Yeah, we all have our fears.
Here in UK the market is acutely aware of the new Government’s stated intention of capping household energy bills.
Bottom line is that the Govt will underpin any difference between energy wholesale price to energy co.s and the capped retail price to households - thus guaranteeing energy co.s profits.
Big problem is that it is impossible to put a number on future wholesale price whereas retail price will be set in stone.
The UK Govt does not have the money to fund this (limitless) bill so they have to borrow - second problem is that borrowing costs are on the up - 80% increase on same qtr as last year to be exact.
IN UK the Treasury is not dissimilar to a Central Bank in that they act in the Nation’s interest governed by civil servants and not politicians.
First act by the new Govt was to fire the head of the Treasury on Sep 8th without any stated reason - assumption is that he was not in agreement with the huge increase in borrowing.
Edit: Bloomberg reported yesterday:
Pound Hits Lowest Since 1985… Latest hit to currency is slide in UK retail sales data