Gas Infrastructure Europe says gas stocks have reached 98pc in France, 94pc in Germany, and 92pc in Italy. This is enough to muddle through the winter so long as there is no polar vortex.
The Government calculated the cost of the energy cap at around 600 pence per therm for December gas. The actual cost for December contracts is now 435 p/therm.
The November contract is down to 294 p/therm – already at or below the guarantee. Predictions of an energy cap of £7,000 or more by next April were always dubious – if not a publicity stunt – since they overlooked demand destruction across Asia.
Goldman Sachs thinks European wholesale prices may fall a further 40pc by late winter. Average energy bills in the UK would in that case fall to £2,000 or less.
The Government could put its cheque book back in the drawer.
Douglas McWilliams, from the Centre of Economics and Business Research, says that the public finances are in better shape than widely-supposed.
Bracket creep largely offsets the fiscal effect of tax cuts announced by Kwasi Kwarteng, the Chancellor. “There are two stealth mechanisms at work. They give the Government £60bn to play with over two years,” McWilliams says.
One of them is the freeze in tax thresholds. The other is to hold public sector pay rises below inflation.
“If our calculations are right it would appear that the Chancellor has managed to burn his reputation for fiscal prudence for no good reason at all. He would have been better advised to have done his sums before presenting his budget to the markets,” he says.
The rating agencies may have been trigger-happy in rushing out warnings on the UK.
Fitch Ratings made eye-watering assertions in a note on Thursday that could only be plausible in a disaster scenario, in which circumstances the fiscal strain would be equally bad in Europe. A growing number of states have comparable price caps.
Fitch put the UK on negative watch, predicting that the budget deficit will rise to 8.8pc of GDP next year if there is no fiscal U-turn. The gross debt ratio will rise from 101pc to 109pc of GDP by 2024 – under its house measure, different from other bodies.
This eight percentage point rise borders on science fiction given that inflation is whittling down the underlying debt burden faster than it is lifting the debt-service cost of index-linked gilts.
Fitch says extra tax measures will reduce revenue by £28bn this year and £31bn next year. This is an annual loosening of roughly 1.2pc of GDP, a level that would not normally lead to a gilts crisis.
Clearly there are other factors at work: stress across the entire global bond market and the ideological direction of an untested Government. But the hard numbers are not that large.
Events in Ukraine will chiefly determine gas prices and the fiscal costs of recession. Clearly anything could happen. But the balance of probability is that Putin will soon have to focus all his efforts on an internal power struggle at home.
Historian Timothy Snyder says Putin’s defeat on the battlefield is setting off a cascade-effect within Russia.
Factional warlords (Kadyrov, Prigozhin) and parts of the Russian army are already in sauve-qui-peut mode, undercutting each other and striving to preserve their forces for the political convulsions of the post-invasion era.
Putin’s own survival now depends on finding a quick way out of his predicament before the whole Russian line collapses.
Even if the Nord Stream pipelines are damaged irreparably, significant flows of Russian gas could resume in time for the winter of 2023-2024 through the Yamal route via Poland and the nexus of pipelines through Ukraine. The EU would seize the chance if there is a change of music in the Kremlin.
We may be nearing the point where the futures market begins to price an end to the global gas crisis.
