Burnham to announce new GB Grid in bid to bring energy costs down

Responding to the news that Prime Minister Andy Burnham will announce plans to set up a new publicly owned “Great British Grid” in a bid to bring UK energy costs down, Susannah Streeter, chief investment strategist at Wealth Club, said: “Given the concerns over the damage to businesses ahead if the energy crunch worsens, strengthening security while limiting the cost of Britain’s energy supply is set to be one of the key themes of Andy Burnham’s speech to the Labour Party conference today.

“The pound is hovering around two-month lows as the Prime Minister prepares to take to the stage, as investors assess the fragile nature of the UK economy. The government’s borrowing costs remain high, as concerns about higher inflation ahead have intensified. Ten-year gilt yields are trading around 5.4 per cent, the highest level in nearly two decades, with investors pricing in at least four interest rate hikes over the next year.

“Although the latest snapshot of retail prices from the BRC Shop Price Index shows a very slight weakening in September amid intense competition and discounting, companies are unlikely to be able to keep absorbing higher overheads.

“Recent comments from Bank of England policymakers have indicated they are concerned about so-called second-round effects of high energy prices taking place – when costs are passed on via higher prices of goods and services, potentially leading to a wage hike cycle, as employees demand higher salaries to keep up with rising prices.

“The government is wading through quicksand, with budgets being sucked away by the ever-higher costs of servicing growing debts. It’s putting the comparatively generous terms of state pension hikes into the spotlight, with speculation about changes to the triple lock set to intensify ahead of the Budget.”