A frustrated UK manufacturing sector is warning of production shutdowns because of soaring gas prices. Energy intensive industry such as steel, glass and ceramics have accused the british government of doing nothing to help. They’re contending with gas prices around five times. What they were six months ago during interviews on Sunday. The UK business secretary would not commit to supporting industry through the crisis. A cap on consumer bills has seen several British energy firms go bust in recent weeks. Now this morning in the UK the trade body for steel makers demanded the government take quote swift decisive action to avoid a crisis.
It’s clearly very serious and the next few weeks are going to be critical. One of a few things really needs to happen either the price of energy needs to come down organically which would likely be triggered by increased supply from Russia which still looks relatively unlikely at this stage. They need to see a significant increase in the gas coming from somewhere else either from Norway or from other sources be that higher wind turbine to buy an output or something similar. The government needs to ultimately step in because the longer they wait the worse the problem is going to become. They have seen in Europe for example that other countries have already started to step in removing charges and levies to try and ease the pressure on businesses and the alternative solution is obviously going to be subsidies which again is going to be something that the government will have to undertake as they have. For example with fertilizer companies already they’re clearly very reluctant to do so. But this wouldn’t be the first time. They’ve changed their mind.
In the UK the price of that is going to be higher taxes and there’s something that this government is going to be extremely reluctant to do. But is clearly going to undertake and the last thing they want to do is now start subsidizing more and more industries and increasing the amount of taxes. They’re going to have to ask for and that’s clearly where the reluctance comes from and markets.