Energy bills bailout could pay for itself, City says

Deutsche Bank economists say a £4bn package to hold down gas and electricity bills could reduce CPI inflation and lower government borrowing costs; major suppliers warn household bills could top £2,000 by autumn.

Economists have argued that a targeted energy support package could largely pay for itself. Deutsche Bank says a £4bn measure to hold down gas and electricity bills would lower consumer price inflation. That fall in inflation could lead to lower interest rates and smaller government borrowing costs, according to the analysis. The point is being made as suppliers raise forecasts for sharply higher household bills. Key points: - Deutsche Bank economist Sanjay Raja says a £4bn package that reduces CPI inflation could offset its fiscal cost and cut government borrowing requirements. - EDF and E.On Next have forecast household gas and electricity bills could exceed £2,000 by autumn, citing higher wholesale prices linked to tensions in the Middle East. - Chancellor Rachel Reeves has so far resisted a wide-ranging energy-bills support package, and commentators say that stance faces renewed pressure. - A rise in fuel duty is scheduled for September and some have called for it to be postponed; the government's response is pending. Summary: Supporters of a fiscal intervention argue it could lower inflation and reduce borrowing costs enough to cover a £4bn package. Suppliers' forecasts of bills above £2,000 increase the immediacy of the debate for policymakers. Government decisions on any support and on the planned September fuel duty rise are undetermined at this time.