UK economy grows by 0.4% in May; households face £94 water bill increase over next five years | Business

Key events

In return for being able to increase their bills, water companies must invest in the following, the regulator said:

Improving the environment

  • Delivering more than 2,500 projects to reduce spills from storm overflows

  • Upgrading over 1,500 wastewater treatment works

  • Improving or protecting over 15,000km of rivers across England and Wales

  • Expanding use of nature-based solutions – with £2bn of green schemes proposed

  • Putting the sector on track to meet net zero emissions by 2050

Improving service

  • Improving drinking water quality – targeting 21% fewer contacts received by water companies

  • Stretching targets on reducing sewer flooding

  • Better customer service incentives – companies only rewarded for good customer service compared to other sectors

Protecting our water and wastewater system

  • A major expansion in new water assets, including nine new reservoirs and progressing seven large-scale water transfer projects

  • Delivering 425 million extra litres of water supply per day by 2030

  • Getting leakage down by a further 13% – to the lowest level since privatisation

  • The biggest smart meter rollout to date, with 10 million to be delivered

  • Tripling the rate of replacing water mains


The water regulator said companies should triple investment in new infrastructure and resources compared to 2020-25, to improve the environment, resilience, and service – from £11bn to £35bn. Nearly 90% of this investment is needed to meet legal requirements. Ofwat added:

Companies have proposed increased support for those struggling to pay, with an estimated 1.4 million more customers to pay reduced tariffs.


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The increases in average water bills range from £66 at Anglian Water over the next five years, £99 at Thames Water, £107 at Yorkshire Water and £199 at Southern Water.

Despite the increases, water bills bills are on average £44 per year lower than what companies proposed, Ofwat said in its draft determinations for the water industry.

This is mainly because we have challenged companies’ view of what they need to spend, and because some companies based their plans on an investor return above the level we think is fair.

Water bills. Photograph: Ofwat

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Introduction: UK economy grows by 0.4% in May; households face £94 water bill increase over next five years

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

England are through to the final in the euro men’s football tournament, and the UK economy has returned to growth.

In other news, the average water bill is set to rise by £94 over the next five years in England and Wales, the water regulator Ofwat said.

The 21% increase, or £19 a year on average, is intended to fund investment at water companies for improvements such as fixing leaking pipes and tackling the discharge of sewage into rivers and seas. Is is lower than water companies had asked for.

The UK economy grew by 0.4% in May after showing no growth in April, resuming its recovery from last year’s recession, according to official figures.

April was a very wet month, putting consumers off from spending on the high street.

The outcome is better than the 0.2% growth forecast by econommists.

GDP grew by 0.9% in the three months to May compared with the the three months to February, driven by 1.1% expansion in services output, according to the Office for National Statistics.

In May alone, services output rose by 0.3%, the same rate as in April (revised up from 0.2%), and was the biggest contributor to growth.

Production output grew by 0.2% in May following a drop of 0.9% in April, and posted zero growth in the three months to May.

Construction output grew by 1.9% in May, following a fall of 1.1% in April (revised higher from a fall of 1.4%), and declined by 0.7% in the three months to May.

The Agenda

  • 1.30pm BST: US Inflation for June (forecast: 3.1%), core inflation (forecast: 3.4%)

  • 1.30pm BST: US jobless claims


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