Pound rises from pandemic lows on Truss’s plan to freeze energy bills – business live

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Tackling the UK’s energy crisis must be high on Liz Truss’s list, and there are a flurry of reports that the next PM will take rapid steps to freeze bills.

This has lifted the pound back by almost a cent this morning, to $1.16, reversing Monday’s selloff.

Truss, who will be appointed by the Queen today, is ready to cap the cost of gas used for electricity and heating. This would effectively commit the taxpayer to paying Britain’s energy bills beyond a certain level to stop widespread hardship and bankruptcies.

The Telegraph understands that, among the moves to tackle the cost of living crisis set to be unveiled this week, Ms Truss could freeze energy bills for all households until 2024.

The “huge” policy intervention would last longer and cost tens of billions of pounds more than the Labour Party’s proposal to cap prices at their current levels until early 2023.

Like many other central banks, the Bank of England has been guilty of being too late to respond to the inflation threat. But anything that smacks of reducing the independence of the Old Lady of Threadneedle Street would worry international investors that are funding the UK’s big twin budget and trade deficits at time when inflation is the highest amongst the G7 economies.

Hard choices rather than wishful thinking are required to boost long-term growth potential of the British economy and maintain confidence in the monetary and fiscal policy framework. The credibility of the new Prime Minister’s economic policy programme will be judged in the bond and foreign exchange markets.

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