Banks could help UK energy firms ease gas price hike

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Banks could help UK energy firms ease gas price hike

The gas ring of an oven in Durham, Britain, was sunk on September 23, 2021 by a domestic gas ring in Durham, Britain. The BBC said Britain's government is considering a plan to smooth out a rise in energy costs due to hit households in April.

The broadcaster reported that big banks would lend billions of pounds to energy companies under a cost deferral mechanism, which would allow them to spread the increase in gas bills over five or 10 years.

Britain's finance ministry could play a role by guaranteeing loans to the energy firms.

Government officials were considering using the Bank of England, which provided emergency loans to businesses during the coronaviruses epidemic, to provide upfront funding, the BBC said late on Friday.

Other options for the government to reduce the impact of the tariff hike - which could see bills rise by 50% after a surge in international energy prices - include an expansion of a discount scheme for low-income households or cuts to taxes on energy.

Prime Minister Boris Johnson is under pressure to act before an expected rise in the fuel price cap, which is expected to take Britain's inflation rate to 6% or higher in April, when tax payments are due to go up for workers and employers.

The cost-of-living squeeze is compounding the problems for Johnson, who is facing calls to resign from some members of his Conservative Party after revelations of parties in Downing Street when social mixing was restricted.