Time to wrap up, after another day dominated by concerns over the UK’s supply chain problems. Here’s a quick summary:

Supermarkets and hauliers have warned that the lorry driver shortage gripping the UK could push up food prices in the shops.

Rod McKenzie, managing director of policy and public affairs at the Road Haulage Association, told PA Media that:

Certainly drivers’ pay is increasing, often by quite substantial amounts.

This in turn is a cost that will need to be passed on, and given the tight profit margins of most haulage operators that means their rates to customers will have to go up.

In turn, this may mean more of us paying higher prices for goods, services and shopping - including food prices - going forward.

With retailers warning of shortages this Christmas, the Labour party has urged ministers to tackle the crisis.

Seema Malhotra MP, the shadow minister for business and consumers, says the government should heed business leaders (who are pleading for temporary visas for EU drivers)

The chaos hitting supply chains is of the Conservatives’ making. Their failure to keep their promise to cut red tape for businesses, which are struggling with more paperwork and higher costs, combined with worker shortages, has created a perfect storm.

Whether it’s production grinding to a halt in our car factories, shelves emptying in supermarkets, or restaurants running out of food and drink, businesses are ringing the alarm and saying these problems are only going to get worse.

Ministers must listen to businesses and unions who are calling for them to show leadership and put in place short-term solutions to deal with this acute crisis.

Latest figures from the ONS show that transport and shipping companies are more likely to have paused trading, or shut down, than firms in other parts of the economy, with just 82% operating as normal.

Firms across the economy also reported supply chain problems, with 7% unable to get the materials and staff they needed in the last fortnight, and others forced to switch suppliers.

And with card payments and seated diner numbers flat, and retail footfall dipping, the recovery seems to be slowing.

The supply chain crisis is also hitting confidence in the customer-facing service sector, where firms such as bars, restaurants and travel companies turned pessimistic about the economic outlook in August, according to a new survey from the CBI this morning

It blames a shortage of workers to fill jobs, adding to rising costs and operational difficulties following the lockdown. Optimism about the general business situation among consumer service firms tumbled to minus 17% this month, down from a positive reading of 47% in May.

Manufacturers are also suffering, with car engine production dropping by 27% and car production the weakest for any July since the 1950s.

Packaging and labeling company Macfarlane Group predicted that shortages and rising costs would continue, while recruiter Hays reported a surge in demand for hiring in the last quarter.

Rising costs, and Covid-19 cases, hit consumer confidence in Germany, while in America the number of new jobless claims rose a little.

Here are today’s other stories:

Goodnight. GW

The Guardian’s latest Covid Crisis watch report shows that Britain’s economic recovery from the winter lockdown is showing signs of stalling, amid shortages of workers and supplies due to the double whammy of the pandemic and Brexit.

Despite the easing of most government pandemic restrictions, consumer caution appears to have crept higher in the past month as the Delta variant fuels a persistently high infection rate. In the meantime, UK businesses have come under pressure from global supply chain disruption and staff shortages.

Figures from the Bank of England show debit and credit card spending has fallen to 94% of its pre-pandemic level in recent weeks as the initial buzz from shops, pubs and restaurants reopening fades to a lower level. Footfall in town and city centres remains below pre-Covid levels, while retail sales unexpectedly dropped in July.

Here’s the full report:

And here’s Torsten Bell, chief executive of the Resolution Foundation, on the UK’s economic challenges:

The Covid crisis has led to huge changes in how economic activity takes place. Some of those will last; some will be beneficial. But they are not magic bullets targeted at the big economic challenges the UK faces. If we want some positive change to come from the pandemic we need to make, not wish for it, to happen. The pandemic has highlighted the inequalities scarring Britain – but also shown this Conservative government that acting boldly can make a huge difference, as with furlough.

The insecurity at the bottom of our labour market can be tackled with new rights and proper enforcement to make them a reality. We can level up by keeping the £20 a week increase to universal credit that one in three working-age families in “red wall” constituencies rely on. We can properly fund our further education colleges if we want to tackle disgraceful gaps in education.

Covid has made us poorer. It has widened wealth gaps and educational inequalities. Almost everything important we need to achieve as a nation has been made harder, not easier. So, put the wishful thinking aside. Silver linings to Covid won’t solve our deep-seated economic problems. We have to.

New listings of fossil fuel companies would be immediately banned on the London Stock Exchange as part of a proposal by the Liberal Democrats that the party’s say could help the UK become a leader in tackling the climate emergency.

Under the plan outlined to the Guardian by the Lib Dem leader, Ed Davey, another immediate policy would be to stop new bonds being issued in London to finance oil, coal or gas exploration.

Fossil fuel firms already listed in the UK would then have two years to produce a coherent plan about how they would reach net zero emissions by 2045, or risk being struck off the LSE.

In the longer term, pension funds would have to disinvest from fossil fuels by 2035, with all companies with fossil fuel assets removed from the exchange by 2045.

Davey, who on Friday marks the first anniversary of becoming the permanent leader of the Lib Dems, said such plans had the potential to achieve more than the UK’s own move to net zero emissions, or even its chairing of November’s Cop26 climate summit in Glasgow.

Davey said:

“The reality is that no matter how much governments spend, it’s going to be totally dwarfed by the amounts banks, private equity and hedge funds invest every day.

“So if you’re going to really take on climate change you’ve got to get that private capital to switch from dirty into clean. And this is a fundamental role for Britain in global leadership on climate change.”

Dallas Fed President Robert Kaplan has declared that the U.S. economy is still on track for the Federal Reserve to begin reducing its stimulus programme in October, or shortly after.

In a sign that he would support tapering the $120bn/month bond buying scheme this autumn, Kaplan told CNBC that he didn’t see evidence to hold off for longer, downplaying the impact of the Delta variant of COVID-19.

“Based on everything I am seeing I don’t see anything at this point that would cause me to materially change my outlook.

“Based on all that it would continue to be my view that when we get to the September meeting we would be well served to announce a plan for adjusting purchases and begin to execute that plan in October or shortly thereafter.

Last week, Kaplan had suggested he could support delaying tapering if the economy weakened -- but he seems to have returned to a more hawkish position now.

We’ll find out tomorrow if Fed chair Jerome Powell agrees, when he speaks at the Jackson Hole economic symposium.

In the meantime, stocks on Wall Street have dipped a little, with traders also monitoring the grim news of two explosions outside Afghanistan’s Kabul Airport with multiple fatalities.

Our economics editor Larry Elliott has analysed the latest weekly healthcheck on the UK (as covered earlier) - and seen a clear message: the recovery is losing momentum.

Card payments: flat. Job adverts: flat. The number of seated diners: flat. Retail footfall: down slightly. Ship visits to the UK: down slightly. Daily flights: up a bit.

Supply chain problems are part of the story, with 7% of UK firms reporting difficulties obtaining raw materials, products or services in the past week. That figure rises to 15% for construction, the worst affected sector.

The slowdown looks to be more than simply a supply chain issue, though. It is hard to explain why a shortage of parts or raw materials would affect the number of people browsing in their local high street or booking a meal out.

There are a couple of possible explanations for the levelling off in demand. One is that people are going out less because they have been pinged. A second is that unpinged consumers are becoming more cautious owing to the rising number of new cases of the coronavirus.

The second of these explanations would be the more serious, because it would suggest the economy is at best moving sideways heading into the autumn and will take longer than expected to return to its pre-crisis level of activity.

More here:

Supermarkets and hauliers have warned that the lorry driver shortage gripping the UK could push up food prices in the shops.

Bosses at the Road Haulage Association have told the PA news agency the “substantial” pay rises offered by firms in need of new drivers could force supermarket bosses to pass the costs on to customers, meaning long-term higher prices for food.

Rod McKenzie, managing director of policy and public affairs at the Road Haulage Association, told PA Media that:

“Certainly drivers’ pay is increasing, often by quite substantial amounts.

“This in turn is a cost that will need to be passed on, and given the tight profit margins of most haulage operators that means their rates to customers will have to go up.

“In turn, this may mean more of us paying higher prices for goods, services and shopping - including food prices - going forward.”

With the UK lacking around 100,000 drivers, many retailers have offered new recruits bonuses running into thousands of pounds, while the John Lewis Partnership is raising its lorry driver salaries by up to £5000.

But with many EU drivers having left the UK, business leaders continue to push for temporary visas -- with Iceland’s managing director yesterday insisting that HGV drivers should be added to the essential and skilled worker list.

One supermarket boss also told PA that increasing wages for drivers will result in inflationary pressure for retailers.

“Paying drivers more, in itself isn’t the solution as it is resulting in them making choices about the level of working hours and balancing reduced hours along with weekend working.

“It will also create more inflationary pressure in the sector, which no one clearly wants.

“To ease the pressure we need the Government to quickly allow us to access the EU labour market, whilst the industry must also play its part in increasing the driver pool through fast-track driver programmes and apprenticeships.”

More here.

The number of Americans filing new claims for unemployment benefit has risen slightly, but remains near its pandemic lows.

Around 353,000 fresh ‘initial claims’ for jobless support were filed last week, the Department of Labor reports, up from 349,000 the previous seven days.

However, if you strip out seasonal adjustments, the initial claims total fell by around 11,700 to 297,765 --a more encouraging picture, as US companies try to keep growing in the face of the Delta variant, and labor shortages.

But on the other hand, the number of self-employed and freelance workers seeking help from the Pandemic Unemployment Assistance programme rose by 9,628 people, to 117,709.

The number of ‘continuing claims’ (people signing on for at least a fortnight) dropped further below the 3m mark.

Here’s some reaction:

Just in: The US economy grew very slightly faster than first thought in the last quarter.

US GDP rose at an annualised rate of 6.6% in April-June, updated figures from the Bureau of Economic Analysis show, up from 6.5% first estimated.

That works out at a quarterly rate of around 1.6% (as before), and is a slight pick-up on the 6.3% annualised growth in January-March.

The BEA says business investment was stronger than expected (up 9.3%) as firms invested in new equipment, and software. Exports were also stronger than first thought - rising at a rate of 6.6%.

Consumer spending on both goods and services continued to drive the recovery, rising 11.9%, as the reopening of the US economy and stimulus support spurred demand.

The BEA explains:

The increase in second quarter GDP reflected the continued economic recovery, reopening of establishments, and continued government response related to the COVID-19 pandemic.

In the second quarter, government assistance payments in the form of loans to businesses and grants to state and local governments increased, while social benefits to households, such as the direct economic impact payments, declined.

Worryingly, the broader supply chain crunch caused by the pandemic doesn’t appear to be getting better, with bottlenecks looking more persistent than hoped.

Bloomberg points out that the increase in Delta variant cases in Asia has caused disruption to shipping, and also caused new problems for factory production. So with raw materials and parts in short supply (as we’ve seen in the UK this morning), manufacturers generally face higher costs.

Bloomberg predicts that supply chain problems could last “last well into next year”.

Here’s a flavour of their report:

“We can’t get enough components, we can’t get containers, costs have been driven up tremendously,” said Christopher Tse, chief executive officer of Hong Kong-based Musical Electronics Ltd., which makes consumer products from Bluetooth speakers to Rubik’s Cubes.

Tse said the cost of magnets used in the puzzle toy have risen by about 50% since March, increasing the production cost by about 7%. “I don’t know if we can make money from Rubik’s Cubes because prices keep changing.”

The jump in shipping rates has also hurt exporters. The recent partial closure of China’s massive Ningbo container port (the world’s third-busiest) for two weeks also caused disruption. Ningbo has now fully reopened, but it will take time to catch up.

Hsieh Huey-chuan, president of Taiwan-based Evergreen Marine Corp., the world’s seventh-biggest container liner, told investors last week that there could be ongoing congestion.

“Port congestion and a shortage of container shipping capacity may last into the fourth quarter or even mid-2022.

If the pandemic cannot be effectively contained, port congestion may become a new normal.”

Production of UK car engines also fell sharply in July, as the wider supply chain problems hit the sector.

UK factories made 127,922 engines in July, a drop of 27.5% compared with the same month in 2020 -- when demand got a short-term boost as factories caught up with production lost in the pandemic.

So far this year, engine manufacturing is 6.8% higher than in 2020, with 1.05 million engines rolling off the production line since the start of the year.

But that’s still almost a third lower than the average in the five years before the pandemic (of 1,559,684 units

With chip shortages hurting car production, there was a knock-on impact on the number of engines carmakers needed, explains Mike Hawes, SMMT chief executive,

“The decline in engine production in July must be looked at in context against the same month in 2020 which saw production artificially inflated as the sector looked to recover lost units due to the pandemic.

It is unsurprising that the number of engines produced so far this year remains below the five-year average with the global shortage of semiconductors continuing to impact the ability of manufacturers to produce vehicles, leading to a fall in demand for engines.

Government must show its support for UK Automotive by introducing measures to support production during these Covid-related stoppages and boost industry competitiveness.”

The Labour party are urging ministers to act on the UK’s supply chain crisis, before the problems hitting manufacturers and supermarket chains get worse.

Seema Malhotra MP, Labour’s Shadow Minister for Business and Consumers, says the government should heed businesses (who are pleading for temporary visas for EU workers to address the HGV driver shortage)

“The chaos hitting supply chains is of the Conservatives’ making. Their failure to keep their promise to cut red tape for businesses, which are struggling with more paperwork and higher costs, combined with worker shortages, has created a perfect storm.

“Whether it’s production grinding to a halt in our car factories, shelves emptying in supermarkets, or restaurants running out of food and drink, businesses are ringing the alarm and saying these problems are only going to get worse.

“Ministers must listen to businesses and unions who are calling for them to show leadership and put in place short-term solutions to deal with this acute crisis. But they must also end their chronic dismissal of these concerns, having accused the industry of ‘crying wolf’ over driver shortages, and take action to deliver on the promise of post-Brexit Britain.”

Here’s shadow chancellor Rachel Reeves:

The UK’s shortage of HGV drivers appears to be forcing some transportation and storage firms to suspend trading, according to the latest weekly healthcheck on the UK economy under the pandemic.

The Office for National Statistics says that, in 9 to 22 August 2021, 82% of transportation and storage business were currently trading. That’s the lowest across the UK economy -- on average, 90% of firms polled said they were currently trading.

The report found that 9.1% of transport and storage firms have permanently ceased trading, while 8.5% are paused.

In its Business insights and impact on the UK economy report, the ONS says:

The high percentage of paused and not permanently ceased traders is partly driven by the freight transport by road industry and the unlicensed carriers industry. It has been reported that this industry has been experiencing a shortage of lorry drivers.

Across the wider economy, 3.4% firms said they’d shuttered for good, while 7% were temporarily closed.

The survey also flags up that almost half of UK firms said their debt repayments had increased in the last month, although most had “high or moderate confidence” of repaying them.

• 16% reported an increase of more than 50%
• 7% reported an increase of between 20% and 50%
• 23% reported an increase of up to 20%

Around 7% of UK companies weren’t able to obtain the raw materials, products or services they needed from within the UK in the last two weeks, as the supply chain crisis chewed on.

The Office for National Statistics reports that the construction industry was worst hit, with 15% of builders unable to lay their hands on materials and/or find enough workers in the last fortnight.

[Over a third of UK firms reported that their supplies weren’t affected, while almost half said the question wasn’t applicable...]

Another 9% of UK firms said they had to change suppliers or find alternative solutions to the supply problems, up from 8% previously.

That includes over 17% of businesses in the manufacturing and construction industries as factories and builders tried to cope with the worst shortages in decades, followed by 13% of wholesale and retail trade firms, and 11% in accommodation and food service activities.

The survey also highlights that stocks are running lower in some businesses - notably at food and accommodation companies such as restaurants and hotels, retailers, car repair firms, and factories.

The ONS says:

The accommodation and food service activities industry reported the largest percentage of businesses that indicated stock levels were lower (27%), followed by the wholesale and retail trade; repair of motor vehicles and motorcycles industry (25%) and the manufacturing industry (23%).

The ONS also reports that the number of cargo ships arriving in the UK fell 5% last week:

Recruitment firm Hays has failed a “dramatic” recovery in the UK jobs market, while warning that there are shortages of qualified workers in some industries, which is pushing up wages.

Hays reported that its fees (earned by finding staff for companies) jumped 39% in the three months to the end of June, after a quick recovery in the global jobs market boosted its income.

That’s a dramatic turnaround after falling by 29%, 19%, and 10% in the previous three quarters as the pandemic gripped many of the countries where Hays operates.

Hays says it’s never seen such an improvement in 53 years of trading, with CEO Alistair Cox declaring:

Overall, the strength of the recovery has been dramatic. We now see a clear route back to, and then exceeding, pre-pandemic levels of profit, faster than we envisaged even six months ago.

Cox also pointed to the labour market shortages which have been hurting UK companies:

Across all our regions there are clear signs of skill shortages and wage inflation in certain industries, particularly Technology and Life Sciences.

Here’s our news story:

UK commercial property firm British Land is focusing its attention on research and technology parks, and retail and fulfilment centres, as it looks to recover from the pandemic.

In a capital activity update, British Land says it has recently bought and sold £350m-worth of property. Key purchases include Peterhouse Technology Park, in Cambridge for £75m, and The Priestley Centre, at the Surrey Research Park in Guildford, for £12m.

The Peterhouse site is close to the Cambridge Biomedical Campus, and fully let to technology business Arm for its global headquarters.

Simon Carter, CEO of British Land, said momentum is picking up as the economy recovers from the Covid-19 lockdowns.

We are delighted with the momentum we are delivering across our business as the economy reopens.

Leasing activity at our London campuses has been strong, with a significant amount of space going under offer to a broad range of occupiers in the last two months.

British Land has also been selling off £160m of “off-strategy mature assets”, including Virgin Active in Chiswick for £54.3m, to free up capital for new sites with more potential.

This includes buying Finsbury Square Car Park in London for £20m -- where British Land plans to create a logistics hub to help retailers ship products to customers.

This underground car park is close to the Broadgate campus and provides an excellent opportunity to create a last mile logistics hub in the City of London where supply for last mile logistics is highly constrained.

It also recently bought Thurrock Shopping Park for £82m.

Here’s the full details:

Rising prices, and the increase in Covid-19 cases, have knocked consumer confidence in the eurozone’s largest economy.

The mood among German consumers has darkened, in the face of accelerating inflation and rising Covid infections, the GfK institute reports.

GfK’s forward-looking index of German consumer morale has dropped to -1.2 points for September, from a revised -0.4 points a month earlier. That’s worse than the -0.7 points expected by economists.

GfK consumer expert Rolf Buerkl said anxiety over the pandemic was hitting confidence, with people worrying about new restrictions being imposed.

“Significant higher incidence values, a slowdown in vaccination momentum, and discussions about how to deal with unvaccinated individuals in the future have caused noticeable uncertainty among consumers in Germany.

They fear that restrictions could even be tightened again. This is obviously depressing consumer sentiment right now.”

Covid-19 cases in Germany have been rising in recent weeks, leading the Robert Koch Institute to warn last week that Germany has “clearly” begun a fourth wave of coronavirus infections.

Inflation concerns also rose, after Germany’s Consumer Prices Index hit 3.8% in the year to Jul -- the first time it’s been over 3% since the 2008 financial crisis.

Bürkl says households are worried that inflation will eat into their purchasing power:

“Prices have been rising rapidly since the middle of this year. This dampens consumer sentiment, as experience has shown. While these are primarily one-off effects stemming from the VAT cut in the second half of 2020, given the ongoing low-interest phase, households perceive inflation rates as even more threatening to their purchasing power.”

Shortages of raw materials and staffing pressures are likely to continue in the coming months, warns packaging and labeling company Macfarlane Group this morning.

The Glasgow-based firm predicted that these supply chain problems will keep pushing up its costs, in its latest financial results:

We expect the second half of 2021 to be challenging as we anticipate further inflationary pressure on input prices, continuing supply constraints on most raw materials and operating costs increasing due to staffing pressures.

Macfarlane designs and produces protective packaging and labels - so has benefitted from the boom in internet shopping since the pandemic began. But it also relies on materials such as corrugated paper, polythene films, timber, foam and paper, where prices have jumped and availability has tightened.

Despite these supply chain problems, Macfarlane predicts its full-year performance will be ahead of its previous expectations.

Sales grew 26.5% in the first half of 2021, compared to a year ago, while pre-tax profits more that doubled (up 120%).

It says:

Despite ongoing difficult operating conditions due to Covid-19, significant inflationary pressure on input costs and supply shortages of some materials, the business has produced a strong profit performance.

British car factories produced the fewest cars for any July since 1956 as they struggled with worker absences and the global shortage of computer chips, my colleague Jasper Jolly explains.

UK carmakers made 53,400 vehicles in July, a 37.6% drop when compared with the same month in 2020, according to data from the Society of Motor Manufacturers and Traders (SMMT), the industry’s lobby group.

Demand for new cars has stayed relatively strong during the coronavirus pandemic, but manufacturers around the world have struggled to keep producing because of problems in their supply chains, most notably in the months-long delays to computer chips, or semiconductors, that are used to control everything from windscreen wipers to electric car batteries within the car.

Some analysts expect the chip shortages to last until next year, holding back the recovery of the car industry.

UK production over the course of 2021 is up by 18% compared with the first seven months of 2020, when car factories were shut for long periods during the first national lockdowns. Yet at 552,400 units, it is 29% below the 774,800 it reached over the same period in 2019 before the pandemic.

No large carmaker has been spared, and buyers are being forced to wait months for some new cars. German carmaker Volkswagen last week warned that it may have to scale back production further, after Japanese rival Toyota said that it would cut output by 40% in September.

Jaguar Land Rover and Nissan, the two largest manufacturers in the UK, have both previously been forced to cut production because of shortages.

During June and July manufacturers also had to contend with increased levels of employee absences, as more and more workers were “pinged” by their NHS apps when they had come into contact with people who later tested positive for coronavirus. The rules in England, home to nearly all the UK’s car plants, eased on 16 August so that vaccinated people no longer have to self-isolate after contact.

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

The UK supply chain shortage continues to grip the economy, with consumer-facing companies grow more worried about the economic outlook as they struggle to find workers... and car production slumps.

Firms such as bars, restaurants and travel companies turned pessimistic about the economic outlook in August, according to a new survey from the CBI this morning. It blames a shortage of workers to fill jobs, adding to rising costs and operational difficulties following the lockdown.

Optimism about the general business situation among consumer service firms tumbled to minus 17% this month, down from a positive reading of 47% in May.

Consumer services firms also reported record concerns about labour shortages -- and after the strongest growth since February 2018, expectations for the next quarter are “rather bleak”, the survey says.

These consumer-focused firms also expect profits to decline next quarter, and - despite these labour shortages - many are anticipating cutting headcount next quarter.

The CBI also identifies a split within the services economy. Business and professional services firms reporting strong volumes growth, and expect this to continue for the three months.

Charlotte Dendy, CBI Principal Economist, says:

“It’s clear that the service sector has performed well over the three months to August, revealing strong volumes and profits growth in our latest survey as the economy reopened over the summer. However, the outlook between sub-sectors is set to diverge over the quarter ahead, with a deterioration in prospects expected in consumer services.

“Firms in sectors such as hotels, restaurants and travel, do not expect this strength to persist into the next quarter, reflecting the pressure that consumer services firms continue to face.

This tight labour market should put more power in workers’ hands, though. As Labour MP Claudia Webbe pointed out on Twitter - firms struggling to fill crucial positions need to pay appropriately:

Manufacturers are also struggling - with British car output falling to its lowest July level since 1956. The ongoing global shortage of semi-conductor chips hit auto firms, with workers also having to self-isolate due to COVID-19..

SMMT chief executive Mike Hawes warns that component shortages will continue:

“While the impact of the ‘pingdemic’ will lessen as self-isolation rules change, the worldwide shortage of semi-conductors shows little sign of abating,”

UK carmakers made 53,400 vehicles in July, a 37.6% drop when compared with the same month in 2020. More here:

As we covered yesterday, business leaders are urging the government to relax post-Brexit migration rules to allow EU lorry drivers to plug the gap, or risk Christmas disruption.

But ministers are standing firm, arguing that firms need to train domestic drivers.

A Home Office spokesperson said:

“The British people repeatedly voted to end free movement and take back control of our immigration system. Employers should invest in our domestic workforce instead of relying on labour from abroad.”

The Office for National Statistics publishes its latest realtime indicators on the UK economy today, which will show how businesses are faring.

We also get an updated estimate on US economic growth, and the latest jobless claims figures, which will help set the scene ahead of the Jackson Hole economic symposium this week.

The agenda

• 9.30am BST: ONS’s latest Business insights and impact on the UK economy report
• 1.30pm BST: US Q2 GDP report (second estimate)
• 1.30pm BST: US weekly jobless figures