Price caps and economic stability: How to manage the Iran war energy shock? (opens in new tab)

As it drives up inflation, we estimate the Treasury could lose up to £8 billion a year from higher debt payments and lower tax revenues that result from lower economic growth. Relying solely on interest rates to combat the inflation spike would be a mistake.In this report we explore how a well-designed intervention that caps energy prices can limit inflation and insure against the worst outcomes. We also show how the upfront fiscal costs would be offset by higher growth and lower debt payment...