Nearly 100,000 additional COVID-19 cases were confirmed in the U.K. throughout September in a worrying acceleration that saw cases rise three times faster than in August. The U.K.’s nascent economic recovery was already under threat as the post-lockdown recovery lost momentum, and with new restrictions put in place by the government to try and control this latest surge, the economic outlook turned even gloomier as the Autumn looms.
Further exacerbating the uncertainty is the rapidly approaching Brexit deadline which looks increasingly likely to arrive without a deal being struck between the two sides. Moreover, the Chancellor of the Exchequer Rishi Sunak looks to relieve the tax payer’s current burden of supporting the jobs market, paving the way for spikes in unemployment in late-2020 and early-2021 as the U.K. moves to a more selective income support scheme from November 1st.
The bearish headwinds and ongoing uncertainty have weighed on the U.K. energy market, with annual gas and power falling month-on-month. Gas fundamentals remain largely bullish, however, as they did throughout August, which has limited the losses in gas futures. U.K. power futures end the month firmly in the red, feeling weight of both the deteriorating economic outlook and month-on-month declines in carbon EUAs.
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