Europe faces higher energy costs, new taxes

From 1 October 2026, millions of UK households face higher energy costs as the regulator Ofgem increased its quarterly price cap by 4%. The change lifts the typical annual dual-fuel bill for a household using both gas and electricity and paying by direct debit to £1,723. For such a customer, this represents an increase of about £60 per year, or roughly £5 per month, if this level were sustained for a full year.

The price cap adjustment comes at the start of the colder months, when energy use typically rises. The new level sets a benchmark for suppliers’ standard variable tariffs and directly shapes the bills of customers who are not on fixed-price deals, making the timing significant for household budgets.

Consultancy Cornwall Insight forecasts that the energy price cap could rise further by about 16% in January 2027. On this projection, the typical annual dual-fuel bill for a household would increase to around £1,999. The forecast points to a sharp step-up in costs within a short period, relative to the current £1,723 level.

Such a rise would come in the middle of winter, when heating demand is highest. The prospect of a 16% increase adds to concerns about how households, particularly those on lower incomes, will manage higher bills if the forecast materialises.

Price movements on European natural gas markets highlight pressure on near-term supply and storage. On the ICE exchange, October futures for European-traded natural gas are reported as more than double the price of February futures. This structure indicates that gas delivered in the immediate period commands a significant premium over later in the winter.

Higher prompt prices raise the cost of filling storage and increase exposure for market participants that must buy gas on the open market. In contemporaneous trading, UK gas prices were reported above 150 pence per therm, further underscoring elevated procurement costs for utilities and other buyers heading into winter.

In Poland, policymakers are responding to energy cost pressures through new taxation and price measures. On 1 October 2026, President Karol Nawrocki signed a government bill introducing a windfall tax on fuel companies. He also said he would refer the law to the Constitutional Tribunal, adding a legal review step to the process.

The levy applies to profits from fuel sales between 1 March 2026 and 31 March 2027 and is estimated by the government to raise about PLN 4 billion in revenue. At the same time, the government announced measures, including VAT and excise adjustments and regulations, which it says could reduce pump prices by approximately PLN 1.20–1.30 per litre. The combined approach aims to capture part of fuel companies’ profits while seeking to ease costs for drivers.