Closing summary: Poorer UK households to cut back three times more than rich this winter
Oil prices are on track for their biggest one-day decline in a fortnight as investors try to work out whether China’s economic weakness will persist – and cause a drop in demand.
Brent crude oil futures prices reached the joint-lowest level since February, while West Texas Intermediate set a new low.
Falling energy prices would be a blessing to economies around the world in the short term as they struggle with the political and financial implications of inflation, but $90 for a barrel of oil is still pretty high in historical terms.
It is likely to be the poorest households who bear the most pain when bills rise in the winter. In the UK the energy price cap is expected to rise above £4,200 for an average annual bill in January.
New analysis by the Resolution Foundation suggests that the poorest fifth of households will have to cut their discretionary spending by more than a fifth to make up for the energy price increase. Even the richest households will have to tighten their belts.
That will mean a lot of products and services that are not bought. Little wonder that economists are bracing for recession in the UK and elsewhere – and little wonder that it is likely to be the key political issue for the contenders to be UK prime minister.
The Resolution Foundation’s Mike Brewer, Karl Handscomb, and Jonathan Marshall wrote:
This winter, low-income households will have to reduce their spending by three times as much as high-income households in order to afford their energy bills – a situation that is particularly concerning now that we know energy bills in January-March 2023 are set to be an annualised £4,266, rather than the £2,800 expected earlier this year.
That’s it for the business live blog today, but you can continue to follow our live coverage from around the world:
In UK politics, Starmer says government ‘just not good enough’ on cost of living crisis as he defends plan to freeze energy bills
In the US, fears of violence grow after FBI search of Trump’s Mar-a-Lago
In our coverage of the Russia-Ukraine war: injuries reported in Kharkiv shelling; Kyiv mayor warns of cold winter due to gas shortages
Thank you as ever for following our live coverage of economics, business, and financial markets. I’ll be back on Friday but in the meantime please do join us on the blog tomorrow for more. JJ
Wall Street stock indices have dipped at the opening bell.
It appears traders across the Atlantic also have their eye on a possible Chinese slowdown.
Here are the opening snaps, via Reuters:
S&P 500 DOWN 22.85 POINTS, OR 0.53%, AT 4,257.30 AFTER MARKET OPEN
NASDAQ DOWN 50.98 POINTS, OR 0.39%, AT 12,996.20 AFTER MARKET OPEN
DOW JONES DOWN 171.96 POINTS, OR 0.51%, AT 33,589.09 AFTER MARKET OPEN
