Falling energy prices raise hopes of a Spring rate cut

The good news started with the revelation that last month had produced a surplus of £16.7 billion for the Treasury – double the surplus of the same month last year and a record-breaking amount (in nominal terms) since records began. This has boosted hopes that the Chancellor will be able to offer up more tax cuts in his Spring Budget (though admittedly his headroom to do so still seems to be notably less than the amount he had to play with last autumn to deliver the business tax cuts).

Now, as money comes off workers’ tax bills, their energy bills will fall too. This morning Ofgem announced changes to the energy price cap from April, which will fall by 12.3 per cent. The new cap for gas prices will be 6p per kWh, and 24p per kWh for electricity. This means the average household’s annual energy bill will total £1,690, a fall of £238 or roughly £20 a month.