Long-term loans could help energy suppliers survive, say experts

Banks and energy firms should help finance a freeze on household energy bills, according to a think tank

Banks and energy suppliers will have to come together to share the burden of skyrocketing energy prices.

That’s the suggestion from the Social Market Foundation which suggests that both energy providers and the government should purchase collateral assets to back a funding facility to support energy companies struggling to stay afloat.

According to the proposal, that collateral would encourage banks to offer long-term loans to help energy companies survive.

The think tank proposes that loans from the facility should be in place for up to 30 years, giving energy providers decades to recoup their losses through slightly higher household bills.

The energy price cap will increase to £3,549 from 1st October – experts have predicted that energy bills could rise above £5,000 next year.

Michael Johnson, Analyst for the Social Market Foundation and former Investment Banker, said: “These proposals build upon the energy providers’ sensible suggestion to freeze the energy price cap and the establishment of a funding facility.

“Inspiration is drawn from a significant precedent, the highly successful Brady Plan, executed in the 1980s to help resolve a sovereign debt crisis. Today’s energy cost challenge is commensurate in scale and required timeframe for resolution.”

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