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The complete lockdown was announced in the United Kingdom by the Prime Minister Boris Johnson on 23rd March 2020 in a bid to contain the spread of coronavirus. But due to the countrywide lockdown all the essential businesses all over the United Kingdom were closed with immediate effects. Three weeks later, i.e. on 16th April 2020, Foreign Secretary Dominic Raab declared that lockdown would further continue for another three weeks till May 2020. The government has been actively adopting all the essential measures to curb the community transmission of the virus that in turn brought the economy to a grinding slow. The complete lockdown has not only affected the businesses and day to day lives, but it has also been affecting the energy bills of UK households.
During the lockdown period, the consumption of household electric appliances such as washing machine, ovens, televisions, computers, lights/fans and dishwashers has significantly increased, which is expected to result into an average upsurge of around £32 in energy bills per month that means additional burden of ~£387 over a year on households. The market expectations are based on the reports coming in from the survey conducted by the price comparison site (comparethemarket.com) on 2,000 UK consumers. The survey reported that around three fourth of the consumers they surveyed have answered in affirmative to the question of increase use of energies during the lockdown with about half of them considering more family members working from home.
Given the amount of adversities, energy companies have decided to initiate a compassionate approach in favour of their customers. That is, the companies are planning to reduce or hold on to the debt repayment and energy bill payments of the consumers who are struggling through a financial setback due to the coronavirus fallout. They are driven with the objective to ensure the supply of gas and electricity to the most vulnerable people at this time of global crisis.
Let’s take a glimpse on essential points on energy bills during the lockdown.
- Head of Energy at comparethemarket.com, Peter Earl stated that the lockdown had increased the time spending inside the home, which is leading to higher energy consumption.
- As per the survey report, the increase in energy bill is a big concern for almost half of the participants in the survey.
- The report reads that around 36 per cent families stated that they switched off their home heater to reduce the electricity bill. However, about 27 per cent are restricting their lights usage.
- Energy regulator Ofgem has recently placed a price cap on standard variable tariffs to provide a fair price to the household consumers of energy with effect from 1 April 2020, for next six months.
- According to Ofgem, 15 million British families are on their providers’ minimum-competitive standard variable charge, which would cost them on average £362 per year.
UK House Prices Talk During The Lockdown
Till now, the novel coronavirus lockdown has impacted the retail sector, aviation sector, energy sector and transport sector, among others, in the United Kingdom. But there is one more sector, i.e. the housing sector, that has joined the queue of downsize risk due to the virus-induced economic downturn. The housing companies are unable to operate effectively as lockdown restrictions have slammed the risk of collapse in the UK housing sales.
According to a global consultancy Knight Frank, the sale of homes in the United Kingdom could fall in the year 2020 as the property market is frozen. It reported that the prices of houses could decrease by 3 per cent; however, have the potential to recover in the next financial year. The consultancy said in the early of the previous month that the total number of house sales would drop to 734,000 in the year 2020 as compared to ~1.17 million last year. As per the media report, many of the real estate agents have complained that their businesses have collapsed completely. They have further informed that last week the number of sales has decreased by 84.2 per cent yearly, exchanges also dropped by 66.6 per cent, and the volume of deals had tumbled by 70 per cent.
However, there has been a significant rise in the average price of a Britain home in March as per the Nationwide Building Society. It that house prices increased by 0.7 per cent from March to April 2020 and was 3.7 per cent higher as compared to the prior year. But as per the lender, the impact of novel coronavirus lockdown has not been taken fully taken into consideration at the time of analysis. The Nationwide Chief Economist Robert Gardner stated that the position for the housing market is highly uncertain, depending on economic conditions.
Let’s take a look at the latest news updates of the Housing Market as follows:
- According to the Press Association reports, the average home value growth exceeded £220,000 in the previous month, i.e. in April 2020 despite markets not operating fully.
- Nationwide Building Society told media that the value of average property throughout the UK have reached a record high to £222,915.
- According to the Bank of England, the new mortgage levels toppled to a low level in the last seven years in March 2020, when the COVID-19 started impacting the UK property market.
Lockdown impact on the United Kingdom’s Economy
As per Office for Budget Responsibility (OBR), UK economy could shrink by 35 per cent in the period of three month, i.e. April to June 2020. The UK independent budget forecaster further reported that gross domestic product could plunge by 13 per cent for the entire year 2020 with unemployment expected to increase by over 2 million due to novel coronavirus crisis.
The lockdown has become a bottle neck to the retail businesses in the United Kingdom. Small businesses such as retail companies, restaurants and hotels etc. are not able to start their operations, which directly is affecting the entire UK economy. The aviation sector and energy sector, which are the backbone of Britain, have also experienced huge losses due to travel restrictions and complete lockdown. However, the UK government has been closely working towards the revival of economy and reopening of country in phases that could help the businesses and people navigate through the tough times of financial distress led by the public health emergency.
