UK mulls bank loan scheme to smooth energy costs – BBC

Flames rise from a domestic gas ring of a furnace in Durham, Britain September 23, 2021. REUTERS/Lee Smith

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LONDON, Jan 15 (Reuters) – The British government is considering plans to blunt sharp rises in energy costs that are expected to hit households in April, the BBC reported.

Under a cost-deferral mechanism, big banks would lend billions of pounds to energy companies, allowing them to spread rising gas bills over five or 10 years, the broadcaster reported.

The UK Treasury could play a role in guaranteeing loans to energy companies.

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Government officials were also considering using the Bank of England, which has provided emergency loans to businesses during the coronavirus pandemic, to provide seed funding, the BBC said on Friday evening, without citing sources.

Other options for the government to reduce the impact of rising tariffs – which could see bills rise by 50% after a spike in international energy prices – include expanding a discount scheme for low-income households or reductions in energy taxes.

Prime Minister Boris Johnson is under pressure to act ahead of an expected increase in the fuel price cap that is expected to take Britain’s inflation rate to 6% or more in April, when tax payments are also expected to rise for workers and employers.

Squeezing the cost of living is compounding problems for Johnson, who is facing calls for some members of his Conservative Party to resign after party revelations in Downing Street when social mixing was restricted.

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Written by William Schomberg; Editing by Jan Harvey

Our standards: The Thomson Reuters Trust Principles.

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