Jeremy Hunt is expected to extend the government’s energy price guarantee at its current level for three more months, preventing household bills from increasing by an average of £500 from April.
The energy price guarantee is set to increase its threshold from £2,500 to £3,000, despite wholesale gas prices dropping 40% since the beginning of the year.
However, the Chancellor plans to maintain the guarantee until wholesale prices have fallen to a level where it is no longer necessary.
Energy companies are preparing to adjust bills as they expect Mr Hunt to retain the government’s support package at £2,500 a year.
Martin Lewis, a consumer champion, believes there is a better than 50% chance that annual energy bills will remain at £2,500 rather than rise to £3,000.
The government has stated that the energy price guarantee is under review, and the Treasury source declined to comment on speculation.
Mr Hunt will announce his next Budget on March 15. Some city economists have already factored in an unchanged energy price guarantee into their forecasts, with JP Morgan no longer predicting a recession, Deutsche Bank expecting a shallower contraction in the second quarter, and Citi anticipating a drop in inflation below 3% by the end of 2023.
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