Time to wrap up.

Britain’s seventh biggest energy supplier Bulb, which provides gas or electricity to 1.7 million households, is to enter special administration in the largest casualty yet of the energy crisis.

European consumer confidence has dropped, as rising pandemic cases and inflation worry citizens, as the euro hit a 21-month low against the pound.

Germany’s Bundesbank has warned that inflation could soon approach 6%, and that growth in Europe’s largest economy may faltered this quarter.

Joe Biden has nominated Jay Powell to serve a second term as chair of the Federal Reserve, as the US battles high inflation and tries to recover jobs lost in the pandemic.

The news drove Wall Street to record highs, but will disappoint progressives who favoured Lael Brainard (who gets the vice-chair position).

The UK’s recovery will be less speedy than hoped in 2021 and 2022, according to new forecasts from EY Item Club.

Shares in Marks & Spencer jumped to their highest in two-and-a-half-years, on reports that New York-based Apollo Global Management had mulled a buyout.

But mining company Hochschild have ended the day down 27%, after Peru’s government announced plans to shut two of its gold and silver mines on environmental grounds.

The insurer LV= has claimed that a takeover by the US private equity firm Bain Capital will result in £212m in extra distributions for members, as it tried to fight back against criticism of its decision to demutualise.

British Airways could move flights away from Heathrow if the airport is allowed to increase charges by 50%, the airline’s owner has warned.

Hopes that Crossrail will open in central London in early 2022 – this time on schedule – have been boosted as the troubled £19bn scheme moved into its final phase of testing at the weekend.

The John Lewis Partnership has launched a £1m fund that will channel cash into projects with the potential to end the high street’s “throwaway” culture.

Police and banks have warned consumers to be vigilant when shopping in this week’s Black Friday sales, with a rise in scams expected to cost shoppers millions.

The CBI has told ministers that levelling up cannot be left to the free market, after decades of “benign neglect” has left the country with a “branch-line economy”.

However, the message may have been lost after Boris Johnson gave a particularly shambolic speech to business leaders:

Goodnight. GW

In the City, the stock market has shaken off worries about Covid-19 lockdowns to end the day higher.

London’s FTSE 100 index jumped 32 points or 0.45% to 7,255 points, up from Friday’s three-week lows, with mining companies and oil giants in the risers.

The renomination of Jerome Powell as Fed chair lifted equity markets a little, while pulling the pound and the euro lower against the US dollar.

Dan Suzuki, deputy CIO at Richard Bernstein Advisors, says:

It seems in line with what the tea leaves were indicating. The Democrats gave up the option of a future inflation scapegoat in favour of a well-respected known entity that was supported by Yellen.

While on paper, Powell leans slightly more hawkish than Brainard, their policies are very similar, and Powell provides more consistency and less uncertainty. Biden still has more appointments that will shape the overall make-up of the Fed.

Pandemic concerns held back other markets, though, with the pan-European Stoxx 600 finishing the day flat.

The rise in Covid-19 cases in Europe has hit consumer confidence, as people worry that fresh lockdowns will be imposed this winter.

The European Commission’s gauge of consumer morale has dropped this month, away from the three-year highs earlier this summer.

Consumer confidence in the euro area dropped to -6.8 points, from 4.8, while in the wider EU it dropped to -8.2 points, from -6.1 points.

This indicates that the recent rise in Covid-19 infections, which has forced a full lockdown in Austria and emergency measures in Germany.

Bert Colijn of ING says concerns about new Covid cases, and inflation worries, are hitting confidence:

At face value, there is still a lot to like about the current economy. The labour market is fuelling income growth and should take away worries about spending as jobs are relatively plentiful.

Uncertainty for consumers seems to be stemming from two big issues. The rising cases of Covid and inflation. The first has the risk of causing further lockdowns and economic pain over the winter months. Quite some countries have already taken new restrictive measures and it looks like there’ll be more are to come in the coming weeks. This clearly has a dampening effect on the economic outlook and this casts a shadow on consumer confidence at the moment.

Inflation is another factor, especially as energy prices have been soaring, which is now being felt in households across the continent. That results in an income squeeze as real wage growth suffers on the back of this despite a strong labour market. Without significant upward pressure on wages, we could see a dampening effect on consumer spending as lower-income groups especially spend a larger part of their income on energy bills.

Ed Miliband MP, Labour’s shadow business secretary, has accused government ministers of complacency over the energy crisis.

Following Bulb’s collapse into administration today, Miliband says:

The collapse of energy suppliers is a direct consequence of a decade of Conservative inaction in government which has left us exposed and vulnerable as a country. Families hit by a cost of living crisis will be deeply worried about what this collapse means for them, as will the workers at Bulb.

The business secretary has buried his head in the sand for too long. The government was warned by Ofgem over a year ago about “systemic risk to the energy supply sector as a whole”.

Instead of action we’ve had complacency from ministers and they are making the cost of living crisis worse by raising national insurance and refusing to cut VAT on energy bills.

Labour will scrutinise the special administration regime to ensure it protects bill-payers and secures value for money for taxpayers. But alongside those measures, the government should now remove VAT from domestic gas and electricity bills for six months, so that families have some respite during the winter, and roll out a national home insulation plan to reduce energy bills by £400 and cut emissions.

Over in Washington, Federal Reserve chair Jerome Powell is to be nominated for a second four-year term by President Joe Biden.

The move ends uncertainty over whether Powell would be given a second term as the world’s most powerful central banker.

Progressive lawmakers had pushed Biden to choose Fed board member Lael Brainard, arguing that Powell did not take recognise climate change as an urgent and systemic economic threat.

But in the event, Biden has decided to nominate Jay Powell for a second four-year term as Federal Reserve chair.

Brainard, the only Democrat on the Fed’s board, will be proposed as vice-chair, giving her a more powerful position at the central bank.

Powell’s first term was dominated by the pandemic, and a severe downturn in which the Fed’s ultra-low interest rates and huge stimulus programmes helped to spur the recover, revitalise the jobs market, and saw inflation hit a 30-year high.

Biden says:

While there’s still more to be done, we’ve made remarkable progress over the last 10 months in getting Americans back to work and getting our economy moving again.

That success is a testament to the economic agenda I’ve pursued and to the decisive action that the Federal Reserve has taken under Chair Powell and Dr Brainard to help steer us through the worst downturn in modern American history and put us on the path to recovery.

Interactive Investor’s head of investment, Victoria Scholar, points out that the US dollar has pushed higher.

Gillian Cooper, head of energy policy for Citizens Advice, says “serious questions must be asked” about the state of the UK energy market and how it is regulated.

Bulb customers will be protected by the special administration process and they shouldn’t see much change to their service for now.

But when the country’s seventh largest supplier fails, serious questions must be asked about the state of the market and how it’s regulated.

It’s clear reforms are needed to prevent consumers and taxpayers from paying the price for supplier failures in future.”

Walid Koudmani, market analyst at financial brokerage XTB, says Bulb’s collapse shows the “bleak” situation in Britain’s energy market, which could leave consumers with much less choice.

Bulb energy’s collapse continues to highlight the bleak situation which has already seen a number of other energy providers fold under increasing costs and the inability to provide advertised services to their customers.

As today’s announcement further reduces competition in the market, it could lead to a scenario where only a small number of major players are left in the energy market once issues are settled and things return to normal.

Bulb Energy has gone bust and will be placed into a special administration process to manage the fallout of the biggest energy supply collapse on record.

The energy regulator drew up plans over the weekend to put the company into a special administration process designed to protect Bulb’s 1.7 million household customers, according to industry sources.

A statement from the company on Monday said.

We’ve decided to support Bulb being placed into special administration, which means it will continue to operate with no interruption of service or supply to members.

If you’re a Bulb member, please don’t worry as your energy supply is secure and all credit balances are protected.

The company’s collapse has been long expected by industry rivals, which described the company as the “walking dead” after it struggled to find new investment, or a willing buyer, before the UK’s looming winter energy crisis.

Here’s the full story:

Justina Miltienyte, energy policy expert at Uswitch.com, says Bulb’s collapse is a ‘tipping point’, caused by the price cap which has protected UK customers from soaring wholesale prices.

This signals the tipping point of the UK energy crisis. With Bulb’s 1.7 million customer base, over four million people have now been directly impacted by the turbulent energy market.

But it’s not just Bulb’s size as the seventh largest supplier that makes this so significant. Unlike some of the smaller suppliers who recently ceased to trade, Bulb operated with a strong business model combined with a competitive offering for consumers.

Ultimately this demise wasn’t caused by a badly run business model. Instead, Bulb was choked off by the way the Government decided to structure the current energy market with the price cap.

Miltienyte also explains that Bulb’s collapse is different than previous failures - as its customers won’t now be passed onto another supplier:

Instead of Ofgem picking a supplier of last resort, as has been the case with smaller providers, Bulb will continue operating as normal.

The most important thing for consumers to know is that their energy supply will continue to run as it always has done, and any credit balances will be protected.

Affected consumers should not cancel their direct debit - you will continue to receive energy and be billed for it, as normal.

It’s also worth noting that Bulb customers will be protected by the current price cap, until April 2022.

Is it worth switching suppliers? Miltienyte argues that customers should ‘stay put’ and see how the situation develops:

Technically, you can switch suppliers, but it is worth bearing in mind that there are unlikely to be better deals available elsewhere. You’re probably better off staying put and waiting for the dust to settle on the current situation.

The administrator may decide to close the supplier down in the future, and move customers elsewhere. But customers will be kept informed by Ofgem and the administrators about what will happen next.

Bulb has tweeted that moving into special administration is a ‘difficult decision’.

The company adds that it will continue to operate as usual. It asks customers to only contact them in an emergency, or if they’re in a vulnerable situation or struggling to pay their bills.

Newsflash: Bulb, the UK’s seventh biggest energy firm, is to enter special administration.

Bulb will become the biggest UK supplier yet to collapse following the surge in global gas prices.

The company has 1.7 million household customers, and says their supplies will be protected.

A Bulb spokesperson says:

We’ve decided to support Bulb being placed into special administration, which means it will continue to operate with no interruption of service or supply to members.

If you’re a Bulb member, please don’t worry as your energy supply is secure and all credit balances are protected.

In a blog post, the company explains that:

Special administration is designed to protect the customers of a large energy supplier that’s become insolvent. The special administrator is required by the Government under the 2011 Energy Act to continue to supply energy to customers, and will protect customer credit balances. The process to appoint special administrators is not yet complete but we expect them to be appointed shortly.

Our International businesses in France, Spain and Texas will continue trading. They are separate businesses from Bulb UK and are not immediately affected by us entering special administration in the UK.

Germany’s central bank has warned that inflation could rise towards 6% this month, almost three times over target, even as the economy slows.

The Bundesbank said in its monthly report that consumer prices saw “an exceptionally steep rise in the third quarter of 2021”.

This was due to the surge in energy prices, and costlier industrial goods as supply chain shortages and shipping fees rise.

The Bundesbank says:

Prices saw a further substantial rise in October. Annual headline inflation rose from 4.1% in September to 4.6%.

This month it could even reach just under 6% (CPI: just over 5½%), of which just over 1½ percentage points would be attributable to the two one-off effects.

The Bundesbank fears that Germany’s economic recovery could pause this quarter (a worrying sign for the wider European and global economy), saying:

Initially, there will probably be a brief pause in the economic recovery. From today’s perspective, GDP could broadly stagnate in the final quarter of 2021, after economic output already stopped rising over the course of the third quarter.

The report also predicts that inflation will “decline perceptibly” earlier next year, although the bulk in gas prices will probably only be passed on to consumers after the turn of the year.

Inflation is not expected to fall back to the eurozone’s 2% target soon.

While, as things stand, headline inflation is likely to gradually continue falling in the following months, it could remain significantly above 3% for an extended period of time. It is conceivable that core inflation will be substantially over 2%.

The Bundesbank also flagged that the global economic recovery lost significant momentum in the third quarter of 2021.

The Delta variant, world supply chain tensions, the crisis at China’s property developer Evergrande, and hurricanes in the US were all factors, it says:

Severe shortages of intermediate goods hindered economic activity in many regions. As the delta variant of the coronavirus spread, pandemic-induced burdens in some countries were also exacerbated again – a situation compounded yet further at times by other inhibiting factors.

For instance, economic growth in China also slowed due to problems on the real estate market. In the United States, weather-induced production losses and the expiry of fiscal transfer payments were partly responsible for weaker growth.

Recovery in the United Kingdom also continued at a substantially reduced pace. In the euro area, meanwhile, gross domestic product (GDP) saw renewed strong growth, but here, too, the recovery lost significant momentum over the course of the quarter.

Gas prices have eased back this morning, on speculation that lockdowns will hit demand for energy.

The contract for next-day delivery in the UK down 3.2% at 208p per therm, away from the one-month high of 240p/therm set last week.

European prices are also lower, with the Dutch benchmark contract for December delivery down 5.5% this morning.

Here’s Reuters’ take:

• “Corona fears are highlighted heavily now,” a gas trader said.
• Market players are monitoring the return of restrictions to stem the spread of COVID-19 as cases rise significantly across Europe.
• Germany has declared an emergency status and there is a possibility that it could be next along with France to face some degree of lockdown. Austria and the Netherlands have already implemented full or partial lockdowns.
• “Our outlook for today is for prices to continue to remain under bearish pressure with the potential reintroduction of new lockdowns across Northwest Europe as case numbers increase by the day,” Refinitiv analysts said.

Despite today’s falls, wholesale gas prices are still over three times higher than at the start of this year.

Henning Gloystein, director at Eurasia Group, warns that the colder weather will push demand up.

Wholesale electricity prices have also surged this year:

Shares in Marks & Spencer have jumped to their highest in two and a half years on reports that New York-based Apollo Global Management had mulled a buyout.

The Sunday Times reported that the US private equity giant has been “running the rule” over the high street chain. City sources said Apollo had considered M&S a bargain, believing the company’s shares were being weighed down unreasonably by the impact of Covid.

M&S shares had already rallied in recent months, after lifting its profit forecast in August and again this month.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says Apollo is interested in M&S’s food aisles and in particular the tie-up with Ocado.

And the pandemic, and Brexit, make companies such as M&S good value to overseas predators.

Streeter explains:

Apollo has flirted with other acquisitions in the UK grocery sector, losing out in its quest for Asda, and then pulling out after making advances for Morrisons. Given its thwarted attempts so far, there is growing expectation that the group may make an offer for the company, particularly given that food was such a star performer in the last set of results.

Apollo will be weighing up the future value of Marks and Spencer’s e-commerce tie-up with Ocado, and speculation that its success so far may lead the retailer to buy out Ocado’s 50% share indicates the weight of expectation about its growth prospects. However, shares have surged more than 27% since those impressive results and if the price continues to climb, there is a chance Apollo may turn into more of a reluctant suitor.

It does demonstrate how the UK is still near the top of private equity shopping lists, with valuations of UK listed companies dragged down while the economy continues to reverberate with problems caused by the pandemic and Brexit after-effects.

FTSE 250-listed precious metals producer Hochschild Mining has tumbled nearly 40% this morning, after Peru’s government announced plans to shut two of its gold and silver mines on environmental grounds.

On Friday night, Peruvian prime minister Mirtha Vasquez announced that a group of four mines in the Andean Ayacucho region will be closed “closed as soon as possible”.

The move dashed miners’ hopes of extensions to their operational plans for extra mining or exploration work, following protests by local communities in recent weeks.

Vasquez said the government would help broker terms for the shutdown of four mines, which includes Hochschild’s sites at Pallancata and Inmaculada.

She explained:

“We will close the mines as soon as possible.

“There will be no extensions, whether for exploitation, exploration or even shutdown.”

The moves deepens a clash between the country’s mining industry and its left-leaning government.

Hochschild, which operates silver and gold mines in North, Central and South America, told the City it believes the move is unlawful, and vowed to “vigorously defend its position”.

Ignacio Bustamante, CEO, commented:

“Hochschild is surprised by this unilateral announcement by the Head of Cabinet.

Our goal is to continue investing in Peru, growing our resources and extending mine lives, in accordance with the Peruvian legal framework. We are prepared to enter into a dialogue with the government in order to resolve any misunderstandings with respect to our mining operations.

However, given the illegal nature of the proposed action, the Company will vigorously defend its rights to operate these mines using all available legal avenues.”

Hochschild’s shares tumbled over 50% in early trading to their lowest since 2016, and are currently down 39% at 101p.

The euro is weakening this morning, as Austria’s new lockdown worries the markets.

It’s down 0.2% against the US dollar at $1.126, close to a 16-month low.

This lifted sterling to a 21-month high against the euro this morning, at €1.1929 for the first time since February 2020.

Kyle Rodda of IG explains:

In Europe, fresh lockdowns has cast another pall on the Eurozone’s anaemic fundamentals and fledgling post-COVID recovery, with surging case numbers and tighter restrictions in Austria, Germany and the Netherlands threatening to weaken the region’s growth further.

Jim Reid, strategist at Deutsche Bank, says that investors are watching for signs that other European countries could be forced to bring in new curbs:

Covid will be the focus, especially in Europe as Austria enters lockdown today after the shock announcement on Friday. Germany is probably the swing factor here for sentiment in Europe so case numbers will be watched closely.

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

Britain’s economy will grow slower this year and next year than previously hoped, as ongoing supply chain disruption and rising prices drag back growth.

So warns the EY Item Club this morning, as it predicts that the ‘tougher’ part of the recovery is upon us.

In its autumn forecasts, it warns that ‘higher and more sustained inflation’, recent rises in energy prices, and intensifying supply chain disruption mean the recovery won’t be as strong as hoped.

EY now sees UK GDP rising by 6.9% this year, down from 7.6% forecast in the summer [but still the best year since 1941, after last year’s near-10% plunge]

But growth in 2022 is also seen lower - at 5.6%, down from 6.5% forecast before.

By 2023, growth is back down to 2.3%, before sagging to a lacklustre 1.8% in 2024 and 2025.

Martin Beck, the chief economic advisor to the EY ITEM Club, says:

“With the boost from reopening the economy now largely passed, the UK was always expected to enter a tougher phase of the recovery.

Record growth is still forecast, but there are persistent headwinds as we approach the end of the year: pandemic-related policy support is being withdrawn, supply chain disruption and shortages have been more severe than expected, and the scope for catch-up growth has been run down.

With households being squeezed by inflation, EY has now cut its forecast for consumer spending this year from 4.8% to 3.9% growth, and for next year to 6.8% from 7.4%

Beck warns that household incomes will not keep pace with rising prices:

“Although inflation looks like it’ll peak higher – and stay higher for longer – than first anticipated, it doesn’t look like this will tip into ‘stagflation’, the combination of sluggish growth and persistent high inflation.

The inflationary landscape will probably contribute to real household incomes falling around the turn of the year, slowing the rebound in consumer spending and decelerating the strong recovery seen earlier in 2021.

But there are still reasons for optimism, with EY seeing a smaller increase in unemployment than feared, due to the success of the furlough scheme.

The jobless rate is now seen peaking at 4.6% early next year, up from 4.3% in the last quarter. Back in July, EY had forecast a post-furlough unemployment rate peak of 5.1% in the second half of this year.

Beck explains:

“Despite these challenges, the UK economy has made some significant progress in regaining pandemic-related losses and the recovery is far from out of steam. Looking at the big picture, the economy has recovered much faster than was expected at the start of this year.

Clear grounds for economic optimism remain too. While not every household has been able to save more over the last year or so, the build-up of household savings means consumers are in a good position overall. Meanwhile, the labour market is healthy and businesses have built up robust balance sheets. Long-term economic scarring from the pandemic is likely to be minimal.”

But... Europe’s pandemic risks have not lifted, as Austria awakes to its fourth national lockdown.

Austria’s 20-day nationwide partial lockdown is the toughest in western Europe for months, with Vienna also making vaccination mandatory for all from February, prompting protests over the weekend:

Travel stocks have come under pressure, falling on Friday after Austria’s lockdown was announced, as investors worry that Europe’s recovery may be hurt by fresh restrictions this winter.

Analysts at MUFG Bank say:

Market participants are becoming more fearful of downside risks to growth in Europe.

The latest COVID wave has already prompted policymakers to re-tighten restrictions. It joins the energy price shock, geopolitical tensions with Russia and the developing currency crisis in Turkey on the list of worries for European investors.

In contrast, the U.S. economy has regained upward momentum and the Fed’s communication is turning more hawkish.

The agenda

• 11am GMT: Bundesbank Monthly Report
• 1.30pm GMT: Chicago Fed national activity index for October
• 3pm GMT: Eurozone consumer confidence flash estimate for November
• 3pm GMT: US existing home sales for October