{"id":457439,"date":"2026-03-04T17:40:07","date_gmt":"2026-03-04T17:40:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/457439\/"},"modified":"2026-03-04T17:40:07","modified_gmt":"2026-03-04T17:40:07","slug":"uk-in-poor-position-to-help-households-if-energy-costs-surge-says-obr-economist","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/457439\/","title":{"rendered":"UK in poor position to help households if energy costs surge, says OBR economist"},"content":{"rendered":"

Unlock the Editor\u2019s Digest for free<\/p>\n

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/p>\n

The UK government is poorly positioned to cushion the blow to households from surging energy prices given the mountain of public debt it is trying to manage, a top economist has warned.\u00a0<\/p>\n

David Miles, a senior official at the Office for Budget Responsibility, said this week\u2019s jump in oil and gas prices driven by the war in Iran<\/a> was \u201cunambiguously bad\u201d for a major energy importer such as the UK and that it would be \u201cunderstandable\u201d if there was public pressure for the government to intervene if energy costs continued to spiral upwards.<\/p>\n

But he added that it came at a \u201cparticularly difficult time\u201d given that the government had been attempting to bring borrowing down and stop the debt-to-GDP ratio from continuing to rise.<\/p>\n

\u201cYou would not want to be doing that when you have to start from here, in terms of the size of government borrowing we have seen in recent years, the stock of debt, gilt yields have moved up,\u201d Miles told a conference hosted by the Resolution Foundation think-tank on Wednesday.\u00a0<\/p>\n

Public sector net debt jumped to 85 per cent of GDP in the first year of the Covid-19 crisis, compared with 76 per cent in the previous fiscal year, as the government supported the economy. It subsequently increased further, fuelled in part by UK measures intended to respond to the energy price surge that followed Russia\u2019s full-scale invasion of Ukraine in 2022.\u00a0<\/p>\n

The OBR\u2019s latest forecasts show public debt, excluding the Bank of England, on track to rise from 91 per cent as a share of GDP now to more than 95 per cent by the end of the parliament.\u00a0<\/p>\n

It comes a day after chancellor Rachel Reeves vowed to \u201creduce pressures on the cost of living\u201d in her spring forecast. Referring to the war in Iran, the chancellor said she would \u201csecure our economy against shocks\u201d as well as \u201cprotect families from the turbulence that we see beyond our borders\u201d.<\/p>\n

Helen Miller, head of the Institute for Fiscal Studies, said that the UK had \u201cbecome accustomed\u201d to governments propping up household incomes when shocks come along, such as Covid and the war in Ukraine.<\/p>\n

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\u201cWhile there can obviously be benefits to this, protecting household incomes in this way is not costless,\u201d Miller said, noting it was \u201ca key reason that debt has been rising in recent years\u201d.\u00a0<\/p>\n

She added: \u201cThat can\u2019t go on forever.\u201d \u00a0\u00a0<\/p>\n

Miller argued that if the government did choose to help households with energy bills, it would be better to target support towards those with the lowest incomes and the highest energy costs, and to deliver help in a way that still incentivised people to save on energy use.\u00a0<\/p>\n

In 2022-23, when the previous Conservative government stepped in to cushion households from the increase in energy costs, Miller said it had spent \u00a335bn without managing to target those most in need, for want of accurate data on incomes and energy use.<\/p>\n

OBR forecasts on Tuesday showed the safety buffer against Reeves\u2019 main fiscal rule<\/a> had increased since November to \u00a323.6bn on the back of improved tax receipts and lower borrowing costs.\u00a0<\/p>\n

But it warned that Britain\u2019s economy could face a \u201cvery significant\u201d hit from the war in Iran, as the conflict threatened to derail Reeves\u2019 promises to deliver economic stability.<\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this…\n","protected":false},"author":2,"featured_media":457440,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":["post-457439","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/457439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=457439"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/457439\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/457440"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=457439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=457439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=457439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}