The UK is preparing a huge energy bailout that could cost $175 billion

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London (CNN Business)The United Kingdom's new premier minister is reportedly preparing to perpetrate arsenic overmuch as £150 cardinal ($172 billion) to shield households and businesses from soaring vigor bills, expanding authorities borrowing astatine a clip erstwhile investors are already connected borderline astir the country's finances.

Liz Truss, who earlier this week succeeded Boris Johnson, told lawmakers Wednesday that she would unveil her plans to tackle sky-high vigor prices connected Thursday.

Truss is drafting up plans to frost the mean yearly vigor measure for households astatine astir £2,500 ($2,860) for the adjacent 2 years, the Financial Times reported. That would mean bills rising by 27% from their existent level, but support them good beneath the £3,549 ($3,954) they would deed starting successful October without authorities intervention.

    The occupation   that should beryllium  keeping Liz Truss awake astatine  night

    It volition beryllium expensive. The FT reported that the program could see £90 cardinal ($103 billion) successful enactment to households, and up to £60 cardinal ($69 billion) for businesses, the FT said.

      If so, that would outstrip the magnitude the authorities spent subsidizing the salaries of millions of workers during the pandemic to forestall wide layoffs by a whopping £80 cardinal ($91 billion). It would besides dwarf the €95 cardinal ($94 billion) the German authorities has promised truthful acold this twelvemonth to assistance its households and businesses meet their vigor costs.

      Breaking the bank?

      Like the remainder of Europe, the United Kingdom is grappling with however to wage for its ambitious alleviation package.

        The details of Truss' plans are inactive unclear, but she has already made 1 happening certain: The UK authorities is not imposing a caller "windfall tax" connected the bumper profits its vigor companies.

        On Wednesday, she ruled retired extending the £5 cardinal ($6 billion) taxation erstwhile concern curate Rishi Sunak introduced successful May connected UK lipid and state producers to money an earlier vigor alleviation package.

        "I americium against a windfall tax," she told parliament. "I judge it is the incorrect happening to beryllium putting companies disconnected investing successful the United Kingdom conscionable erstwhile we request to beryllium increasing the economy," she added.

        Truss has repeatedly promised to chopped taxes, alternatively than rise them, successful the anticipation of reviving the ailing economy. Without a windfall tax, she's apt to person to summation authorities borrowing to subsidize bills.

        Kwasi Kwarteng, the country's caller concern minister, besides indicated implicit the play that much borrowing was connected the way.

        "Given the severity of the situation we face, determination volition request to beryllium immoderate fiscal loosening to assistance radical done the winter," helium wrote successful the FT.

        Yet dense borrowing — successful summation to the tax cuts and other defence spending promised by Truss during her run — risks further spooking investors already disquieted that the UK's finances are connected an unsustainable path.

        That could nonstop the lb into a tailspin, which would further thrust up prices and marque it harder to wage for indispensable imports. The currency has already mislaid astir 15% of its worth against the US dollar this year.

        But Britons are successful hopeless request of support, beyond the £33 cardinal ($39 billion) the Institute for Government (IfG) calculates the authorities has already committed this year. That assistance has travel done a premix of taxation cuts, vigor measure rebates and nonstop payments to households, the IfG said.

          Without a caller program to clasp down prices, the mean yearly measure for millions could apical £5,700 ($6,513) from adjacent April, according to a Wednesday estimation by probe steadfast Auxilione. Bills for tiny businesses are rising astatine an adjacent faster rate.

          Julia Horowitz contributed reporting.

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