A prolonged surge in energy prices could push Britain’s household energy costs sharply higher, according to analysts at Deutsche Bank.
The bank warned that if oil prices remain around $100 a barrel and gas contract prices reach about 143p per therm, the UK energy price cap could climb to around £2,500 in July — a 52% increase from the current cap of £1,641.
Sanjay Raja said such a scenario — which is not the bank’s central forecast — would push UK inflation to a peak of roughly 3.8% in 2027, compared with around 3% recorded in January.
The surge in energy costs would also weigh heavily on economic growth. Deutsche Bank estimates UK GDP could expand by just 0.6% this year under this scenario, down from its existing forecast of 1.1%.
At the same time, the bank expects unemployment could rise to 5.9%, compared with 5.2% at the end of last year, highlighting the broader economic risks posed by a sustained energy shock.
