Putin steps in as energy crisis escalates
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Good evening from London,
There was a tragedy late afternoon today as Russian President Vladimir Putin said his country was ready to step in and stabilize the spike in energy prices, which rocked financial markets and fueled fears that the global economic recovery could be interrupted.
UK gas contracts for November delivery jumped almost 40% as trade opened this morning to hit £ 4 per therm, having started 2021 below 50p. But Putin’s offer – aimed at pushing back criticism from Europe that Russia was blocking supplies – saw markets change course drastically, pushing the price down to £ 2.87.
In addition to the demand caused by economies emerging from the pandemic, traders highlighted several reasons for the surge in prices, including the sharp drop in domestic production in Europe. The UK, which has very limited storage capacity, is particularly vulnerable to higher energy costs.
Meanwhile, investors are increasingly concerned that the increases will translate into broader price hikes across the economy, with UK inflation expectations at their highest level since 2008 This caused government bond prices to fall and hurt stocks due to the effect on companies. profits.
In the EU, member states urge Brussels to take action to stop rising prices, with some arguing that the Green Deal to make the bloc climate neutral by 2050 will only further increase energy costs and could lead to social unrest. A senior EU politician warned that the Green Deal could become “a symbol of high energy prices and we will have instead yellow vests, vests [protesting over] fuel poverty everywhere ”.
Putin also criticized EU policy, accusing the “poorly thought out decisions” of Brussels officials of having created “serious imbalances” in European energy markets.
But rising gas prices in Europe are just a sign of a wider energy crisis playing out around the world, as consuming countries struggle to secure their fuel supplies. Oil prices in the United States this week hit their highest level in seven years after Opec + decided to maintain current production levels, while the price of coal surpassed its previous all-time high set in 2008.
China and India, regarded by the IMF as the two main engines of global growth and heavily dependent on coal, have been hit by severe electricity shortages. China has suffered a ‘triple whammy’ of emission restrictions on power generation, a coal shortage and price caps on electricity which mean demand is unaffected by rising costs inputs. India, which relies heavily on coal for its thermal power plants, has only four days of stocks left.
Ting Lu, chief China economist at Nomura, highlighted the global implications of China’s power shortages. “Global markets will feel the effects of a textile supply shortage [and] toys for machining parts. . .[and this will]will most likely lead to a shortage of goods for Thanksgiving and Christmas, ”he said.
Poland raised interest rates for the first time in nine years by 40 basis points to 0.5%
US private sector hiring created 568,000 higher-than-expected jobs in September, the largest increase in three months
Only 37% of people in Latin America and the Caribbean have been fully vaccinated against Covid-19, according to the Pan American Health Organization (Reuters)
For the latest updates on coronaviruses, visit our live blog
Good to know: the economy
Boris Johnson laid out his plans to restructure the UK economy in his opening speech at the Conservative Party conference. The PM has denied that the country faces a supply chain crisis, with his government moving from claiming that labor shortages have nothing to do with Brexit to claiming that ‘they were a sign of successful Brexit which marked the end of cheap foreign labor. Meanwhile, pig farmers have started slaughtering healthy animals as the government refuses to help cope with slaughterhouse shortages.
Latest for UK and Europe
“Ouch, that hurts” was an analyst’s reaction to this morning’s data showing a sharp drop in German industrial orders in August thanks to supply chain problems and soaring inflation. Orders fell 7.7 percent, down from the 2.1 percent expected by economists. The German auto sector was hit particularly hard – an issue echoed in the UK – as Car sales fell to its lowest level in two decades.
Aside from the sectors hit hard by labor shortages, economists estimate that most British workers Can only hope for modest wage gains in the near future and that any increase could be totally wiped out by inflation, write business correspondent Delphine Strauss and chief political correspondent Jim Pickard.
The US Senate will vote on the debt ceiling at 2 p.m. ET (7 p.m. London), Democrats needing 10 Republicans to vote with them to raise the country’s borrowing limits. Here is our explanation of the US debt ceiling.
The IMF said global growth this year would be lower than its previous projection of 6%, as the impact of the pandemic continues to “hamper” the recovery, with unequal access to vaccines being the most pressing issue. IMF Director Kristalina Georgieva said the fund’s key message was to “vaccinate, calibrate and accelerate”.
New Zealand became the third developed economy to raise interest rates since the start of the pandemic, rising 25 basis points to 0.5%. The Reserve Bank of New Zealand’s move follows recent rate hike measures in South Korea and Norway, as inflation fears begin to set in as growth returns. Fear of stagflation, where inflation is rising and growth slows, haunts central banks around the world.
Tesco, the UK’s largest food retailer, raised full-year profit expectations to £ 2.5-2.6bn and announced a £ 500m share buyback as it announced a 29% increase in its operating profits in the first half of the year.
E-commerce giant Amazon opened its first UK ‘4 star’ store at Bluewater Shopping Center in Kent, selling items that received favorable reviews on its website.
Almost half of UK staff have returned to the office at least part-time, according to a survey carried out for the FT, but growth is leveling off as workers remain concerned about the coronavirus infection and companies consolidate remote working practices.
Manufacturers have warned that the continued disruption of energy supplies in China would severely damage technology supply chains, just as companies like Apple prepare for peak production season. US plans to fight globalization semiconductor shortage are unlikely to have much impact, writes Greater China correspondent Kathrin Hille.
Tui, the world’s largest package vacation operator, plans to raise € 1.1 billion by selling new shares, as a sign of confidence in the travel industry emerging from the pandemic disruption. The Anglo-German group said it took 5.2 million bookings this summer, about 1.1 million more than expected just two months ago.
The world of work
The pandemic boom in trading has taken its toll on staff at law firms, which are now launching wellness programs and even hiring “burnout counselors” in response. Mental health charity LawCare said wellness programs would not be successful without sweeping changes to an office culture with long hours, a lack of management support, and poor boundaries between work and work. family life.
Why do we still feel so little time when we are working fewer hours than previous generations? Sarah O’Connor examines the mysterious decline in free time and the trend towards “time poverty” for decades.
Forget the brown nose and the humble boastfulness. The newly blurred lines between work and home life during the pandemic have helped spark a new trend towards more ‘honest’ posts on the networking site LinkedIn, writes Emma Jacobs.
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