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UK considering bank loan plan to smooth energy cost hit – BBC

UK considering bank loan plan to smooth energy cost hit - BBC
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Flames escaping from a domestic gas loop in a furnace in Durham, Britain, September 23, 2021. REUTERS/Lee Smith

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LONDON (Reuters) – The British government is considering plans to ease the sharp rise in energy costs that are set to hit homes in April, the BBC said.

The radio reported that under the cost deferral mechanism, major banks would lend billions of pounds to energy companies, allowing them to spread the increase in gas bills over five or ten years.

Britain’s Treasury could play a role by guaranteeing loans to energy companies.

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And the British Broadcasting Corporation (BBC) said late on Friday that government officials were also considering using the Bank of England, which has provided emergency loans to companies during the Corona virus pandemic, to provide advance financing, without naming its sources.

Other options available to the government to reduce the impact of higher tariffs – which could see bills rise 50% after higher international energy prices – include expanding the discount system for low-income households or cuts to energy taxes.

Prime Minister Boris Johnson is under pressure to act ahead of an expected increase in the fuel price cap that is set to push Britain’s inflation rate to 6% or higher in April, when tax payments to workers and employers are also due to rise.

Cost-of-living pressure is exacerbating the problems for Johnson, who is facing calls to resign from some members of his Conservative Party after parties were exposed in Downing Street when social mixing was restricted.

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Written by William Schomberg; Editing by Jean Harvey

Our Standards: Thomson Reuters Trust Principles.

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