Banks funding UK energy crisis solution should be allowed only razor-thin margins if they get taxpayer guarantee (1)

–NOTE from Sept. 9. Funding for the energy crisis solution remains shrouded in mystery, will be revealed soon / later this month

Sept. 8, 2022 — Opinion by Mathew Carr

Should the UK government use private money to finance its £170 billion or so energy-crisis fund, which I suspect it will, the banks providing the loans should be allowed only a razor-thin profit margin.

It may well be clever politics to use private money instead of the public purse, because the government is already being criticised for lumping extra debt on future generations (as well as a terrible, polluted climate).

To be sure, certain media outlets, including the Times newspaper, are predicting the public purse will get the job.

Detailed climate and economic modelling has made it easier to predict how the climate transition will take place, but it’s still devilishly difficult.

How the big fund will handle market risk will be key — and managing commodity risk can be expensive.

The energy crisis has already created huge profit – with £170 billion “excess profits” expected the next two years, according to the opposition Labour party.

Energy companies are making that money as consumers must pay for two energy systems at once — the existing dirty one and a new clean one.

It’s understandable that banks look at this money making with envy and want a part of it.

New Prime Minister Liz Truss might be about to hand them a big part.

If taxpayers see the government expanding the corporate largesse to two sectors from one, they will get very angry, very fast

CarrZee

Picture of the comment:

Leave a Reply