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McClatchy-Tribune  01/20/2014 4:48 PM ET
Labour wipes pounds sterling 7bn off energy giants [Daily Mail, London :: ]

Jan. 20--LABOUR'S threats to meddle in the energy market have taken a pounds sterling 7bn toll on Britain's energy companies, the Mail can reveal.

British Gas owner Centrica and SSE have seen their market value fall by a fifth since September, when Ed Miliband promised to freeze prices if he wins the next election.

Shares slumped within days of the pledge, and have fallen steadily since.

News of the huge hit on the energy market comes as Miliband faces fresh criticism over plans to break up the banks to boost competition on the High Street.

The Labour leader was accused of 'economic vandalism' as almost pounds sterling 500m was knocked off the value of Royal Bank of Scotland on Friday after he pledged to force lenders to sell of branches.

Last night Metro Bank's founder and chairman Vernon Hill accused Miliband of 'meddling'. He said: 'The more any government meddles in the free market the weaker the result. In theory breaking up the big banks will give customers more choice, in practice I don't see a clear path to make that happen.'

Evidence of how the markets have baulked at the prospect of more state intervention has been seen in the energy market.

Centrica, one of the most widely-held shares in the FTSE 100, has fallen by more than pounds sterling 4bn in the last four months. SSE has also slumped by pounds sterling 2.5bn.

Last week analysts warned if Labour gets into power in 2015 'the financial repercussions could be severe'.

Analysts at Barclays said: 'We estimate that further price increases of around pounds sterling 40 per household will be required ahead of next winter.' They added: 'Centrica and SSE now face a UK energy supply margin squeeze regardless of the outcome of the election. 'We see ongoing cost pressures and little scope for an energy price rise. Thereafter, even if Labour's proposed tariff freeze never happens, we see little reason why retail margins should fully recover.'

The bank cut its price targets on both companies by 30pc, sending shares down sharply.

Supplying British homes with energy accounts for around 40pc of Centrica's profits, and around a fifth of SSE's.

They are two of the 'Big Six' energy companies in the UK the others being EDF, EON, Scottish Power and Npower.


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