Phillip Hammond delivered his first and last spring budget on Wednesday afternoon, as he takes on the task of steering the British economy and finances through Brexit. Among the key headlines were rising inflation forecasts and downgraded GDP growth, despite positive sentiment around future employment projections.
More specific to the energy industry, Hammond pledged support for North Sea oil and natural gas as well as funding for innovative research and development, citing maximum exploitation of the remaining reserves as integral to the UK energy sector.
In regards to the Levy Control Framework (LCF), the government identified the need to limit costs to businesses and households as the UK decarbonises its energy supplies. The existing LCF has helped to control the costs of low carbon subsidies in recent years and will be replaced by a new set of controls, with further details set to be announced later this year.
Ideas to reform the EU’s trading scheme for cutting carbon emissions was recently approved by the member states. Clarity on carbon prices that businesses will pay in the 2020s is set to be released in the autumn budget.
Furthermore, the first steps towards improving the functioning of retail markets for consumers has been outlined, with the Treasury reaffirming plans to make the markets work more efficiently and fairly.
To summarise what this means to the end user; there will be little to no impact in the immediate future but the wholesale energy markets will remain volatile as the GB pound continues to weaken in the wake of the UK’s decision to leave the EU.