Bank of England's Bailey warns energy price surge is squeezing UK firms' margins and could fuel inflation

Bank of England governor Andrew Bailey warned at an IMF event in Bangkok that rising energy costs are forcing UK businesses to cut costs and squeeze their own margins rather than pass prices on to consumers, but he cautioned that this defence cannot hold indefinitely. He said the longer the energy situation persists, the harder it will become for firms to absorb costs without raising prices for shoppers.

Household energy bills are expected to rise at least 16 per cent in January, pushing Ofgem's annualised price cap to just under £2,000.