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Lower gas price to improve UK outlook

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I appreciate that we have been taking a very negative view on the economy for several months now. Some say that is because as IP’s we are naturally pessimistic, but that is not a view we share – it is just the way we have been seeing the outlook for UK Plc.

However, something has given us a positive feeling and that is the price of natural gas.

Last week the spot price went negative very briefly. This, according to industry experts is due to the fact that most of Europe has been stockpiling gas ready for winter and that the recent higher than expected temperatures has meant that demand has been lower than anticipated.

The experts are saying that this fall in price will not be reflected in household bills because the gas suppliers are not offloading onto European shores but redirecting the ships to Asia where demand (and so price) remains higher.

However, wearing our ‘positive thoughts’ cap, we feel that there could be benefit to us here in the UK. If we do not suddenly see a really harsh winter, we think that the current low gas price will positively impact us in the UK. There are, in our opinion, two reasons for this which are that we have all been scared into cutting back on energy usage already which has been made easier by the mild weather and secondly that we think the Bank will already be factoring this into their current calculations and, hopefully, will be thinking that actually, considering inflation has largely been caused by external factors (the war etc) the outlook may not be as bad and actually rates do not need to be hiked as much as previously thought.

Of course we may well be proved wrong but what do you think? Are we missing something fundamental?