Energy regulator Ofgem has warned that the current free-market model for the industry is not fit for purpose and could lead to supply shortages and spiralling fuel poverty.

Ofgem said failure to reform the energy system could mean power shortages after 2015, while inaction will lead to a "degree of crisis" in three or four years.

It acknowledged that sticking with the current market was "not an option" - barely two years after it declared privatisation was working - and hinted at nationalisation as a possible solution.

The report expressed "reasonable doubt" over the security and sustainability of the country's power supplies amid a perfect storm of the financial crisis, environmental targets, dependency on imported gas and the closure of ageing power stations.

It has predicted average household bills could jump as much as 25% - to nearly £2,000 - without radical moves.
 

The National Institute of Economic and Social Research (NIESR) data showed a 4.8pc fall in gross domestic product (GDP) for 2009, Britain’s biggest contraction since 1921.

Describing the downturn as a “depression”, NIESR said that output fell sharply for 12 months until March 2009, “and has not changed very much since then, although evidence of a recovery is starting to emerge.”

NIESR estimated that UK gross domestic product increased by 0.3% in the third quarter of 2009, compared to the third quarter.It means that the economy shrank by 4.8% in 2009 - the steepest fall in GDP since 1921. It was more than in any year during the Great Depression.

If NIESR is correct and the economy did start growing again in the fourth quarter it would mark the first rise in GDP in six quarters, since the first three months of 2008.
 

UK house prices rose by 5.9% in 2009, making some recovery from the massive falls seen last year, the Nationwide building society has said. It means the typical home has regained roughly a third of the 15.9% lost in 2008.

The rise is good news for homeowners who had slipped into negative equity. It will also benefit many who are coming to the end of fixed-rate mortgages.

They faced paying a higher interest rate as the falling value of their home meant they had a smaller deposit. But it is less welcome for first-time buyers.

Most lenders are still demanding at least a 10% deposit and are reserving their lowest mortgage rates for those who are able to put down 40%.

However, the Nationwide predicted that prices would change little over the coming year.
 

Britain's banks expect to make credit more easily available to households and businesses in the first quarter of 2010, a survey by the Bank of England showed today, suggesting the credit freeze is slowly thawing.

The Bank's quarterly credit conditions survey showed that lenders said the improvement in mortgage choice was greatest for people seeking to borrow more than 75% of their property's value – a group that has been hit hardest by the credit crunch.

However, the increase was lower than expected and weaker than the prior month and suggests smaller firms are still struggling to borrow money. For the first time since the second quarter of 2007, there has been a rise in credit availability for commercial property firms.

This signals a belief that the slump in office values has bottomed out.
 

The head of the CBI has called on ministers to bring forward plans to deal with the UK's deficit within the lifetime of the next Parliament.

Richard Lambert said he was "not satisfied" with the plans set out by Chancellor Alistair Darling in last month's pre-Budget report.

He said plans for legislation to bind the government into halving the deficit within four years were no substitute for spelling out how to fix the "big structural problems" in the public finances.

But he was upbeat about the prospects for the economy in 2010, saying national income was expected to grow.

However he said there was a "terrific amount of uncertainty" about the economy generally - not least because of the impending election.