The Irish Government should not copy the British Government’s “bonkers” plan to cap the price of energy, an adjunct professor of economics has said. 

The new British Prime Minister, Liz Truss, has announced that household energy bills could be capped at around £2,500 (€2,875) a year, while businesses will also be entitled to receive Government support. 

Such a plan would cost British taxpayers around £100 billion and would be funded by borrowing and higher tax receipts from sales of North Sea oil and gas.

However, Professor John Fitzgerald of Trinity College, Dublin believes the plan could end in economic ruin: 

“You’re talking about 4, 5% of national income in Britain,” he told Newstalk Breakfast. 

“This is what the British Government did when faced with a very similar shock in the oil price crisis of the 70s and they ended up in September 1976 having to go to the IMF cap in hand looking for a backup loan. 

“Been there, done that. We can’t do that, we’re not going to do that. The United Kingdom is heading for the rocks - fast.”

Targeted support

Instead, he wants the Irish Government to introduce targeted measure to help the poorest in society:  

“Everyone in Ireland is 3% worse off on average and we’ve got to share out that worse offness,” he lamented. 

“You can’t protect the bulk of the population from being 3% worse off. It could be 5% by the end of next year.

“So yes there’s a big hit and I think you’ve got to target your resources… We need to concentrate on those who are going to go cold, not those who can afford to pay.” 

A hand counting expenses of an electricity bill on smartphone calculator. Picture by: Sergio Monti / Alamy Stock Photo

Sinn Féin have proposed that the Government reduce energy bills to pre-crisis levels - a policy Professor Fitzgerald said was not a good idea. 

“We’re all worse off and we have to take the hit,” he argued. 

“The question is ‘who takes the hit?’”

Main image: A radiator.