UK Energy Pricing Trends - Oct. 2020
29 Oct 2020
The resurgence of COVID-19, and the progressively more stringent lockdown measures continued to guide market sentiment throughout October. With the growing prevalence of the disease – reflected in a doubling of hospital admissions and a 5-fold increase in daily deaths – the U.K. government’s tiered virus-restriction system posed further threat to an already faltering economic recovery. The 5.5% contraction in year-on-year economic activity, forecast at the start of October, now looks rather optimistic with the latest forecasts placing the U.K.’s year-end GDP growth at -10%.
A U-turn expansion of the Job Retention Scheme, introduced by the Chancellor of the Exchequer Rishi Sunak, attempts to keep the current 4.5% unemployment rate at bay; yet has seemingly done little to lift Britain’s economic outlook.
A Brexit deal inched closer in the last week of October: EU and U.K. negotiators managed to resolve some, but far from all, of the disagreements that have long bedevilled the Brexit talks.
In all, a dismal month of progress failed to provide any truly concrete signs that a deal would be reached. Bearish sentiment, riddled with uncertainty and fuelled by a dampened economic outlook, pressured oil, equity and emissions markets. Yet, U.K. power futures received support from a gas market characterised by tight supplies and elevated demand for heating requirements.
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