Business
British households will be £1,000 worse off next year, thinktank warns
British households will be £1,000 worse off next year, thinktank warns
British households will be £1,000 worse off next year from a cost of living squeeze created by rising energy prices and shortages of workers and supplies caused by Covid and Brexit, a leading thinktank has warned.
The Resolution Foundation said higher levels of inflation would weigh down workers’ earnings next year, contributing to a hit to the average household income in Britain at a time when the government is cutting benefits and raising taxes.
It said the average household disposable income, after adjusting for inflation, would be about 2% lower by the end of 2022 relative to forecasts made in March by the Office for Budget Responsibility (OBR), before the surge in shop and energy bill prices.
Although the OBR had predicted that household disposable income would rise in 2022, the Resolution Foundation said soaring inflation would mean households would have £1,000 less than originally forecast.
“Higher inflation reduces the amount of goods and services that households are able to afford, eroding the real value of incomes,” it said.
The warning comes amid mounting concern over the impact of the rising cost of living this autumn, as surging wholesale gas and electricity costs feed through into higher energy bills, and as the price of a weekly shop climbs.
In an intervention before Rishi Sunak’s post-lockdown budget next week, the Resolution Foundation said that, on top of the hit from inflation, many households would also have to reckon with cuts to universal credit, while workers and businesses must budget for planned national insurance tax increases.
The government slashing universal credit by £20 a week from early October will cost those households £1,040 a year, including for millions of working families, in the biggest overnight cut for social security benefits on record.
Issuing the chancellor a warning that a “cost of living crunch” was brewing from the combined impact of inflation, tax rises and cuts, the thinktank said: “Together with a £13bn raid on household incomes from increases in NICs [National Insurance contributions], and sharp cuts to universal credit, there will be major headwinds to families’ spending power in the coming months.”
Official figures show inflation, as measured by the consumer prices index, had its biggest monthly jump on record in August, hitting an annual rate of 3.2%, the highest rate in nearly a decade after a sharp rise in the cost of energy, food and drink.
The Bank of England has warned rising household energy bills will cause inflation to peak above 4% this winter, with the gauge for the rising cost of living forecast to stay at elevated levels until at least the summer before gradually fading again.
Sunak has warned the sharp jump is a key risk being closely monitored by the Treasury for the potential impact it could have on the government finances, with the cost of servicing the national debt linked to inflation and interest rates.
The Resolution Foundation said the chancellor was on course for an improvement in the government’s finances worth about £30bn next year, compared with earlier forecasts for the budget deficit. However, it said this was smaller than some economists assumed because rising inflation was pushing up borrowing costs.
The thinktank also warned that Sunak had little wriggle room over coming years because of huge uncertainties over the economic outlook.
Britain’s economy is expected to grow by 7.5% this year, the fastest peacetime annual growth rate in nearly a century, after the largest contraction over the same period in 2020.
However, growth has slowed to just 0.3% in July and August, while fears are mounting over rising inflation and a possible need to raise interest rates to compensate.
James Smith, research director at the Resolution Foundation, said: “The backdrop to the budget will be a strong recovery from the pandemic that risks being derailed by rising inflation and economic disruption that will squeeze both the chancellor’s borrowing windfall and family budgets.
“The decisions that Rishi Sunak will take next Wednesday will help to define the rest of the parliament, and the type of chancellor he’ll be remembered as.
“But amid such long-term and legacy-defining announcements, he must not forget the cost of living crunch facing families up and down the country right now.”
The Treasury said: “We are supporting people with the cost of living, including through a new £500m support fund to help vulnerable households, the energy price cap, and support with energy bills through the winter.
“Our Plan for Jobs is also helping people across the country to find great work and progress in their careers.”
Business
Nigeria begins sales of Crude Oil in Naira
Nigeria has officially commenced the sale of crude oil and refined petroleum products in Naira.
This milestone, announced by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, marks a new chapter in the nation’s economic strategy.
Effective from October 1, 2024, the Federal Executive Council (FEC) directive to trade crude oil and petroleum products in Naira was implemented following a key meeting of the Implementation Committee.
The meeting included prominent stakeholders, such as the Minister of State for Petroleum (Oil), the Special Advisers to the President on Revenue and Energy, executives from the Nigerian National Petroleum Company (NNPC), and top representatives of the Dangote Group. The Group Chief Executive Officer (GCEO) of NNPC and its Chief Financial Officer (CFO) were also in attendance, underscoring the initiative’s national significance.
The strategic policy, championed by the Bola Ahmed Tinubu-led administration, is expected to reshape Nigeria’s economy.
By denominating oil sales in Naira, the country aims to bolster economic growth, enhance stability, and promote self-sufficiency.
The move is seen as a crucial step toward reducing dependency on foreign currencies, positioning Nigeria for long-term success amidst the ever-changing dynamics of global markets.
Business
Electricity Tariff hike: Nigeria’s discos collect N887bn as revenue
Revenue of electricity distribution companies in Nigeria increased to N887.86 billion in the first seven months of 2024 amid an electricity tariff hike.
This is according to the analysis of Nigerian Electricity Regulatory Commission data on Discos’ commercial performance for the seven months of 2024.
The data showed that out of N1.14 trillion electricity bill issued by Discos to customers, the companies recorded 79.7 percent collection efficiency which stood at N887.86bn in the period under review.
A breakdown of the bill collection by Discos from January to July 2024 includes N95bn, N97bn, N100.44bn, N142.92bn, N191.65bn, N150.86bn and N162.14bn which amounted to N887.86 billion.
Further analysis showed that during the corresponding period in 2023, the companies issued bills totaling N797.18 billion, while they managed to collect N604.15 billion.
This surge in revenue collection is not unconnected to the hike in electricity tariff in April from N66 per kilowatt-hour to N225.
Recall that amid the call for the electricity tariff hike reversal, it was reviewed downward to 206.68 per kilowatt-hour, but was reviewed upward to N209 per kilowatt-hour thereafter.
Though the electricity tariff hike was introduced for customers getting at least 20 hours of power supply, Nigerians have lamented the burden occasioned by the tariff.
The energy cost pain has been exacerbated as Discos migrate more consumers to Band A feeders.
The Minister of Power, Adebayo Adelabu, however, insisted that Nigeria’s electricity tariff is among the cheapest within African countries.
Business
FG unveils seven CNG conversion centres in Ekiti
The Presidential Compressed Natural Gas Initiative (P-CNGi) has unveiled seven centres where commercial transporters can convert their petrol to CNG-powered vehicles in Ekiti.
The Program Director of P-CNGi, Michael Oluwagbemi who spoke during the official unveiling of the centres and handing over of 15 CNG-powered buses to government in Ado-Ekiti, Ekiti State capital at the weekend, urged commercial transporters in the state to visit the centers to convert their vehicle free of charge.
He explained that the CNG initiative is cheaper, more convenient, and safer compared to petrol, noting that the administration of President Bola Tinubu is determined to energize the economy through the initiative which he said would create jobs and enhance sustainable development.
Oluwagbemi disclosed that the administration is targeting one million vehicle conversions to CNG by 2027, saying that no fewer than 125 centres have been opened across the country.
He listed the new centres in Ekiti state to include, Femoyo centres, Beijing Universal Limited, ABJ oil and gas, Bovas Company, and NADDC training center in the state capital.
The program director said that the 15 buses donated would be deployed for inter and intra-state transportation towards achieving about 40 percent reduction in the transportation cost and ultimately reduced hike in food items.
According to him, ” the government of President Bola Tinubu through the presidential CNG initiative is committed to ensuring they(transporters) use this for their vehicles because it is cheaper, cleaner and more importantly it is safer and more reliable.
” This is a compressed natural gas, it is not the same you use in your kitchen to cook. It is lighter and stored in a bulletproof container. It is also the fact it is produced in Nigeria and what the president said is that instead of us to continue to import poverty and export jobs. He said will need to look inward and use what God has given us.
” It is about job creation, it is about reducing the cost of transportation and ensuring economic development by moving away from subsidy payment where we were making the few richer.
” This is a more sensible and reliable path for Nigeria in terms of our energy sector, and that is what the president is doing with this initiative.”
Speaking, the state governor, Biodun Oyebanji commended the federal government for the initiative, adding that the state would support the programme towards ensuring that more vehicle owners embrace the CNG conversion.
The governor who was represented by the commissioner for Infrastructure and Public Utilities, Professor Mobolaji Aluko explained that the CNG conversion initiative would help in generating employment opportunities and economic development in line with his shared prosperity agenda for the state.
The state chairman of National Union of Road Transport Workers(NURTW) Joseph Falope and his counterpart in Road Transport Employers Association of Nigeria(RTEAN) Sunday Adeola, expressed delight over the initiative, assuring the government that members of their respective unions would take their vehicles for conversion to CNG.
On his part, the Chief Executive Officer of the National Automotive Design and Development Council (NADDC), Joseph Osanipin said the council has trained no fewer than 45 technicians across the state on how to convert petrol vehicles to CNG-powered vehicles.
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