Buyers have warned of the Christmas nightmare; fuel crisis “back under control” – business live | Business
Hello and welcome to our continued coverage of the global economy, financial markets, UK supply chain crisis and business.
Supply chain issues plaguing the global economy threaten to undermine the recovery and raise fears of stagflation, the unhealthy mix of rising prices and slowing growth.
With soaring energy prices and companies still struggling to get their hands on parts and raw materials, policymakers fear the rebound in the recovery will run out of steam.
Governor of the Bank of England Andrew Bailey has warned that it will take longer than expected to restore the UK to its pre-pandemic size as supply chain issues hold back growth – and help push the pound to its lowest level this year.
Bailey told a European Central Bank panel with other leaders of major central banks that Britain’s GDP is unlikely to return to pre-pandemic levels until early next year, a few months later than expected. in August.
“I expect we will return to pre-pandemic levels early next year, maybe a month or two later than we thought in early August.”
Bailey added that:
âThe big challenge now is how to get through this period of uneven growth, supply side shocks and exit the other side with both a smoother recovery and a balance between supply and demand. ”
Other central bankers are also concerned that supply chain shortages will delay the recovery and push up consumer prices.
They are watching closely for signs that higher-than-expected inflation is driving wage increases, creating a cycle that could increase pressure on central banks to raise borrowing costs – although they argue that these disruptions will be temporary.
Jay powell, president 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 panel:
âThe combination of strong demand for goods and bottlenecks has put inflation well above target.
We expect it to continue to do so over the next few months before moderating as bottlenecks ease. ”
ECB President Christine Lagarde also expressed concern, saying that bottlenecks “seem to be accelerating in some areas”:
“How long will these bottlenecks take to clear up is a question we are watching very closely and it is on our radar screen.”
Soaring energy prices are a particular headache – driving up costs for businesses and hammering consumers with higher energy bills, and causing three other UK energy companies to collapse yesterday.
Wholesale gas and coal prices are both breaking records as the Northern Hemisphere heads into what could be a very difficult winter:
Michael Hewson of CMC Markets says:
Fears about stagflation seem to be increasing, after all, how could they not be when you see the kind of increase in energy prices, a trend that will eat away at people’s disposable income, thereby reducing their income. ability to spend on other incidental costs.
These supply chain problems were seen with keen eye in the UK this week, during the fuel crisis.
While gas stations are still struggling, the government yesterday began deploying its civilian-driven standby tanker fleet to ramp up fuel deliveries.
And soldiers are expected to be deployed to drive tankers in the coming dayss, to help eliminate the queues and shortages that started almost a week ago.
The government insists the situation is improving, said business secretary Kwasi Kwarteng.
âThe last few days have been difficult, we have seen big queues. But I think the situation is stabilizing, we are putting gasoline on the forecourt. I think we’ll see our way through this.
But the tightening of the broader supply chain remains intense, with shortages in stores and on the forecourt.
When asked if the government was certain the issues would be resolved as Christmas approached, Kwarteng said:
âI don’t guarantee anything. All I’m saying is I think the situation is stabilizing.
- 7 a.m. BST: National House Price Index for September
- 9:30 a.m. BST: weekly ONS survey on real-time indicators of economic activity and social change
- 10 a.m. BST: Eurozone unemployment report for August
- 1 p.m. BST: German inflation report for September
- 1:30 p.m. BST: US weekly unemployment figures