Afternoon summary
Time to wrap up...
Britain remains locked in a fuel crisis, with around a quarter of petrol stations out of fuel a week after supply problems prompted panic buying at the pumps.
Despite reassurances from Boris Johnson that the fuel crisis is improving, demand for petrol and diesel remains at ‘unprecedented levels’, according to the industry this afternoon.
And around a quarter of stations are still closed today, with barely half offering both petrol and diesel today, according to the Petrol Retailers Association.
PRA executive director Gordon Balmer warned that demand was still much higher than usual, meaning supplies are being drained
“PRA members are reporting that whilst they are continuing to take further deliveries of fuel, this is running out quicker than usual due to unprecedented demand.
We would urge drivers to maintain their buying habits and only fuel up as and when needed to ensure there is plenty of fuel to go around.
It is important to remember that fuel stocks remain normal at refineries and terminals, and deliveries have been reduced solely due to the shortage of HGV drivers.”
Balmer’s warning came hours after the government again insisted that the crisis was easing.
Treasury Chief Secretary Simon Clarke told Sky News:
“We are in a situation now where more fuel is being delivered to petrol stations than is being sold so that crisis is now absolutely back under control.
The AA offered a glimmer of hope, reporting that callouts for misfuelling mistakes and motorists running out of petrol had fallen back, after surging early in the panic.
The Times says the situation is improving in the North East, Yorkshire and Wales, with Scotland and Northern Ireland seeing less disruption too. But elsewhere, shortages continue.
The crisis is hurting businesses. New data shows that motor traffic fell 6% on Monday, to its lowest levels since the end of England’s lockdown rules in July. Many firms have reported that staff, customers or deliveries couldn’t get to them.
The supply chain crisis is also causing disruption to medical supplies, with pharmacies reporting delays receiving stocks.
Customers have also been warned that the disruption could make for an unseasonal Christmas.
Clive Black, a retail analyst at Shore Capital, warned there will be shortages of festive food, and problems getting hold of gifts.
“I expect Christmas will be a nightmare for consumers.
There will be food on supermarket shelves but there will be a distinct lack of choice. Shortages of labour have meant businesses have not laid down the same number of turkeys or planted the same number of crops and the HGV driver shortage is compounding the problem.”
Opposition politicians lambasted the government’s handling of the crisis.
Keir Starmer has blamed the fuel crisis on Boris Johnson’s “whack-a-mole” approach to running the country, urging him to plan ahead or risk staff shortages in a string of other industries in the coming months.
Mark Drakeford, the Welsh first minister, launched a strong attack on the UK government, claiming that a combination of ideology, incompetence and malevolence had resulted in the fuel crisis and is leaving the most vulnerable people facing one of the most difficult winters for years.
In other economic developments...
Central bankers are warning that the supply chain crisis is slowing the recovery, and continuing to push up price of commodities, raw materials, parts and shipments.
Last night, Bank of England governor Andrew Bailey said the recovery will take a couple of months longer. But there was good news today too - the UK economy grew faster than previously thought in April-June (but seems to have faltered since).
The pound rose slightly, having hit its lowest level in nine months yesterday.
China’s factories contracted this month, as curbs on energy use hit manufacturers.
UK car production fell last month, as the shortage of semiconductors hit output...
...while German’s Opel is closing one of its plants in Germany until at least the end of the year due to chip shortages.
Germany’s inflation rate jumped over 4%, highlighting the global pressures on prices.
Unions, business groups, employment experts, City firms and politicians all warned that Rishi Sunak’s decision to wind up the furlough scheme today will intensify Britain’s economic woes:
And the chancellor’s new £500m winter hardship fund was dismissed as a ‘sticking plaster’ that won’t do enough to help struggling families in the months ahead:
Here’s the rest of the business news so far:
Goodnight. GW
Bloomberg: China Orders Top Energy Firms to Secure Supplies at All Cost
Bloomberg is reporting that Beijing has ordered China’s top energy companies to secure supplies for the winter, whatever the cost.
The move comes after prices have already soared, amid fears that a cold winter, and implies there could be even more frenzied bidding for energy stocks in the weeks and months to come.
Bloomberg says:
China’s central government officials ordered the country’s top state-owned energy companies -- from coal to electricity and oil -- to secure supplies for this winter at all costs, according to people familiar with the matter.
The order came directly from Vice Premier Han Zheng, who supervises the nation’s energy sector and industrial production, and was delivered during an emergency meeting earlier this week with officials from Beijing’s state-owned assets regulator and economic planning agency, the people said, asking not to be named discussing a private matter.
Blackouts won’t be tolerated, the people said.
A regional split is appearing in the petrol crisis-- with some areas improving and others still struggling with shortages.
The Times says the petrol crisis is improving in areas including the North East, Yorkshire and Wales but swathes of the country are still suffering from significant fuel shortages, according to an internal Whitehall analysis.
Average fuel levels at forecourts across the country remain at 20% for the third day running. The usual level is 43%.
The Whitehall analysis categorises each region as red, amber or green for fuel shortages. It shows that London, the South East, the North West, the West Midlands and East Midlands are all rated red, with fuel levels of less than 20 per cent.
However, there are signs of significant improvement elsewhere. Northern Ireland is green, Scotland is moving from amber to green, while the North East, Yorkshire and Humber and Wales have all moved from red to amber.
That chimes with the PRA’s comments about the situation in Scotland improving.... but not so much elsewhere.
Demand for private jets soars as rich travellers try to avoid ‘mosh pit’
Private jet providers are experiencing “unprecedented demand” from wealthy customers seeking to avoid the “mosh pit” of commercial flights on autumn getaways as coronavirus travel restrictions ease.
Flexjet and PrivateFly, which supply private jets to rich families and business executives, said they were “experiencing exceptionally strong demand” for September and October travel at a time of year when bookings normally fall away.
Flexjet, which offers shared ownership in its fleet of private jets in Europe, said it operated 53% more flights in September than the previous month, bucking the usual seasonal trends.
Marine Eugène, the European managing director of Flexjet and PrivateFly, said:
“Our industry in Europe traditionally sees a significant peak in July and August, followed by a tailing off in September – but not this year.
“We are currently experiencing exceptionally strong demand, with the appetite for personal travel not yet sated after a later start to summer due to restrictions, and now business flying is also taking off alongside.”
More here:
Full story: Boohoo warns on delivery disruptions plus higher shipping and wage costs
Boohoo has warned of slowing sales growth and a squeeze on profit margins as disruption to deliveries and more competition from the high street combines with higher shipping costs and wage rises at its warehouses.
Shares in the online fast fashion specialist fell 10% on Thursday morning after it said pretax profits had sunk by a fifth to £63.8m in the six months to 31 August despite a 20% rise in sales to £975.9m.
The company blamed the profits dive on “materially higher shipping costs” as well as increased marketing costs partly related to the acquisition of new brands including Debenhams, Dorothy Perkins and Burton, as well as higher costs as shoppers returned more goods than during lockdown.
Reflecting similar warnings from the fashion and homewares retailer Next on Wednesday, Boohoo said higher costs would continue into the second half underpinned by higher freight costs and increased wages for its warehouse workers.
Petrol driver shortage: No improvement in supplies, say retailers
There has been no sign of improvement in petrol supplies at independent petrol stations, industry body the Petrol Retailers Association says.
The PRA, which represents independent fuel retailers, said that more than a quarter (27%) of its members’ petrol stations were out of fuel on Thursday.
The industry body represents nearly 5,500 of the UK’s 8,300 stations.
PRA chairman Brian Madderson said:
“Trying to calm this down appears to be a monumental task at the moment,”
“The surge in demand appears to be continuing,” “
There’s been no easing off of the pressure from drivers wanting to refuel whenever they can, wherever they can.”
More here: Petrol driver shortage: No improvement in supplies, say retailers
The AA say that the fuel crisis is easing, with fewer motorists running out of fuel or putting the wrong type in their cars.
It reports that breakdowns related to the rush on fuel have dropped back towards normal levels, after a spike in misfuellings and drivers running dry.
The AA says:
Peaking on Friday and Saturday of last week, the problem of desperate drivers putting the wrong fuel in their tanks had jumped more than 100% above normal levels but that spike has almost gone away.
For callouts where drivers had run out of fuel, these had gone up nearly 600% over the weekend, albeit measured in hundreds not thousands. Latest monitoring shows that run-drys are down to 200% and falling rapidly.
It says there are “encouraging signs of stability”, even though queues remain at filling stations across London, the South of England and in built up areas (and many stations remain closed).
Edmund King, AA president, says forecourts should be able to restock and find their feet again, adding:
“While the picture isn’t perfect for everyone, we are seeing daily improvements and as such we believe we have turned the corner.
Keir Starmer has blamed the fuel crisis on Boris Johnson’s “whack-a-mole” approach to running the country, urging him to plan ahead or risk staff shortages in a string of other industries in the coming months.
Ministers have suspended competition law in the energy sector and called in the army in recent days as they scramble to alleviate the shortages on forecourts caused by a lack of HGV drivers.
Other sectors including social care, hospitality and food production have also highlighted difficulties in finding staff as a result of Brexit and the Covid pandemic, and the CBI said this month the problems could persist for up to two years.
Starmer said:
“The government at the moment is playing whack-a-mole: it’s trying to whack down one problem and another one pops up somewhere else. And that is a pathetic, lamentable lack of planning.”
He said a Labour government would “plan across the board with the different sectors”.
More here:
Meanwhile in the US, the number of Americans filing new claims for unemployment benefit has risen.
There were 362,000 fresh ‘initial claims’ for jobless support last week, the third weekly rise in a row.
That’s still much lower than earlier in the pandemic, but also rather higher than before Covid-19, It shows the US jobs market hasn’t recovered all the lost ground, with the Delta variant hitting the economy this summer.
Deliveries to British pharmacies are being affected by the acute shortage of truck drivers, the Company Chemists’ Association said today.
A spokeswoman for the association which represents large pharmacy operators said (via Reuters):
“The whole supply chain has been impacted from inbound wholesale depot supply down to outward depot deliveries to pharmacies.”
On Sunday, the National Pharmacists Association (NPA) said it was aware that deliveries to some pharmacies had been reduced amid the shortage of van drivers.
My colleague Ben Quinn reported:
Pharmacists are waiting for details from the government about what measures are in place to deal with any delays to deliveries of drug supplies as a result of van driver shortages.
If the situation worsens, pharmacists have suggested that one fall-back could involve the use of a “serious shortage protocol”, which the government had originally prepared, against the backdrop of hard Brexit concerns, to cater for drugs with known supply problems. This would enable pharmacists to supply alternate forms and strengths of medicines without the need to contact the prescriber.
Nigel Farage isn’t convinced that the petrol crisis is easing.
The former leader of the UK Independence Party and the Brexit Party says he tried seven petrol stations in vain this morning, before his car was then hit by a van.
Farage’s fuel struggle shows that forecourts are still struggling, in a supply chain crisis due to labour shortages caused, in part, by Brexit....
The fuel crisis doesn’t appear to have eased much today, points out Graham Hiscott of the Daily Mirror, with more than a quarter of pumps still dry.
The PRA also said yesterday that 27% of members reported being out of fuel, so the situation seems to be stable - with petrol and diesel selling faster than usual.
It’s pretty much a week since the crisis started, after BP said it had closed some forecourts due to a shortage of truck drivers. So there will be some motorists who held off filling their tanks during the panic, but are now running low - and buying fuel when they can find it.
Reuters reporters visited 10 petrol stations in London and surrounding areas on Thursday, but just three were open.
Petrol retailers: Still seeing unprecedented demand
British petrol stations are still seeing unprecedented demand despite additional deliveries of fuel, the Petrol Retailers Association has said.
A survey of 1,200 PRA members found that more than a quarter of sites are still dry, while more than half have both petrol and diesel on offer to motorists.
This shows that the crisis is not over, even if it is now ‘under control’, as the government says.
The PRA represents independent fuel retailers, who now account for 65% of all UK forecourts.
PRA executive director Gordon Balmer said:
“PRA members are reporting that whilst they are continuing to take further deliveries of fuel, this is running out quicker than usual due to unprecedented demand,”
“In a PRA member survey today of 1,200 sites across the UK including motorway service areas, 52% of sites have reported having both petrol and diesel in stock, 21% have either one grade in stock and 27% are dry.”
The PRA also warns that some staff are receiving abuse as they try to handle the crisis.
The PRA has also predicted that fuel supplies in Scotland could start to return to normal by the weekend providing there are no surges in panic buying.
PRA chairman Brian Madderson told the BBC there should soon be a “rebalancing” of supply and demand. The group has found the number of dry sites in Scotland had reduced to 15%, compared to the UK average of 27% today.
Mr Madderson told the BBC’s Good Morning Scotland programme:
“The tankers can actually get to more filling stations during their shifts due to the shorter distances than England and Wales.
“You’re talking 30-40 miles maximum in the central belt. That’s been a key point of your resilience.
“So we would expect Scotland will continue to improve and hopefully towards this weekend, provided we don’t have any more massive surges in buying, we might start to see some rebalancing of supply versus demand.”
Updated
Over in the US, retailer Bed Bath & Beyond has warned of industry-wide supply chain complications, and steeper inflation costs which are hitting its sales and profits.
Supply chain pressures and energy price surges have pushed inflation higher in Germany -- highlighting how global cost pressures are mounting.
German inflation accelerated at a higher pace than expected in September, up 4.1% year-on-year (on an EU-harmonised basis) compared with 3.4% in August.
Motor vehicle traffic fell amid petrol crisis
The UK petrol crisis knocked the number of vehicles on the roads on Monday, to the lowest since Covid-19 restrictions were lifted.
Traffic volumes fell by six percentage points on Monday, compared to the previous week, new data from the Office for National Statistics shows.
Volumes were the lowest for a non-Bank Holiday Monday since the England lifted its final pandemic restrictions in mid-July.
The long queues at forecourts, and the closure of many petrol stations, deterred some motorists from getting behind the wheel as they didn’t have enough fuel to safely get to work or the shops and back. They may also have been conserving petrol, worried about how long the crisis would last.
Many businesses have already warned that deliveries were disrupted by the chaos at petrol stations, and that customers or staff couldn’t come in.
On Tuesday, Amy Baker, owner of Wisbech-based Halo Beauty and Holistic Therapy, said her company had been hit:
“I have had a number of customers cancel at the last minute due to not having any petrol or diesel. Others are stuck in traffic queues because people are blocking roads waiting to get into petrol stations, and are therefore missing their appointments. 5-minute journeys for mobile appointments have taken 45 minutes to an hour to get to because the roads are blocked.
This is the last thing that any business that is struggling to bounce back after Covid closures needs.”
Shirley Leader, director of Petersfield-based woman’s clothing boutique, Velvet & Rose, also warned on Tuesday that the crisis was hitting business at the start of the week:
The town centre has seemed quiet in the past day or so and it is because people are worried about travelling very far.”
The ONS also reports that jobs ads for transport, logistics and warehousing are running at 367% of their pre-pandemic level. That shows the severity of the UK’s supply chain pressures, and highlights why Christmas will be difficult.
Here’s the details:
TRAFFIC – Department of Transport figures show the volume of motor vehicle traffic on Monday 27 September 2021 decreased by 6 percentage points from the previous week to 95% of the level seen on the Monday of the first week in February 2020; this was the lowest volume of traffic on a non-Bank Holiday Monday since Monday 12 July 2021.
The 6-percentage point week-on-week decrease in the volume of motor vehicle traffic was partially driven by a 6-percentage point fall in car and light commercial vehicle traffic, to 91% and 106% of the level seen on the Monday of the first week in February 2020, respectively; meanwhile heavy goods vehicle traffic fell by 3 percentage points to 107%
JOB ADVERTS – According to Adzuna, on 24 September 2021, the total volume of online job adverts grew by 2% from the previous week and was at 135% of its February 2020 average level; the ‘transport, logistics and warehousing’ category continues to see the highest volume of online job adverts relative to its February 2020 level and is at 367% of this level in the latest week.
Updated
Fears over UK economy weigh on pound
Worries about the health of the UK recovery are weighing on the pound this week.
Two days of heavy falls sent sterling to its lowest level since December 2020 last night.
Today, it’s trading around $1.344 this morning, up just +0.15%, as the data showing a stronger recovery this summer fails to spark a meaningful rally.
Fawad Razaqzada, market analyst with Think Markets, says the short-term risks to the pound are “skewed to the downside”, given last night’s warning about future growth from Andrew Bailey, Bank of England Governor, and concerns about rising prices.
Judging by this week’s sharp selling, investors are no longer confident that the economy is on a sustainable path of recovery and that it is facing stagflation risks.
Bailey’s remarks implies that the BoE will not aggressively tighten its belt. Although inflationary pressures are increasing sharply – with UK gas futures exceeding £2.50 per British thermal units to hit a fresh record today – Bailey’s warning that the UK economy is facing strong headwinds because the services sector has not recovered as strongly as had been expected means any rate hikes would be done so for the “wrong” reasons.
That is, to prevent very high levels of inflation derived from energy prices spikes and temporary factors, rather than because of growth warranting tighter policy.
UK carmakers aren’t the only ones suffering from semiconductor shortages.
Carmaker Opel, which is part of the Stellantis group, has said today it will close one of its plants in Germany until at least the end of the year due to chip shortages.
Reuters has more details:
Production at the Eisenach plant, which makes internal combustion engine and hybrid electric cars, should start again in 2022, although an Opel spokesperson could not specify a date.
Some 1,300 workers employed at the plant will be temporarily laid off, Opel said, with a separate plant in France picking up some of the production.
Stellantis has halted production at other plants, including in Europe and Canada, forecasting that it would make 1.4 million fewer vehicles this year due to the chip shortage.
Petrol queues are continuing to cause congestion on the roads this morning, with Stagecoach South East reporting disruption to several bus routes in Kent:
Updated
Here’s the situation at a couple of London petrol stations this morning:
Charities and the Labour party have criticised the government’s planned £500m winter hardship fund as a “temporary sticking plaster” that will help struggling households recover from next week’s £20 a week cut to universal credit.
The Joseph Rowntree Foundation called it “an 11th-hour attempt to save face” by ministers as they pressed ahead with unprecedented cuts to universal credit. It would not fix the “fundamental inadequacy” of the social security system, it added.
Helen Barnard, deputy director at JRF, warned:
“It does not come close to meeting the scale of the challenge facing millions families on low incomes as a cost-of-living crisis looms and our social security system is cut down to inadequate levels,”
ONS: 5% of jobs furloughed, as scheme winds up
Around one in 20 workers were furloughed earlier this month, new figures suggest, on the day the programme winds down.
Data from the Office for National Statistics shows that the proportion of workers on full or part-time furlough leave fell to 5% in the two weeks to September 19th, down from 6% in the previous fortnight.
That would suggest that more than one million roles were still furloughed earlier this month (There are 29m payrolled employees in the UK).
It is possible to be furloughed from one job but still work another, or to be furloughed by more than one employer. Official figures have previously shown about 1.6m jobs remained on furlough at the end of July.
The furlough scheme covers 80% of wages of unworked hours, allowing firms to temporarily stand staff down (since August, they’ve been paying 20% of pay, with the government paying 60%).
Unions have warned that the government should not end the scheme today, when the UK already faces a fuel supply crisis and a mounting cost of living crisis. The travel sector, which has used furlough extensively, still faces some restrictions on overseas travel.
Unite general secretary Sharon Graham said:
“Working people need more than platitudes from politicians. They need money in their pockets and jobs secured. Despite its faults, furlough has helped many through the crisis. This is not the time to stop furlough.
“As general secretary of Unite, I issue a warning to any bad boss who might seek to use the crisis as an opportunity to make workers’ pay for this pandemic: I will not stand by and allow you to cut the pay, terms and conditions of my members.”
Business leaders are also concerned, warning of an “autumn storm” from the government dismantling emergency pandemic support schemes at a time when the economic recovery from Covid-19 was faltering.
The energy crunch continues to bite, with natural gas prices hitting new records again:
Consumers have already been warned to expect higher bills and more household energy supplier failures, while heavy industry and the food and drink sector are facing the prospect of shutdowns and pre-Christmas product shortages.
Gas prices are being driven by a range of factors - including increased global demand for energy, lower supplies from Russia, and low wind levels earlier this month which hit renewable energy output.
The UK seems particularly vulnerable, with less gas storage than many other countries, and a major fire which forced the shutdown of one of Britain’s most important power cables importing electricity from France.
UK house price growth slowed in September as economists said the looming end of the stamp duty tax break had cooled the market after a period of extraordinary growth.
The average price grew by just 0.1% over the month to £248,742, a sharp slowdown compared with growth of 2% in August, according to Nationwide.
The UK’s largest building society said annual house price growth fell back to 10%, down from 11% in August. That was down from annual growth of more than 13% as recently as June, the fastest since the property boom in 2004.
Here’s the full story:
Deputy Prime Minister Dominic Raab has suggested offenders who have been given community sentences could be used to address the country’s lack of HGV drivers, amid the ongoing fuel shortages.
PA Media explains:
Mr Raab, who was made Justice Secretary in Prime Minister Boris Johnson’s recent ministerial reshuffle, has dismissed Labour’s call for 100,000 migrant visas to be issued to provide sufficient drivers.
The former Foreign Secretary said the move would leave the country reliant in the long term on labour coming from abroad, and instead suggested the gap could be filled in another way.
“We’ve been getting prisoners and offenders to do volunteering and unpaid work,” Mr Raab told The Spectator, in comments carried by The Times.
“Why not if there are shortages encourage them to do paid work where there’s a benefit for the economy, benefit for society?
“If you give people skin in the game, give them something to lose, if you give them some hope, they’re much less likely to re-offend.”
The UK has a shortfall of up to 100,000 HGV drivers, according to estimates, leading to calls for higher pay and improved working conditions to attract recruits.
But haulage firms and retailers have warned that training up new staff will take time.
Plus, the Driver and Vehicle Licensing Agency (DVLA) already has a backlog of HGV licence applications to process.
According to the Driver and Vehicle Licensing Agency (DVLA) – which processes HGV licence applications – 4,000 are new applications and 50,000 are lorry drivers that are renewing existing licenses, meaning they can continue driving.
Under Section 88 of the Road Traffic Act (RTA) 1988, drivers renewing their HGV licenses are able to drive on expired licenses while their renewal applications are being processed provided they have not been told by their doctor or optician they should not drive.
Fast fashion chain Boohoo has warned that supply chain problems are hitting its rapid growth.
Boohoo trimmed its sales and profit margin forecasts this morning, as it reported a 64% drop in pre-tax profits (year-on-year) in the six months to 31 August.
This was partly due to “materially higher” shipping costs, which were £26m higher than before the pandemic.
It says:
Performance in the second quarter was impacted by UK returns rates returning to pre-pandemic levels, physical stores reopening, consumer uncertainty in markets that we operate in resulting in the loss of key events and holidays, as well as continued COVID-19 related disruption across the Group’s key international markets, which has impacted international delivery timeframes.
Boohoo predicted that cost pressures will remain an issue in the second half of the financial year:
Elevated short-term cost headwinds experienced in the first half are expected to continue in H2, alongside recent freight inflation in our supply chain and wage inflation within our distribution centres.
Shares in Boohoo have fallen over 11% this morning, on track to close at their lowest level in over a year.
Rishi Sunak launches £500m fund to help struggling families
The government is launching a £500m fund for councils to support poorer families through the winter amid an energy supply crisis and the withdrawal of other forms of financial assistance.
It said the new household support fund will “support millions” via small grants for food, clothing and utilities, with money being disbursed by local authorities.
Chancellor Rishi Sunak says it will be a lifeline for struggling families:
“Our new household support fund will provide a lifeline for those at risk of struggling to keep up with their bills over the winter, adding to the support the government is already providing to help people with the cost of living.”
Here’s the full story:
But with inflation picking up, energy bills rising sharply, the £20-per-week universal credit uplift being removed and the furlough scheme ending, will this be enough? (as ending the £20/week increase will cut UC by £6bn per year).
Our Politics Live blog has all the details:
Shoppers warned: Prepare for a nightmare at Christmas
Shoppers have been warned to prepare for a nightmare at Christmas.
Labour shortages and shipping problems will hit stocks of food and gifts, driving up costs and leading to empty shelves, analysts fear.
Clive Black, a retail analyst at Shore Capital, said (via The Times):
“I expect Christmas will be a nightmare for consumers.
There will be food on supermarket shelves but there will be a distinct lack of choice. Shortages of labour have meant businesses have not laid down the same number of turkeys or planted the same number of crops and the HGV driver shortage is compounding the problem.”
Black predicts shortages of electronics goods, toys and bicycles, and furniture such as sofas, due to delays at ports and difficulties in securing shipping and containers.
And he blasted the government for creating a “totally avoidable” crisis -- saying it is due to “mismanagement of the economy.” rather than Brexit.
Blacks also blames top civil service mandarins for some of the problems, The Times adds:
“It’s not just the politicians but their permanent secretaries. David Kennedy [director-general for food] at Defra has been a disgrace. Permanent secretaries in the Home Office are a disgrace as well. What the hell have they been advising ministers?”
Turkey producers have been warning for weeks that there could be fewer festive birds on offer, as they can’t get enough staff to process them.
Kate Martin, of the Traditional Farm Fresh Turkey Association (TFTA), said last weekend:
“It is the supermarket shelves that will be emptier on turkeys this year than they have been before, because there have been less turkeys placed on the ground, because the big processors know that they will not get them processed.”
Toy retailers have also warned that there will be less choice on offer, due to a series of problems getting goods delivered from factories in Asia.
That includes a shortage of shipping containers, Covid-19 lockdowns which disrupted both production, and disruption at ports due to the pandemic and storms.
Black fears families will struggle to provide the traditional Christmas feast:
“A lot of people eating on Christmas Day will be asking ‘What the hell is this?’ It won’t be traditional. They may be eating other meats and nut roasts.
Feeding families could also be much pricier, if food and distribution industries pass on the costs they’re facing. The CO2 crisis could also lead to beer and carbonated soft drinks shortages, and push up costs.
High street retail chain Next has also warned that staff shortages may mean shoppers have to wait longer for Christmas parcels, as the immigration system is “not working properly”.
Next’s chief executive, Simon Wolfson, said on Wednesday it was struggling to recruit enough warehouse workers and lorry drivers for the key trading period.
“Without the contribution of overseas workers to assist with these peaks, we suspect customer deliveries may take longer to arrive.
Updated
Government: fuel crisis back under control
The government is insisting this morning that Britain’s fuel crisis is back under control, with the army on standby to help replenish forecourts.
Chief Secretary to the Treasury Simon Clarke told Sky News this morning that the fuel crisis is “thankfully” easing.
We are in a situation now where more fuel is being delivered than is being sold, so that crisis is now absolutely something which is back under control.
It will continue to ease if people return to normal buying habits, Clarke added.
Clarke also told the BBC’s Today Programme that members of the army were on standby to help “buttress” the ongoing shortage of HGV drivers to get fuel to petrol stations.
“The army is on standby to help support the commercial operations and, of course, we’ve seen some changes, including, notably, allowing some MoD driving instructors to help boost the number of tankers,”
“There’s 150 drivers on standby to help support operations as required.
“This is designed to help buttress the commercial operation which is driving down the pressures that we’ve seen on forecourts.”
Transport secretary Grant Shapps has tweeted that the situation has improved, with “more petrol delivered than dispensed yesterday”.
Updated
Virgin Money has announced it will close 31 branches – almost all in Scotland and the north of England – in the latest stage of the UK banking sector’s retreat from the high street.
The bank said it expected to make 112 people redundant because of the closures after the coronavirus pandemic accelerated the shift to online and mobile app-based banking, a move that has rapidly reduced the profitability of physical bank branches.
Since the start of the pandemic HSBC, TSB and the Co-operative Bank have all closed branches, raising concerns about access to cash during lockdowns from the Financial Conduct Authority and consumer groups.
The latest closures represent almost a fifth of Virgin Money’s branches, meaning the bank will have only 131 left, down from 245 when it merged with Clydesdale and Yorkshire Bank in 2018.
UK summer recovery stronger than thought...before supply chain crisis hit
In better news, the UK economy grew faster than expected over the summer.
Official figures have been revised to show that GDP expanded by a pacey 5.5% over the April-June period, up from an initial estimate of 4.8%.
That shows that the rebound as the economy reopened this spring was even more rapid than first thought.
Health services and arts both growing more strongly than initially estimated, while shops and hospitality companies saw a surge in demand as the lockdown lifted.
The revised figures also show households have been saving less previously thought.
Jonathan Athow, deputy national statistician for economic statistics, explains:
“Household saving fell particularly strongly in the latest quarter from the record highs seen during the pandemic, as many people were again able to spend on shopping, eating out and driving their cars,”
This shows that the UK economy had more momentum as it entered the third quarter of the year, says Ruth Gregory of Capital Economics, adding that the recovery has “faltered” in Q3.
Overall, while the upward revisions to GDP are clearly welcome, Q2 was three months ago, and the recovery appears to have stagnated since.
Even so, given that there is now thought to be less spare capacity in the economy that will only encourage the Bank of England to hike rates in the not too distant future.
Semiconductor shortages hit UK car production
The global shortage of semiconductors is hammering the UK car industry.
Car production fell by 27% in August, the second monthly fall in a row, with the industry citing a combination of chip shortages and factories extending their summer shutdowns. UK factories turned out 37,200 cars during the month, down from 51,000 a year ago, figures released overnight show.
Mike Hawes, chief executive at the Society of Motor Manufacturers and Traders, said the slide in production was worrying “extremely worrying both for the sector and its many thousands of workers nationwide”.
“The impact of the semiconductor shortage on manufacturing cannot be overstated.
Carmakers and their suppliers are battling to keep production lines rolling with constraints expected to continue well into 2022 and possibly beyond.”
Here’s the full story:
China’s factory activity falls amid energy curbs
China’s factory activity has shrunk unexpectedly amid curbs on electricity use and rising prices for commodities and parts, raising more concerns about the state of the world’s second biggest economy.
A closely watched survey released on Thursday showed that China’s factory activity contracted in September for the first time since the pandemic took a grip in February 2020.
The figures showed that output fell thanks to a marked slowdown in high-energy consuming industries, such as plants that process metals and oil products. Sub-indices also highlighted a fall in new orders, employment and new export orders.
Analysts had expected the manufacturing purchasing manager’s index (PMI) to remain steady at 50.1 in September, but the official result showed the index at 49.6 - below the 50-point mark separating growth from contraction.
Here’s the full story:
Introduction: Supply chain crisis undermining recovery
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the UK’s supply chain crisis and business.
The supply chain problems gripping the global economy are threatening to undermine the recovery, and raising fears of stagflation -- that sickly mix of rising prices and slowing growth.
With energy prices surging, and companies still struggling to get their hands on parts and raw materials, policymakers fear that the rebound from the recovery is faltering.
Bank of England governor Andrew Bailey has warned the UK’s recovery to its pre-pandemic size will take longer than hoped, as supply chain problems drag on growth -- and help to push the pound to its lowest level this year.
Bailey told a European Central Bank panel with other major central bank chiefs that Britain’s GDP probably won’t recover to pre-pandemic levels until early next year, a couple of months later than anticipated in August.
“I expect us to be back to the pre-pandemic level in the early part of next year, possibly a month or two later than we thought we would be at the start of August.”
Bailey added that:
“the big challenge now is how we can get through this period of uneven growth, supply-side bumps and come out of the other side with both a smoother recovery and balance of supply and demand.”
Other central bankers are also worry that supply chain shortages will shunt the recovery, and drive up consumer prices.
They are watching closely for signs that higher-than-expected inflation leads to wage increases, creating a cycle that could increase pressure for central banks to hike borrowing costs -- although they do argue that these disruptions will be temporary.
Jay Powell, chair of the US Federal Reserve, said it was “frustrating” that supply-chain bottlenecks were holding back the recovery of the world’s largest economy.
He told the EBC’s panel:
“The combination of strong demand for goods and the bottlenecks has meant that inflation is running well above target.
We expect that it will continue to do so in the coming months before moderating as bottlenecks ease.”
ECB president Christine Lagarde also sounded concerned, saying supply bottlenecks “seem to be accelerating in some areas”:
“How long these bottlenecks will take to fade out is a question we are monitoring very closely and this is on our radar screen.”
Surging energy prices are a particular headache -- driving up costs for businesses and hammering consumers with higher energy bills, and causing three more UK energy firms to collapse yesterday.
Wholesale prices for gas and coal are both hitting records, as the Northern Hemisphere heads towards what could be a very difficult winter:
Michael Hewson of CMC Markets says:
Fears over stagflation do appear to be rising, after all, how could they not be when you see the sorts of increases being seen in energy prices, a trend that will eat into people’s disposable income, thus reducing their capacity to spend on other incidentals.
These supply chain problems have been seen acutely in the UK this week, during the fuel crisis.
With petrol stations still struggling, the government yesterday started deploying its reserve tanker fleet, driven by civilians, to boost fuel deliveries.
And soldiers are expected to be deployed to drive tankers in in the next few days, to help clear the queues and shortages that began nearly a week ago.
The government insists the situation is improving, with business secretary Kwasi Kwarteng saying.
“The last few days have been difficult, we’ve seen large queues. But I think the situation is stabilising, we’re getting petrol into the forecourts. I think we’re going to see our way through this.”
But the wider supply chain crunch remains intense, with shortages in shops and on the forecourt
Asked if the government was certain the problems would be solved for the run-up to Christmas, Kwarteng said:
“I’m not guaranteeing anything. All I’m saying is that, I think the situation is stabilising.”
The agenda
- 7am BST: Nationwide house price index for September
- 9.30am BST: ONS’s weekly survey of real-time indicators of economic activity and social change
- 10am BST: Eurozone unemployment report for August
- 1pm BST: German inflation report for September
- 1.30pm BST: US weekly jobless figures