Energy price cap: Typical yearly energy bill to fall by £129 from July, Ofgem announces
Donald Trump has issued advice on how UK energy bills could come down further, after households on the energy price cap were told they would see a 7% reduction from July.
The default cap – which is reviewed by industry regulator Ofgem every three months – will see a typical household using gas and electricity and paying by Direct Debit stump up an average annual £1,720.
That is down from the current April-June figure of £1,849 and reflects a reduction in wholesale gas prices.
Money latest: How energy price cap dip will affect me
The lower cap, however, will be £152 higher than the same three-month period last year.
News of the looming reduction drew some surprise commentary.
Hours after the announcement, the US president said of the UK in a post on his Truth Social platform: “I strongly recommend to them… that in order to get their energy costs down, they stop with the costly and unsightly windmills, and incentivize modernised drilling in the North Sea, where large amounts of oil lay waiting to be taken.
“A century of drilling left, with Aberdeen as the hub. The old-fashioned tax system disincentivises drilling, rather than the opposite. UK’s energy costs would go way down, and fast!”.
He also called on the UK to “stop with the costly and unsightly windmills” – in reference to onshore and offshore wind farms.
The advice is unlikely to be heeded by the UK government, which has set a clear course to move the country away from the volatile natural gas market and towards renewable power provision.
Ofgem’s price cap cut does not affect the millions of households to have taken a time-limited fixed deal.
Nevertheless, it represents some relief for families grappling with the cost of living aftershock that saw many essential bills rise by well above the rate of inflation last month.
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Cost of living impacts families
Ofgem also confirmed further bill savings through a £19 average cut, from July, in standing charges for households paying by both direct debit and prepayment, following an operating cost and debt allowances review.
The price cap does not limit total bills because householders still pay for the amount of energy they consume.
The watchdog’s announcements were made just days after fresh forecasts suggested that bills linked to the cap could come down further from both October and January, given recent wholesale market price trends.
Industry data specialist Cornwall Insight estimated on Friday that the price cap was currently on course to rise only slightly in October – by less than £1 a month.
Wholesale gas costs last winter had been relatively stable until a cold snap hit much of Europe in January and early February, driving up demand at a time of weaker stocks.
Other risk factors ahead include extended EU gas storage rules and global conflicts, not least the continuing Russia-Ukraine war that sparked the 2022 energy price spike and cost of living crisis in the first place.
Tim Jarvis, director general of markets at Ofgem, said: “A fall in the price cap will be welcome news for consumers, and reflects a reduction in the international price of wholesale gas. However, we’re acutely aware that prices remain high, and some continue to struggle with the cost of energy.
“The first thing I want to remind people is that you don’t have to pay the price cap – there are better deals out there, so it’s important to shop around, and talk to your existing supplier about the best deal they can offer you. And changing your payment method to direct debit or smart pay as you go can save you up to £136.”
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Ofgem said that a minority of homes, 35%, were on a fixed rate deal.
Price comparison sites lined up after the price cap announcement to urge households still on the default tariff to investigate a switch.
Tom Lyon, director at Compare the Market said: “If anyone is worried about potentially higher energy bills later this year, they could consider locking in a fixed rate deal now.
“Fixed rate deals also protect you from price hikes if the oil and gas markets are volatile. Beyond your energy bills, it’s important to search and compare other household bills, such as your car insurance, credit cards, or broadband, to see if you can make savings.”
Business
US trade war: The state of play as Trump signs order imposing new tariffs – but there are more delays
Donald Trump’s trade war has been difficult to keep up with, to put it mildly.
For all the threats and bluster of the US election campaign last year to the on-off implementation of trade tariffs – and more threats – since he returned to the White House in January, the president‘s protectionist agenda has been haphazard.
Trading partners, export-focused firms, customs agents and even his own trade team have had a lot on their plates as deadlines were imposed – and then retracted – and the tariff numbers tinkered.
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While the UK was the first country to secure a truce of sorts, described as a “deal”, the vast majority of nations have failed to secure any agreement.
Deal or no deal, no country is on better trading terms with the United States than it was when Trump 2.0 began.
Here, we examine what nations and blocs are on the hook for, and the potential consequences, as Mr Trump’s suspended “reciprocal” tariffs prepare to take effect. That will now not happen until 7 August.
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What does the UK-US trade deal involve?
Why was 1 August such an important date?
To understand the present day, we must first wind the clock back to early April.
Then, Mr Trump proudly showed off a board in the White House Rose Garden containing a list of countries and the tariffs they would immediately face in retaliation for the rates they impose on US-made goods. He called it “liberation day”.
The tariff numbers were big and financial markets took fright.
Just days later, the president announced a 90-day pause in those rates for all countries except China, to allow for negotiations.
The initial deadline of 9 July was then extended again to 1 August. Late on 31 July, Mr Trump signed the executive order but said that the tariff rates would not kick in for seven additional days to allow for the orders to be fully communicated.
Since April, only eight countries or trading blocs have agreed “deals” to limit the reciprocal tariffs and – in some cases – sectoral tariffs already in place.
Who has agreed a deal over the past 120 days?
The UK, Japan, Indonesia, the European Union and South Korea are among the eight to be facing lower rates than had been threatened back in April.
China has not really done a deal but it is no longer facing punitive tariffs above 100%.
Its decision to retaliate against US levies prompted a truce level to be agreed between the pair, pending further talks.
There’s a backlash against the EU over its deal, with many national leaders accusing the European Commission of giving in too easily. A broad 15% rate is to apply, down from the threatened 30%, while the bloc has also committed to US investment and to pay for US-produced natural gas.
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Millions of EU jobs were in firing line
Where does the UK stand?
We’ve already mentioned that the UK was the first to avert the worst of what was threatened.
While a 10% baseline tariff covers the vast majority of the goods we send to the US, aerospace products are exempt.
Our steel sector has not been subjected to Trump’s 50% tariffs and has been facing down a 25% rate. The government announced on Thursday that it would not apply under the terms of a quota system.
UK car exports were on a 25% rate until the end of June when the deal agreed in May took that down to 10% under a similar quota arrangement that exempts the first 100,000 cars from a levy.
Who has not done a deal?
Canada is among the big names facing a 35% baseline tariff rate. That is up from 25% and covers all goods not subject to a US-Mexico-Canada trade agreement that involves rules of origin.
America is its biggest export market and it has long been in Trump’s sights.
Mexico, another country deeply ingrained in the US supply chain, is facing a 30% rate but has been given an extra 90 days to secure a deal.
Brazil is facing a 50% rate. For India, it’s 25%.
What are the consequences?
This is where it all gets a bit woolly – for good reasons.
The trade war is unprecedented in scale, given the global nature of modern business.
It takes time for official statistics to catch up, especially when tariff rates chop and change so much.
Any duties on exports to the United States are a threat to company sales and economic growth alike – in both the US and the rest of the world. Many carmakers, for example, have refused to offer guidance on their outlooks for revenue and profits.
Apple warned on Thursday night that US tariffs would add $1.1bn of costs in the three months to September alone.
Barriers to business are never good but the International Monetary Fund earlier this week raised its forecast for global economic growth this year from 2.8% to 3%.
Some of that increase can be explained by the deals involving major economies, including Japan, the EU and UK.
US growth figures have been skewed by the rush to beat import tariffs.
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The big risk ahead?
It’s a self-inflicted wound.
The elephant in the room is inflation. Countries imposing duties on their imports force the recipient of those goods to foot the additional bill. Do the buyers swallow it or pass it on?
The latest US data contained strong evidence that tariff charges were now making their way down the country’s supply chains, threatening to squeeze American consumers in the months ahead.
It’s why the US central bank has been refusing demands from Mr Trump to cut interest rates. You don’t slow the pace of price rises by making borrowing costs cheaper.
A prolonged period of higher inflation would not go down well with US businesses or voters. It’s why financial markets have followed a recent trend known as TACO, helping stock markets remain at record levels.
The belief is that Trump always chickens out. He may have to back down if inflation takes off.
It is “Liberation Day” III – the third tariff deadline set by Donald Trump.
Countries without bilateral trade agreements will soon face reciprocal tariffs – ranging from 25% to 50% – with a baseline of 15% to 20% for any not making a deal.
He has delayed twice, from April to July and from July to August, but hammered this date home in his trademark caps-on style: “THE AUGUST FIRST DEADLINE STANDS STRONG, AND WILL NOT BE EXTENDED. A BIG DAY FOR AMERICA!!!”
“Will not be extended” for anyone but Mexico, it seems. The country secured a 90-day extension at the last minute, with Mr Trump citing the “complexities” of the border.
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Explained: The US-UK trade deal
By close of business on the eve of deadline, he had a handful of framework deals – some significant – including the UK (10%), the EU, Japan and South Korea (15%), Indonesia and the Philippines (19%), Vietnam (20%).
On the EU agreement, which he struck in Scotland, the president said: “It’s a very powerful deal, it’s a big deal, it’s the biggest of all the deals.”
But what happened to the “90 deals in 90 days” touted by the White House earlier this year?
The short answer is they were replaced by letters of instruction to pay a tariff set by the US.
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How Trump 2.0 changed the world
Amid of flurry of late activity, the US played hardball with major trading partners like Canada.
“For the rest of the world, we’re going to have things done by Friday,” said US Commerce Secretary Howard Lutnick – the “rest of the world” meaning everyone but China.
There is, apparently, the “framework of a deal” between the world’s two largest economies, but talks between Washington and Beijing are continuing.
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In terms of wins, he can claim some significant deals and point to his tariffs having generated an impressive $27bn (£20.4bn) in June, not bad for a single month.
But the legality of the approach is under siege – with the US Court of International Trade ruling that the “Liberation Day” tariffs exceeded the president’s authority, with enforcement paused pending appeal.
The deadline has stirred the pot, forcing a handful of deals onto the table. Whether they stick or survive legal scrutiny is far from settled.
But the playbook remains the same – threaten the world with trade chaos, whittle it down, celebrate the wins, and pray no one checks what’s legal.
Microsoft has become only the second publicly traded company after Nvidia to surpass $4 trn (£3.03trn) in market valuation, after registering huge earnings.
On Thursday, shares rose on Wall Street with the S&P 500 and Nasdaq climbing to new record highs.
Stocks in Microsoft jumped after posting better-than-expected results, helped by its Azure cloud computing platform, which is a centrepiece of the company’s artificial intelligence (AI) efforts.
Shares in Facebook and Instagram’s parent company, Meta, also surged after beating sales and profit targets.
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Is Trump’s AI plan a ‘tech bro’ manifesto?
Technology giants Apple and Amazon will report their results after Wall Street’s close.
Microsoft first cracked the $1trn (£760bn) mark in April 2019, but its move to $3trn (£2.27trn) took longer than technology giants Nvidia and Apple.
Nvidia tripled its value in just about a year and clinched the $4trn milestone before any other company on 9 July. Apple was last valued at $3.12trn.
In comparison, the biggest UK company by market value is drug manufacturer AstraZeneca, worth $235.97bn (£178.55bn).
Companies ranked by market value (USD), according to tradingview.com
1. Nvidia (US) $4.43trn
2. Microsoft (US) $4trn
3. Apple (US) $3.12trn
4. Amazon (US) $2.47trn
5. Alphabet (US) $2.35trn
6. Meta (US) $1.95trn
7. Saudi Arabian Oil (Saudi Arabia) $1.56trn
8. Broadcom (US) $1.42trn
9. Berkshire Hathaway (US) $1.03trn
10. Tesla (US) $1.02trn
11. Taiwan Semiconductor Manufacturing (Taiwan) $1trn
29. Samsung Electronics (South Korea) $338.06bn
36. Alibaba (China) $284.62bn
52. AstraZeneca (UK) $235.97bn
While sweeping US tariffs had investors worried about tighter business spending, Microsoft’s strong earnings have shown that the company’s books are yet to take a hit.
Microsoft’s multibillion-dollar bet on OpenAI is proving to be a game changer, powering its Office Suite and Azure offerings with cutting-edge AI and fueling the stock to more than double its value since ChatGPT’s late-2022 debut.
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On Wednesday, the firm announced Azure sales surpassed $75bn (£56bn) on an annual basis, while Azure revenue jumped 39% in the April-June quarter.
Overall revenue rose 18% to $76.4bn (£57.81bn) over the same period.
It is also forecasting a record $30bn (£22.7bn) in capital spending over the first quarter to meet soaring AI demand..
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