Brexit: Does this mean the start of even higher energy costs?
There’s no question that Britain is waking up to a monumental change this morning and with all the emotion of a rather “punchy” campaign still hanging around like a bad hangover, it’s clear to see that things are about to change?
We’ve already witnessed a mass drop in the pound during the first few hours since the Brexit vote and if you’re a business that exports your goods to the rest of Europe, you’ll be waking up with a more optimistic view on the times ahead. However, if your business imports more goods or services from within the European Union, you’d be forgiven about being a little worried by the Sterling’s sudden down turn.
Many people in the lead up to the referendum wanted answers. They wanted clear and precise answers to how a Brexit vote would affect them well, one angle is that there is very likely to be a hike in already inflated energy costs. Britain imports 57% of its energy from the rest of Europe and with the pound now at its lowest level since 1983, the amount of energy you get for your pound will obviously decrease meaning that both commercial and domestic energy costs are likely to go up as a result over the next 12-18 months and probably to their highest levels in recent years.
Eight out of every 10 UK homes are heated by gas. In addition to being used as fuel to provide domestic and commercial heating, gas is also used to generate electricity. Gas-fired power stations currently generate around a quarter of the UK’s electricity. Gas plants are typically very flexible meaning that they can step in at periods of high demand.
Many economic experts are already predicting that energy companies may actually see an increase in profits in the short term as there will be an obvious clamber to get fixed energy prices locked in now rather than waiting until later down the line when they could end up being much higher. Is this the right time to start looking at your energy prices or is it yet more scaremongering?
The truth is, there’s no way to know how energy prices will increase or decrease in value over the coming months a lot like there is no certainty how things will play out in general after a Brexit vote, but based on the fact that Britain imports the majority of our energy, we can make an educated assumption. There’s also no doubt that locking in your energy costs now might actually be a very shrewd move that we’re likely to see more and more domestic and commercial doing over the next few months.
Britain is now facing an uncertain future and in the next two years or so, things will start to be put in place by all of us to try and safeguard our futures, our businesses and our money so that we will be in a much stronger position than we were before the polls closed on June 23rd 2016. Energy won’t be the only form of utilities that will see people locking in their lower, fixed prices and it’s likely to be a trend that will continue as long as there is no fixed plan as to how Britain moves forward through this transition out of the European Union.
- Steve Davies-Evans