British households are bracing for a winter of massive energy price increases. The average annual bill is forecast to rise to almost £4,000, which is more than three times what Britons were paying just 12 months ago.
French households, meanwhile, will barely see their costs increase. Their government has frozen gas prices and limited the increase of the regulated price of electricity to an annual 4%. The total impact of the cost of living squeeze from higher energy prices this year will remain well below 5% of consumption for all French households. For the poorest 20% of UK households, it could be more than 15%.
The difference between two neighbouring countries with interconnected electricity grids is staggering. As part of my ongoing research into market regulation and the systems used to allocate commodities such as electricity, I look at how economic models can help us to understand policy problems. Most recently, I’ve been researching the French power market and comparing it to other models such as those of the UK.
