Professor says Ireland copying UK’s energy price cap would be ‘bonkers’

New Prime Minister Liz Truss announced on Thursday that the typical British household “will pay no more than £2,500 (€2,880) per year for each of the next two years”.

The cap will be put in place from October 1, and will give the average household “a £1,000 (€1,152) saving per year”.

However, Trinity College Dublin’s Professor John Fitzgerald believes the plan will be an economic disaster and advises the Irish Government not to follow suit.

“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,” he told Newstalk Breakfast.

“Been there, done that. We can’t do that; we’re not going to do that. The UK are heading for the rocks fast.”

Mr Fitzgerald said that the Irish Government must introduce a measure that protects those most at risk of going cold this winter, particularly in urban areas where gas prices continue to skyrocket.

“This is a gas problem. It’s not an oil problem. Oil prices are higher but they’re on the way down at this stage.

“If you take your average household, an average gas household in 2019 spent about €1,000 a year and an average oil household, which would be rural, spent €1,400.

“Gas prices are going to go in only one direction – substantially up. There’s a real problem that urban households could be spending €3,000 a year on gas.”

Continuing, he added: “Everyone in Ireland is 3pc worse off on average and we’ve got to share out that worse offness.

“You can’t protect the bulk of the population from being 3pc worse off. It could be 5pc 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.”

It comes after Energia became the sixth energy supplier in the past fortnight to hike its prices.

This is Energia’s second price rise this year, and last year it had three increases.

The group, which is one of the big four suppliers in the market, has around 220,000 household customers.

When all five increases are taken into account households face paying more than €1,200 more for their electricity, and over €1,000 more for their gas over a year.