Time to wrap up… here’s today’s main stories so far:

The price of cocoa has hit a new record high today, pushed up by escalating worries over shrinking supplies due to crop failures in west Africa.

The London cocoa price hit £9,477 per ton today, as industry data showed a drop in production.

“Grindings” — beans processed by the industry to eventually be turned into chocolate — fell by 2.5% in the first three months of the year. That could show that weaker production is resulting in fewer beans reaching the market.

Coffee also hit new highs, with the robusta coffee price climbing to a record $4,292 per ton.

Gareth Redmond-King, head of international programme at the Energy and Climate Intelligence Unit (ECIU) says:

“The cost of our morning coffee is soaring as climate change hits crops in Brazil and Vietnam. The UK imported a billion pounds worth of coffee in 2023; just over half in raw coffee beans, and the rest as roasted coffee.

“But 97% of all coffee globally is grown in countries vulnerable to climate impacts. More than half the coffee beans we imported last year came from Brazil and Vietnam - worth £198m and £87m respectively. Between them they also supply half the beans imported by EU nations to make roasted coffee we also import.

Ukraine needs $42bn of budget support this year as it continues to resist Russia’s invasion, IMF chief Kristalina Georgieva says.

Georgieva also told reporters in Washington that global support for Ukraine remains firm, and that the war needs to end; it is both a human tragedy and a drag on global growth prospects, she says.

Over in Washington, IMF managing director Kristalina Georgieva has said that the high levels of migration across the US border is helping America’s economy to outpace Europe.

Asked why the US economy has performed better than Europe, at the Fund’s annnual meeting in Washington today, Georgieva cited three factors that distinguish the US.

First, the force of innovation – in the US it’s easier to turn innovative ideas into business development and then scaled up into successful businesses. There’s still “work to be done” to unleash innovation in Europe, she says, citing the costs of patents in Europe vs the US.

The second factor, Georgieva says, is the influx of workers into the US, which makes it easier for firms to find staff and puts downward pressure on wages.

[That spike in migration to unprecedented levels at the southern border is a major political issue, and likely to dominate the presidential election this autumn].

Georgieva explains:

Second, the US is benefitting from abundant labour coming across the border.

It creates a domestic political problem, and not everyone who crosses the border adds positively to the economy.

But that labour supply also gives to the US another comparative advantage; wages are not pushing up, because there is no strong pressure because of a lack of labor on wage growth.

The third factor in the US’s favour is that it has benefitted from more favourable energy prices than Europe, where natural gas prices soared after Russia’s invasion of Ukraine in 2022.

Georgieva also reveals that the issue of productivity dominates her thinking; she says:

I wake up in the middle the night and think, how we can help our members lift their productivity?

The surge in UK car insurance premiums may finally be fading, bringing some relief to squeezed motorists.

Data published by Confused.com and insurance broker WTW shows that comprehensive car insurance premiums fell fallen by 5% (£54) during the last three months, with UK motorists now paying £941 on average.

Although that’s a quarterly fall, it’s still an awful lot more than a year ago. In Q1 2023, the average premium was £657, meaning they’re still 43% higher than a year ago!

Tim Rourke, UK head of P&C pricing, product, claims and underwriting at WTW, says:

“After a series of record highs in 2023 took car insurance premiums into uncharted territory, the latest pricing data suggests the relentless rise in prices may finally be turning a corner.”

We reported last month that UK car insurance premiums jumped by 34% in 2023, as motor insurers more than passed on the rising cost of claims.

Fresh questions over BP’s low carbon ambitions have emerged today with a major shakeup of the oil company’s executive team, including the resignation of its gas and renewables boss.

BP’s head of natural gas and low carbon energy, Anja-Isabel Dotzenrath, will step down after just over two years after she joined the company to spearhead the green agenda set out by BP’s former boss Bernard Looney.

The new CEO, Murray Auchincloss, said she will be replaced by BP “lifer” William Lin who joined the company almost three decades ago and currently serves as head of the company’s regions, corporates & solutions division.

At the same time BP’s head of innovation and technology, Leigh-Ann Russell, will also leave to take up an external job opportunity, the company said.

Auchincloss set out his plans for a smaller leadership team as he aims to simplify BP’s management structure in a cost-cutting drive which will reportedly include cutting over a tenth of the workforce in its electric vehicle charging business and pulling out of several markets.

He said earlier this year that BP’s destination was unchanged but that it would get there as a much simpler and more pragmatic company, and at the pace that society demands.

Giacomo Romeo, an analyst at Jefferies, said that the shakeup confirmed its view that we could see more changes around BP’s strategy for low carbon businesses as the company seeks a more “pragmatic approach” to the energy transition.

In a memo to staff, Dotzenrath said:

“After a rewarding career of over 30 years in energy, I am at a point where I need to devote more time to my family.”

“I firmly believe we have the right asset footprint and pipeline, partnerships, financial strength and most importantly the right team to deliver.”

Germany’s central bank is hopeful that Europe’s largest member will avoid falling into recession, after a pick-up in activity at the start of this year.

The Bundesbank has predicted this morning that the German economy probably expanded in the first quarter, thanks to an unexpected boost from industry and construction.

The Bundesbank had previously predicted that GDP would shrink in the first three months of 2024, which would have put Germany into a technical recession (two quarterly contractions in a row), after it shrank in Q4 2023.

But today, the Bundesbank declares that Germany’s economic situation has brightened somewhat, meaning there may have been a slight increase in growth in Q1 2024.

It warns, though, that the outlook remains poor, saying:

“There is still no evidence of sustained improvement for the German economy.

Demand for industrial products from Germany and abroad remains weak and continues to decline.”

The oil price has eased to its lowest level since the start of April.

Brent crude is down 0.7% today at $86.66 per barrel, adding to a heavy drop yesterday.

Last Friday, Brent traded as high as $92 per barrel, as investors braced for Iran to take military action against Israel.

Joshua Mahony, chief market analyst at Scope Markets, says the slump in oil prices is helping to lift sentiment in the markets today, adding:

The risk of an escalation between Israel and Iran appears to be easing with each passing day, while yesterday’s fourth consecutive weekly gain for US crude inventories has signalled an oversupply despite a recent decline in US output.

The Financial Times’ Lex column argues today that it could make sense to put Thames Water into a special administration.

Lex writes:

A swift demise is better than a slow one. That would certainly be true for Thames Water.

A period of temporary public stewardship is generally framed as a worst-case scenario in discussions about the future of Britain’s biggest privatised water utility. But putting Thames Water into a special administration regime — and quickly — would have its benefits.

To be clear, a scenario where Thames is run temporarily by a special administrator on behalf of the UK government remains, at present, hypothetical.

Lex warns that if Thames can’t raise new equity, it would have to slash costs, meaning its already-poor service levels would deteriorate further. Alternatively, a special administration might limit fallout for other utilities and provide a chance to tackle its unwieldy structure, they say.

This might not be popular with Thames’s bondholders, Lex adds, as they could be forced to take a haircut, but investors in other water companies might approve, as it could stop the crisis spreading.

More here: Thames Water could benefit from a spell of public ownership

A special administration could be triggered by the secretary of state or Ofwat.

Oxford professor Dieter Helm has argued it would be wise to “grasp the opportunity” provided by a special administration, and push through “a fundamental re-set” of Thames.

In an excellent analysis last month, Professor Helm wrote that Thames Water’s complex ownership should be straightened out, and it should be completely separated from parent company Kemble.

He also suggests the company is simply too large, and could be split into “London Water”; and “Greater Thames Water”, and that the sewerage and water operations “can and should” be separated into different businesses, which would improve management focus.

Last month, the Liberal Democrats called for Thames Water should be put into special administration by the government and reformed as a public benefit company.

Prof Helm says the government is reluctant to press the special administration button in the Thames Water case comes from a fear of upsetting foreign investors.

He explained:

The UK has got itself into a position of relying on the kindness of strangers to allow its citizens to live beyond their means, and for almost all financing of investment across the economy.

There are two reasons for this exposed state of affairs: net saving (after capital depreciation) has been negative for over a decade; and the current account of the balance of payments is in serious deficit, with imports exceeding exports. UK investment is largely foreign investment; and the trade deficit requires a capital inflow to offset the current-account deficit.

Budget airline easyJet has narrowed its losses, despite losing revenue from cancelling flights to Israel and Jordon last winter.

EasyJet reported this morning that its losses for the six months to the end of March have fallen by over £50m, to between £340m and £360m.

The airline says it grew capacity where demand was strongest. It also benefitted from the early timing of Easter this year, which led to more demand for flights in March.

Shares in easyJet have jumped 4% in early trading, to the top of the FTSE 100 leaderboard.

Johan Lundgren, CEO of easyJet, argues the airline is well set up operationally for this summer season, saying:

The importance that consumers place on travel coupled with easyJet’s trusted brand has driven good demand for our flights and holidays. Our growth and focus on productivity have reduced winter losses by more than £50 million.

“We have further enhanced our network with the launch of new bases in Alicante and Birmingham providing greater choice for consumers across Europe

EasyJet also lost around £40m due to the conflict in the Middle East, after it paused flights to Israel and nearby Jordan for safety reasons after the 7th October attacks.

It faces further lost business in the months ahead, after suspending flights to Tel Aviv for the next six months earlier this week.

Sales of electric cars across the European Union tumbled by over 11% last month, new figures show, in the latest sign that demand for battery-powered vehicles is ebbing in favour of hybrid cars.

The European Automobile Manufacturers Association (ACEA) reported this morning that new car registrations fell for the first time this year in March, dropping by 5.2% to around one million units.

The timing of the Easter holidays negatively impacted sales, ACEA says, including in the EU’s four largest countries – Germany (‑6.2%), Spain (-4.7%), Italy (-3.7%), and France (-1.5%).

Battery-electric car registrations declined by 11.3% to 134,397 units, meaning its market share shrank from 13.9% a year ago to 13% today.

In contrast, hybrid-electric car registrations rose by 12.6%.

There was also a drop in sales of internal combustion engine-powered cars; petrol sales decreased by 10.2%, while diesel registrations shrank by 18.5%.

In the energy sector, Iran is exporting more oil than at any time for the past six years, new data shows.

Data company Vortexa has reported that Tehran sold an average of 1.56mn barrels a day during the first three months of the year, almost all of it to China. That’s its highest level since the third quarter of 2018.

This is giving Iran’s economy a $35bn-a-year boost, the Financial Times reports this morning, at a time when Western governments are drawing up fresh sanctions following Iran’s drone and missile attack against Israel last weekend.

Iran’s oil sector is already under sanctions, but it was still the world’s second largest source of supply growth in 2023.

Earlier this week US treasury secretary Janet Yellen said the Biden administration was poised to take “additional sanctions action against Iran in the coming days”, adding that there may be “more to do” on Tehran’s oil trade.

Vortexa’s data shows how this could be a challenge.

As Fernando Ferreira, head of geopolitical risk service at the Rapidan Energy Group in the US, put it to the FT:

“The Iranians have mastered the art of sanctions circumvention.

“If the Biden administration is really going to have an impact, it has to shift the focus to China.”

More here….

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

Thames Water must sort out its own financial problems, chancellor Jeremy Hunt has declared, as the future of the trouble water company hangs in the balance.

Speaking in Washington last night, Hunt told reporters that the government would never insure investors against poor decisions.

During a visit to Washington for the spring meetings of the IMF and World Bank, the chancellor said:

“It would be completely wrong for Thames Water customers to pick up the tab for bad decisions by Thames Water’s owners and managers.”

Hunt’s comments come as Thames Water prepares to tap the debt markets in an attempt to fund a rescue plan and repair its finances.

Its board is expected to meet today to rubber-stamp a revised five-year spending plan, which could be released tomorrow; it would then approach lenders to fund the proposals in the coming days.

The Guardian reported last weekend that Thames Water – which has debts of £14bn - has just six weeks to convince its regulator that it has a viable survival plan for its business.

Although it could have enough cash to survive for about 15 months, insiders and investors fear that it must move quickly to strike a deal with its watchdog to stave off insolvency.

Its parent company, Kemble Water Finance, missed an interest payment earlier this month, after its investors abandoned plans to provide £500m of emergency funding in a row with the water regulator. Thames has been pushing Ofwat to let it raise bills by 40%.

Hunt said the government was prepared for “all possible outcomes”, but also denied that the UK’s reputation as a destination for international investment would suffer if Thames Water fell into administration.

The chancellor argues that markets need to work properly, saying:

“Of course we want to attract investment into the UK but we do that on the basis of laws and making sure we have transparent regulation and people are able to get very good returns.”

The agenda

• 7am BST: EU car sales for March

• 10am BST: Eurozone construction output for February

• 1.30pm BST: US weekly jobless data