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UK to cap energy bills with massive subsidy package as crisis escalates: reports

·1 min read

The United Kingdom is reportedly planning a monumental spending package aimed at providing relief for households and businesses as sky-high European energy prices are set to surge even further in the continent's ongoing crisis.

New British Prime Minister Liz Truss, who took the reins from Boris Johnson on Tuesday, is expected to cap household energy bills at around £2,500 ($2,887), according to the BBC.

News of the purported plan comes after the U.K.'s energy regulator Ofgem said average bills are set to rise from £1,971 ($2,276) to £3,549 ($4,098) over the next month or so, and climb again in January.

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The plan for helping consumers is estimated to cost U.K. taxpayers roughly £100 billion ($116 billion) via government-backed loans to suppliers, with full details slated to be revealed on Thursday.

A subsequent scheme to help businesses will follow, but those details are still being worked out, one source told Reuters.

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Europe has been grappling with soaring energy prices ever since Russia's invasion of Ukraine, after which Western sanctions against the Kremlin curbed global supply. Several nations that were heavily reliant on Russian oil and gas ahead of the invasion have been scrambling to wean themselves off Russian energy by seeking other suppliers and alternative energy sources.

The crisis escalated further when Russia's state-run energy company Gazprom shut down Nord Stream 1, a key gas pipeline to the continent.

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Benchmark European gas prices have soared roughly 340% in the past year, and spiked 35% on Monday after Gazprom announced the pipeline would be down indefinitely.

Reuters contributed to this report.