Lights go out across Britain as recession hits home

Britain's days as the fastest growing economy in Europe were officially declared over yesterday as the deepest recession in a generation saw consumers turning off the lights and Poles returning home.

While official figures showed the economy contracting at its fastest since 1980, National Grid said demand for electricity had fallen over Christmas at homes and factories across the land, and Poland confirmed that thousands of its citizens were coming home from Britain and Ireland.

National Grid said it was cutting its forecast for electricity consumption this year because of the recession. The thousands of people being laid off each week and the hundreds of firms cutting production are reducing demand.

Industry has suffered most in this recession and made the biggest contribution to the slump in national output, which fell by a worse-than-expected 1.5% in the fourth quarter of last year compared to the third - or around 6% on an annualised basis.

As the economy had contracted by 0.6% in the July to September period, Britain now meets the most common definition of a recession - two consecutive quarters of shrinkage. But some analysts say the country fell into recession last April

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Climate shift 'killing US trees'

Old growth trees in western parts of the US are probably being killed as a result of regional changes to the climate, a study has suggested.

Analysis of undisturbed forests showed that the trees' mortality rate had doubled since 1955, researchers said.

They warned that the loss of old growth trees could have implications for the areas' ecology and for the amount of carbon that the forests could store.

The findings have been published in the journal Science.

"Data from unmanaged old forests in the western US showed that background mortality rates have increased rapidly in recent decades," the team of US and Canadian scientists wrote.

"Because mortality increased in small trees, the overall increase in mortality rates cannot be attributed to ageing of large trees," they added.

"Regional warming and consequent increases in water deficits are likely contributors to the increase in tree mortality rates."

Water woes

After ruling out a variety of other possible factors, including insect attacks and air pollution, the researchers concluded that regional warming was the dominant contributor.

"From the 1970s to 2006, the mean annual temperature of the western US increased at a rate of 0.3C to 0.4C per decade, even approached 0.5C," they observed.

"This regional warming has contributed to widespread hydrological changes, such as declining fraction of precipitation falling as snow, declining snowpack water content, earlier spring snowmelt and a consequent lengthening of summer drought."

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Switch now or wait and see?

British Gas has become the first large energy supplier to break ranks and cut prices, taking 10pc off its standard gas tariff.

The cut will come into effect on February 19 and means that the average British Gas dual fuel bill will drop from £1,328 to £1,240, a saving of £88 a year.

However, experts said the cut nowhere near made up for recent rises in the cost of gas. British Gas increased its prices by 46pc in 2008. Some also advised consumers to wait and see whether other energy providers dropped their prices before switching to a cheaper tariff. It is expected that other providers are likely to announce similar cuts.

"Now that Britain’s biggest supplier has made the move, other suppliers will be under pressure to follow suit. We are sure to see a flurry of pricing announcements," said Ann Robinson, head of consumer policy at financial comparison site uSwitch.

However, she added that the cuts were likely to be "too little, and too late" to help consumers with this winter’s fuel bills.

The British Gas cut means that its WebSaver tariff, which is guaranteed to be 10pc below its ordinary tariff, will be the cheapest option for many customers across the country.

Gareth Kloet, head of utilities at website Confused.com, advised customers to switch now, despite the expected price cuts. "We’ve waited too long for cuts," he said. "We’ve seen suppliers tinkering with tariffs, but this is really good news for customers."

His company provided the table (right, click to enlarge) of the best deals in each area of the country.

Watchdog Consumer Focus welcomed the price cut, saying British Gas had "done the right thing". "We will now turn the heat up on the other five companies that are keeping prices sky high," said chief executive Ed Mayo.

Meanwhile, Age Concern said that, unless there were further price cuts from all suppliers, "many of the poorest pensioners will continue struggle to pay their energy bills".

A spokesman for British Gas said: "Wholesale prices have come down enough for us to begin lowering prices for our customers. We'll continue to watch wholesale prices carefully and if they go down again significantly we will pass this on to our customers."

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British Gas is cutting its gas prices by 10%

British Gas said today it would cut residential gas prices by 10% next month, sparking hopes that the move will put pressure on other suppliers to follow suit.

The company, the biggest gas supplier to the UK residential market, said the move would benefit 7.5m households and save £84 on average household gas bills. The cut will not affect customers on fixed-rate deals or those who only buy electricity from British Gas.

Though some observers described the move as a welcome first step, there was disappointment the company had not gone further in reversing last summer's 35% rise in gas bills, which itself followed a 15% increase last January.

Phil Bentley, British Gas managing director, said wholesale gas prices had almost doubled last year and the market had been very volatile. "We buy gas months before it is used so we can make sure we always have enough for our customers, and can protect them from sudden rises in wholesale prices," he said.

Bentley said the company understood that energy bills represented a "significant cost" for customers. "This price cut will go some way towards helping customers manage their budgets and we will continue to do for them what we can, when we can."

British Gas rejected suggestions from some of the company's competitors that the price cut simply represented a "catch-up" move. It said British Gas had not cut electricity prices because wholesale prices had fallen more slowly and it had increased electricity bills by less than gas prices last year.

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