The cost of living crisis has taken another turn for the worse, with households now being urged to read their energy meters as prices continue to soar. This latest directive from energy suppliers is a clear sign that the market is in turmoil. It is a grim reminder that the era of cheap energy is well and truly over.
For years, I have warned about the perils of loose monetary policy and the inflationary spiral it would unleash. Now, we are seeing the consequences. Energy prices are rising at a pace not seen in decades, and the Bank of England is caught between a rock and a hard place. Raise rates to curb inflation, and you risk triggering a recession. Keep them low, and you watch the purchasing power of the pound erode.
The advice to read meters is, in essence, a plea for accuracy in billing. But it also reveals a deeper truth: the market is failing to allocate resources efficiently. When consumers are forced to take time out of their day to ensure they are not overcharged, something has gone terribly wrong. This is not the sign of a healthy, functioning market. It is the symptom of a system under severe stress.
Capital flight is another concern. As energy prices climb, investors are looking for safer havens. The gilt market is showing signs of strain, with yields rising as confidence in the UK's fiscal discipline wanes. The government's penchant for spending without a clear plan for repayment is eroding trust. We need a return to fiscal responsibility, not more short-term fixes.
To be clear, this is not a problem unique to the UK. Global factors, from the war in Ukraine to supply chain disruptions, are driving up costs. But the UK's reliance on imported energy and its sluggish transition to renewables have amplified the impact.
In the meantime, households must brace for more pain. Reading your meter is a sensible step, but it is a sticking plaster on a gaping wound. Unless we see a fundamental shift in policy and global conditions, the cost of living crisis will only deepen. This is the bottom line.
