Households across Britain may see some relief this summer as the UK energy price cap is forecast to fall, but experts warn that the cost of living crisis and industrial energy struggles are far from over.
Cornwall Insight, a leading energy consultancy, predicts that the UK energy price cap will drop by £129 in July, bringing the average annual dual-fuel bill for households down to £1,720. This represents a 7% decrease from the current cap of £1,849. However, the new figure remains around 60% higher than pre-crisis levels, before Russia’s invasion of Ukraine destabilised global energy markets.
Industrial Output Hit by Record Energy Costs
Despite the anticipated dip, Britain’s reliance on gas for both home heating and electricity generation has left households and manufacturers grappling with some of the highest energy prices in the world. Government figures reveal that output from energy-intensive industries has plummeted by 33% since 2021, now standing at its lowest level since 1990.
Data from the Office for National Statistics (ONS) shows electricity prices for companies surged by 90% at the peak of the crisis in 2023, and are still 75% higher than in 2021. Gas prices for businesses climbed even further, with a 187% spike at the peak and a lingering 120% rise at the end of 2024.
Household Debt and Missed Payments on the Rise
Ofgem, the national energy watchdog, is expected to confirm the new price cap this Friday, impacting around 29 million UK households. Yet, falling prices may offer little comfort. A record number of households failed to pay their energy bills by direct debit last month, simply because their bank accounts had insufficient funds.
Dr Craig Lowery of Cornwall Insight cautioned that although prices are declining, they remain unaffordable for many: “Bills are still significantly above the levels we saw at the start of the decade.”
Experts Warn Against Complacency
Analysts stress that the volatility of the global energy market remains a key concern. Jess Ralston of the Energy and Climate Intelligence Unit warned, “Predicted falls in energy bills merely cancel out recent hikes. The crisis continues, particularly with gas prices still significantly above pre-crisis norms.”
She also noted that energy independence is essential for long-term stability: “Every home insulated and equipped with a heat pump reduces our reliance on volatile global gas markets.”
Cornwall Insight projects further drops in the energy cap in October and January, but these remain highly dependent on international events, gas storage policies in the EU, and seasonal weather conditions.
