Energy bills could rise more as continent effectively rationing gas with storage levels low

Published

10 months ago

January 7, 2025

admin

Here’s a quiz question: how much would you say the supply of non-Russian gas to Europe (including the UK) has gone up since the invasion of Ukraine?

It’s a pretty important question. After all, in the years before the invasion, Russian gas (coming in mostly through pipelines but, to a lesser extent, also on liquefied natural gas [LNG] tankers) accounted for more than a third of our gas.

If Europe was going to stop relying on Russian gas, it would need either to source that gas from somewhere else or to learn to live without it. And while there might, a few decades hence, be a way of surviving without gas while also nursing important heavy industries, right now the technology isn’t there.

For decades, Europe – especially Germany, but also, to a lesser extent Italy and other parts of Eastern Europe – built their economic models on building advanced machinery, with their plants fuelled by cheap Russian gas.

Money latest: MPs to question Shein and Temu

All of which is why that question matters. And so too does the answer. The conventional wisdom is that Europe has shored up its supplies of gas from elsewhere. There’s more methane coming in from Azerbaijan, for one thing. And more too in the form of LNG from Qatar and (especially) the US.

But now let’s ponder the actual data. And it shows you something else: in 2024 as a whole, the amount of gas Europe had from non-Russian sources was up by a mere 0.5% compared with the 2017-21 average.

This isn’t to say that there wasn’t more gas coming in, primarily from LNG tankers, most (but not all) of them from the US. But that extra LNG was only enough to compensate for a sharp fall in gas produced domestically, for instance by the UK and the Netherlands. The upshot was that to all extents and purposes, the non-Russian part of the European gas mix was basically flat.

That’s a serious problem, given the amount of gas coming in from Russia has fallen by 37% over the same period. Essentially, Europe’s total gas consumption has fallen by an unprecedented amount without being supplemented from elsewhere.

Now, to some extent, some of that lost energy has been supplemented by extra power from renewable sources. The UK, for instance, saw the biggest amount of its power ever coming from wind and other green sources last year. However, green electricity only goes so far. It cannot heat houses with gas boilers; it cannot provide the intense heat needed for many industrial processes. And look at the numbers in Europe and you can see the consequences.

With the continent having effectively to ration gas, the industrial heart has borne the brunt. Look at chemicals production in the UK and it’s down by more than a third in recent years. Look at energy-intensive industrial output in Germany and it’s down by 20% since the invasion of Ukraine. The continent is deindustrialising, and the shortage of gas is at least part of the explanation.

And that shortage is about to become even more acute in the coming months. Because the flow of gas coming from Russia is going to fall yet further. There are, broadly speaking, four routes for Russian gas into Europe. The Yamal pipelines are old Soviet pipes running through Belarus; the Nord Stream pipes run (or rather ran) under the Baltic. There are pipes going through Ukraine towards Slovakia and Austria and then there’s the newest pipes, running through the Black Sea to Turkey.

As of late last year, only two of these routes were still operational: Yamal had been shuttered following sanctions by both sides in 2022; Nord Stream was damaged by an attack later in 2022. And now, following a failure to renew the terms of a transit agreement between Ukraine and Russia, the Ukraine route has just shut too. The amounts of gas we’re talking about aren’t enormous: around 4% of total European supply, as of 2024. But even so, it’s a further blow and will mean more rationing in the coming months. European deindustrialisation will probably continue or accelerate.

According to Jack Sharples, senior research fellow at the Oxford Institute for Energy Studies: “In the big picture, the loss of 15 billion cubic metres in 2025 for Europe as a whole equates to 4% of supply in 2024. So, enough to push the market a little tighter in the context of a global LNG market that remains tight, but nothing like the impact of losing Russian pipeline gas supply in 2022.”

Still, this isn’t the only challenge facing the market right now. This time last year, the continent had a near-unprecedented amount of gas stored away. But the amount of gas in storage – a key buffer – has dropped rapidly in recent months, partly because it’s been a little colder than in the previous year, partly because gas has had to step in to provide power when the wind dropped and renewables output disappointed.

The result is the continent starts the year with gas storage at a much lower level than policymakers would like – only 71% full. Admittedly this is higher than the nerve-wrackingly low level of early 2022 (54%). And it’s implausible that Europe will actually exhaust its supplies. But it makes it more likely that the continent will have to pay high prices in the summer to replenish its supplies.

Put it all together and you can understand why wholesale gas prices are climbing higher. The UK may not receive any gas directly from Russia, but it’s plugged into this market, so any shortages on the other side of the channel directly affect the prices we pay here too. And those prices are now up to the highest level since the spring of 2023. This is, it’s worth saying, way lower than the highs of 2022. But it’s enough to suggest bills might be heading up soon.

Business

Octopus COPs £500m financing boost for electric vehicles arm

Published

4 hours ago

November 13, 2025

admin

Octopus COPs £500m financing boost for electric vehicles arm

The electric vehicle-leasing business which forms part of the same group as Britain’s biggest household energy supplier will on Friday announce a £500m extension to its financing war chest.

Sky News has learnt that Octopus Electric Vehicles (Octopus EV) has struck a deal with lenders including Lloyds Banking Group, Morgan Stanley, and Credit Agricole to take its total funding line to £2bn.

The additional financing paves the way for the expansion of the company’s UK fleet from 40,000 to 75,000 cars, and is an extension to a facility agreed with Lloyds in 2023.

Sources said a public announcement would be made at the COP30 climate summit in Brazil.

Last month, EVs accounted for 26% of all new cars in the UK, a record figure, while across Europe, more than 1.7 million EVs were registered in September – a 19% jump from the same month last year.

Octopus EV offers an all-in-one package comprising a leased car, bespoke EV tariffs, home chargers and access to Electroverse, which it describes as Europe’s largest public charging network.

“Electric momentum is surging across the UK and Europe,” said Gurjeet Grewal, CEO of Octopus EV.

“Every month, thousands more drivers are discovering just how affordable and enjoyable making the switch can be – and this fresh funding from Lloyds, Morgan Stanley and Crédit Agricole will allow us to bring even more zero-emission cars onto UK roads.”

Keir Mather, Minister for Aviation, Maritime and Decarbonisation, said the government had “helped over 30,000 people go electric thanks to our electric car grant since we launched it this summer, saving them cash with discounts of up to £3,750 on new EVs”.

“We’re backing people and industry to make the switch with £4.5bn investment, and it’s great to see industry players like Octopus backing the EV revolution and getting more electric cars out on our roads,” Mr Mather added.

The minister’s comments come, however, amid speculation about a pay-per-mile levy on electric car drivers in Rachel Reeves’s budget later this month.

Octopus’s EV arm also specialises in salary sacrifice schemes, which the chancellor is also reportedly planning to target by reducing or removing tax incentives.

Business

Professional services chiefs join chorus of opposition to Reeves tax threat

Published

6 hours ago

November 13, 2025

admin

Professional services chiefs join chorus of opposition to Reeves tax threat

An influential coalition of leaders from Britain’s professional services sector has warned Rachel Reeves that a Budget tax raid on the sector would “stunt growth” in the UK’s faltering economy.

Sky News has obtained a letter sent to the chancellor on Thursday, which was signed by leading figures including the president of The Law Society, the chief executive of the Institute of Chartered Accountants in England and Wales, and the bosses of other leading trade bodies including TheCityUK and the BVCA.

In it, they warn that reported plans to impose employers’ national insurance on limited liability partnerships (LLPs) would damage Britain.

“Such a move would strike at the heart of a sector that is not only growing but actively partnering with government to deliver economic growth,” they wrote.

“Our professional services sector sits among the UK’s global success stories – driving investment, creating jobs, and reinforcing the UK’s reputation as an attractive place to do business.

“Introducing higher taxes on LLPs now would be a misstep and will stunt growth.

“It would undermine the government’s stated ambition to support professional services as a growth partner and send a damaging signal to international investors.

“At a time when firms are already facing potential major regulatory changes – from anti-money laundering compliance to evolving tax adviser rules – this additional burden risks creating a perfect storm that stifles investment, hiring, and innovation.”

The letter warned that the mooted tax changes would force firms to reconsider their corporate structures, “triggering instability and uncertainty across our economy”.

“Meanwhile, our global competitors – many of whom are actively courting professional services firms – would seize the opportunity to attract talent and capital away from the UK,” it added.

The letter was also signed by the City of London Law Society and The City of London Corporation.

It has been sent to the chancellor less than two weeks before she delivers her Budget, and adds to the multitude of warnings from across the economy about the levers she intends to pull to plug an estimated £30bn fiscal black hole.

Last week, the Financial Times reported that a potential tax raid on LLPs was likely to be less severe than feared following warnings from senior sector figures.

The Treasury has declined to comment on the prospective move.

Business

Economy grew by 0.1% in third quarter, official figures show

Published

15 hours ago

November 13, 2025

admin

Economy grew by 0.1% in third quarter, official figures show

The UK’s economic slowdown gathered further momentum during the third quarter of the year with growth of just 0.1%, according to an early official estimate that makes horrific reading for the chancellor.

The Office for National Statistics (ONS) reported a surprise contraction for economic output during September of -0.1% – with some of the downwards pressure being applied by the cyber attack disruption to production at Jaguar Land Rover.

The figures for July-September followed on the back of a 0.3% growth performance over the previous three months and the 0.7% expansion achieved between January and March.

Money latest: The £110 benefit 1.1 million older Britons don’t claim

The encouraging start to 2025 was soon followed by the worst of Donald Trump’s trade war salvoes and the implementation of budget measures that placed employers on the hook for £25bn of extra taxes.

Economists have blamed those factors since for pushing up inflation and harming investment and employment.

ONS director of economic statistics, Liz McKeown, said: “Growth slowed further in the third quarter of the year with both services and construction weaker than in the previous period. There was also a further contraction in production.

“Across the quarter as a whole manufacturing drove the weakness in production. There was a particularly marked fall in car production in September, reflecting the impact of a cyber incident, as well as a decline in the often-erratic pharmaceutical industry.

“Services were the main contributor to growth in the latest quarter, with business rental and leasing, live events and retail performing well, partially offset by falls in R&D [research and development] and hair and beauty salons.”

The weaker than expected figures will add fuel to expectations that the Bank of England can cut interest rates at its December meeting after November’s hold.

The vast majority of financial market participants now expect a reduction to 3.75% from 4% on 18 December.

Data earlier this week showed the UK’s unemployment rate at 5% – up from 4.1% when Labour came to power with a number one priority of growing the economy.

Since then, the government’s handling of the economy has centred on its stewardship of the public finances.

The chancellor was accused by business groups of harming private sector investment and employment through hikes to minimum wage levels and employer national insurance contributions.

The Bank has backed the assertion that hiring and staff retention has been hit as a result of those extra costs.

There is also evidence that rising employment costs have been passed on to consumers and contributed to the UK’s stubbornly high rate of inflation – a figure that is now expected to ease considerably in the coming months.

Rachel Reeves has blamed other factors – such as Brexit and the US trade war – for weighing on the economy and leaving her facing a similar black hole to the one she says she inherited from the Conservatives.

Her second budget is due on 26 November.

She said of the latest economic data: “We had the fastest-growing economy in the G7 in the first half of the year, but there’s more to do to build an economy that works for working people.

“At my budget later this month, I will take the fair decisions to build a strong economy that helps us to continue to cut waiting lists, cut the national debt and cut the cost of living.”

Shadow chancellor Sir Mel Stride responded: “Today’s ONS figures show the economy shrank in the latest month, under a Prime Minister and Chancellor who are in office but not in power.”