The measure has cost €8.4bn (£7bn) and will protect the majority of households from the huge increases in energy bills seen here in the UK. Business presenter Ian King was asked about this in a Q&A on our Cost of Living blog – and has some answers about how it came about and whether it would work in the UK… Image: Business presenter Ian King Isn’t Europe more dependent on Russian gas? How can energy be cheaper in France? It is, in many cases. The typical German or Italian household, for example, currently pays more for its energy than the typical UK household. It’s also worth bearing in mind that energy tariffs in the UK are traditionally lower than in mainland Europe – it’s just that UK households tend to use more energy due to the UK’s older housing stock. France is an outlier because the vast majority of its energy comes from nuclear – so it is less exposed to higher gas, oil or coal prices. Are French households really paying less? France’s nuclear fleet is also aging and half of it is currently offline – so France may end up paying more over time as it looks for alternative energy sources. France is also an outlier because President Emmanuel Macron has frozen energy prices. But this will come at a huge cost to the French state. He has just spent €12 billion single-handedly buying the remaining 16% of EDF, the country’s main electricity provider, that the government did not already own. He did so because this price freeze will be disastrously expensive for EDF. The cost of this support can only become clear over time. Is nationalization the answer? France, as I say, is extreme in nationalizing EDF, its main electricity provider, but that is mainly because that company (which has always been under state control) is a basket case laden with debt that faces massive capital spending in the coming years because Mr Macron wants a massive rollout of new nuclear power stations. Such expenses can only be withheld by French taxpayers. And note that France does not take the same approach with its natural gas suppliers. Neither do comparable economies like Germany. Could the UK cap prices at 4%? We could – but the cost to the taxpayer (as it will be in France) would be enormous. And why would you want to subsidize those households that can afford to pay more instead of trying to target support to those most in need?
