crisis, key winter outlook report takes on particular significance

What are the main threats?

The big one has to be, energy experts agree, the risk of a prolonged cold snap.

Unplanned power station outages too, as well as the inability to import electricity from Europe if there are, for example, nuclear power plant outages in France or gas shortages across the continent. Gas shortages will reduce the ability for EU countries to generate electricity.

The Gas Winter Outlook saw the potential for the shortfall in gas supplies within continental Europe to impact the UK’s ability to secure imports, should they be required.

As a result, it saw LNG acting as the primary source of supply flexibility during the winter months.

“In the unlikely event there is insufficient gas supply available in GB to meet demand, and should the market be unable to resolve the resultant imbalance, we have the tools required to ensure the safety and integrity of the gas system in the event of a Gas Supply Emergency.

“All possible measures would be taken to minimise the extent to which we use these tools”, National Grid said.

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‘What can I do if I don’t have money?’

What are those possible measures and what is a Gas Supply Emergency?

A Gas Supply Emergency can be activated in stages if suppliers are unable to guarantee gas for homes and businesses.

It could mean that some customers, starting with the largest industrial consumers, will be asked to stop using gas for a temporary period.

On the power side, the ability for coal-fired power stations to restart generation has been retained, the ESO previously announced, to help cover any imbalance between supply and demand for electricity.

It has been utilised, most recently, early this year because of poor wind power generation – due to a lack of… wind.

Read more: How much will my bills increase now the energy price cap comes into effect

So what does this all mean for the lights?

The message seems to be that the lights should not go out – but we need your help to achieve it.

The “demand flexibility service” will run from November to March and households can sign up via their energy supplier.

In return for not charging your electric car or running dishwashers, tumble driers or washing machines during times of peak energy use during the day, you will be paid.

It is expected to be implemented 12 times, whatever happens, to ensure people get rewarded for being part of the scheme.

It is hoped it will deliver 2GW of power savings to balance supply and demand, preventing any disruption.

Has anything like the ‘demand flexibility service’ been done before?

Yes, on a big scale for industrial users of energy. Companies can be paid not to use power during times of increased demand in order to balance electricity supply and demand.

A small-scale trial of incentivising households to reduce electricity at peak times was carried out earlier this year with energy company Octopus Energy.

From that trial, the National Grid has been able to say, “we successfully proved the proof of concept for a demand flexibility service”.

Work has been going on between the National Grid, suppliers, aggregators and consumer groups to scale up to making demand flexibility a national service.

Has this been done before anywhere else?

Countries across Europe have been working on plans to reduce their electricity demand.

Just last month France‘s national grid operator said it might have to ask households, local government and businesses to reduce their consumption at peak times. It aims to reduce electricity use by 10%.

Germany has planned to reduce its gas usage by 2% through a range of public and private measures. From last month most public buildings have not been heated above 19C, public monuments have not been lit up and heating private swimming pools has been banned.

Will electricity prices come down?

Not yet. The ESO said on Thursday that, notwithstanding the mitigation measures, it is “highly likely” that the wholesale price of gas and electricity will remain “very high” throughout winter.

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Lloyds Banking Group in talks to buy digital wallet provider Curve

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Lloyds Banking Group in talks to buy digital wallet provider Curve

Britain’s biggest high street bank is in talks to buy Curve, the digital wallet provider, amid growing regulatory pressure on Apple to open its payment services to rivals.

Sky News has learnt that Lloyds Banking Group is in advanced discussions to acquire Curve for a price believed to be up to £120m.

City sources said this weekend that if the negotiations were successfully concluded, a deal could be announced by the end of September.

Curve was founded by Shachar Bialick, a former Israeli special forces soldier, in 2016.

Three years later, he told an interviewer: “In 10 years time we are going to be IPOed [listed on the public equity markets]… and hopefully worth around $50bn to $60bn.”

One insider said this weekend that Curve was being advised by KBW, part of the investment bank Stifel, on the discussions with Lloyds.

If a mooted price range of £100m-£120m turns out to be accurate, that would represent a lower valuation than the £133m Curve raised in its Series C funding round, which concluded in 2023.

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That round included backing from Britannia, IDC Ventures, Cercano Management – the venture arm of Microsoft co-founder Paul Allen’s estate – and Outward VC.

It was also reported to have raised more than £40m last year, while reducing employee numbers and suspending its US expansion.

In total, the company has raised more than £200m in equity since it was founded.

Curve has been positioned as a rival to Apple Pay in recent years, having initially launched as an app enabling consumers to combine their debit and credit cards in a single wallet.

One source close to the prospective deal said that Lloyds had identified Curve as a strategically attractive bid target as it pushes deeper into payments infrastructure under chief executive Charlie Nunn.

Lloyds is also said to believe that Curve would be a financially rational asset to own because of the fees Apple charges consumers to use its Apple Pay service.

In March, the Financial Conduct Authority and Payment Systems Regulator began working with the Competition and Markets Authority to examine the implications of the growth of digital wallets owned by Apple and Google.

Lloyds owns stakes in a number of fintechs, including the banking-as-a-service platform ThoughtMachine, but has set expanding its tech capabilities as a key strategic objective.

The group employs more than 70,000 people and operates more than 750 branches across Britain.

Curve is chaired by Lord Fink, the former Man Group chief executive who has become a prolific investor in British technology start-ups.

When he was appointed to the role in January, he said: “Working alongside Curve as an investor, I have had a ringside seat to the company’s unassailable and well-earned rise.

“Beginning as a card which combines all your cards into one, to the all-encompassing digital wallet it has evolved into, Curve offers a transformative financial management experience to its users.

“I am proud to have been part of the journey so far, and welcome the chance to support the company through its next, very significant period of growth.”

IDC Ventures, one of the investors in Curve’s Series C funding round, said at the time of its last major fundraising: “Thanks to their unique technology…they have the capability to intercept the transaction and supercharge the customer experience, with its Double Dip Rewards, [and] eliminating nasty hidden fees.

“And they do it seamlessly, without any need for the customer to change the cards they pay with.”

News of the talks between Lloyds and Curve comes days before Rachel Reeves, the chancellor, is expected to outline plans to bolster Britain’s fintech sector by endorsing a concierge service to match start-ups with investors.

Lord Fink declined to comment when contacted by Sky News on Saturday morning, while Curve did not respond to an enquiry sent by email.

Lloyds also declined to comment, while Stifel KBW could not be reached for comment.

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UK economy figures not as bad as they look despite GDP fall, analysts say

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UK economy figures not as bad as they look despite GDP fall, analysts say

The UK economy unexpectedly shrank in May, even after the worst of Donald Trump’s tariffs were paused, official figures showed.

A standard measure of economic growth, gross domestic product (GDP), contracted 0.1% in May, according to the Office for National Statistics (ONS).

Rather than a fall being anticipated, growth of 0.1% was forecast by economists polled by Reuters as big falls in production and construction were seen.

It followed a 0.3% contraction in April, when Mr Trump announced his country-specific tariffs and sparked a global trade war.

A 90-day pause on these import taxes, which has been extended, allowed more normality to resume.

This was borne out by other figures released by the ONS on Friday.

Exports to the United States rose £300m but “remained relatively low” following a “substantial decrease” in April, the data said.

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Overall, there was a “large rise in goods imports and a fall in goods exports”.

A ‘disappointing’ but mixed picture

It’s “disappointing” news, Chancellor Rachel Reeves said. She and the government as a whole have repeatedly said growing the economy was their number one priority.

“I am determined to kickstart economic growth and deliver on that promise”, she added.

But the picture was not all bad.

Growth recorded in March was revised upwards, further indicating that companies invested to prepare for tariffs. Rather than GDP of 0.2%, the ONS said on Friday the figure was actually 0.4%.

It showed businesses moved forward activity to be ready for the extra taxes. Businesses were hit with higher employer national insurance contributions in April.

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The expansion in March means the economy still grew when the three months are looked at together.

While an interest rate cut in August had already been expected, investors upped their bets of a 0.25 percentage point fall in the Bank of England’s base interest rate.

Such a cut would bring down the rate to 4% and make borrowing cheaper.

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Is Britain going bankrupt?

Analysts from economic research firm Pantheon Macro said the data was not as bad as it looked.

“The size of the manufacturing drop looks erratic to us and should partly unwind… There are signs that GDP growth can rebound in June”, said Pantheon’s chief UK economist, Rob Wood.

Why did the economy shrink?

The drops in manufacturing came mostly due to slowed car-making, less oil and gas extraction and the pharmaceutical industry.

The fall was not larger because the services industry – the largest part of the economy – expanded, with law firms and computer programmers having a good month.

It made up for a “very weak” month for retailers, the ONS said.

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UK economy remains fragile – and there are risks and traps lurking around the corner

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UK economy remains fragile - and there are risks and traps lurking around the corner

Monthly Gross Domestic Product (GDP) figures are volatile and, on their own, don’t tell us much.

However, the picture emerging a year since the election of the Labour government is not hugely comforting.

This is a government that promised to turbocharge economic growth, the key to improving livelihoods and the public finances. Instead, the economy is mainly flatlining.

Output shrank in May by 0.1%. That followed a 0.3% drop in April.

Ministers were celebrating a few months ago as data showed the economy grew by 0.7% in the first quarter.

Hangover from artificial growth

However, the subsequent data has shown us that much of that growth was artificial, with businesses racing to get orders out of the door to beat the possible introduction of tariffs. Property transactions were also brought forward to beat stamp duty changes.

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Read more:
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In April, we experienced the hangover as orders and industrial output dropped. Services also struggled as demand for legal and conveyancing services dropped after the stamp duty changes.

Many of those distortions have now been smoothed out, but the manufacturing sector still struggled in May.

Signs of recovery

Manufacturing output fell by 1% in May, but more up-to-date data suggests the sector is recovering.

“We expect both cars and pharma output to improve as the UK-US trade deal comes into force and the volatility unwinds,” economists at Pantheon Macroeconomics said.

Meanwhile, the services sector eked out growth of 0.1%.

A 2.7% month-to-month fall in retail sales suppressed growth in the sector, but that should improve with hot weather likely to boost demand at restaurants and pubs.

Struggles ahead

It is unlikely, however, to massively shift the dial for the economy, the kind of shift the Labour government has promised and needs in order to give it some breathing room against its fiscal rules.

The economy remains fragile, and there are risks and traps lurking around the corner.

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Is Britain going bankrupt?

Concerns that the chancellor, Rachel Reeves, is considering tax hikes could weigh on consumer confidence, at a time when businesses are already scaling back hiring because of national insurance tax hikes.

Inflation is also expected to climb in the second half of the year, further weighing on consumers and businesses.

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