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We are helpless in face of inflation, claims Bank of England Governor - live updates

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The Governor of the Bank of England has claimed that policy makers have been left helpless in the face of surging inflation.

Appearing in front of MPs this afternoon, Andrew Bailey admitted he’d felt helpless to control soaring prices amid an energy market shock and the war in Ukraine, adding: “It's a very, very difficult place for us to be in.”

Fellow Monetary Policy Committee members Dave Ramsden and Michael Saunders said external factors contributed around 80pc of the recent inflation surge and insisted that even if the Bank had raised interest rates more aggressively, it’s unlikely inflation would have fallen back to the target of 2pc.

The hearing comes amid a slew of attacks by senior Tory MPs on the Bank of England for its handling of the cost-of-living crisis.

Mr Bailey said he didn’t respond to political comments, but admitted the Bank was facing the biggest test in its 25 years of independence.

05:01 PM

Analysts: consumers are feeling as helpless as Bailey

Commenting on the statements made by Andrew Bailey earlier, Myron Jobson at Interactive Investor said:

"Helpless’ is the word Andrew Bailey used to describe how he felt amid runaway inflation which has battered household budgets, leaving many consumers feeling the same.

“On the eve of the publication of the latest labour markets figures, Bailey admits that the Bank of England was surprised by the persistence and scale of the drop in the size of the labour workforce and the increase in economically inactive individuals.

"As such, the Bank has now lowered its projections for labour market participation in its Monetary Policy Report - which is used to devise measures to rein inflation back to the Bank’s target level of 2pc. The Bank now assumes labour participation will remain flat – around 63pc of the working age population, having previously assumed it would recover somewhat.

“It is not a miscalculation, more of an underappreciation of the different factors. Andrew Bailey pointed to difficulty in predicting the impact of long Covid and the accidental savers phenomenon on workplace participation."

04:45 PM

FTSE 100 closes in the green

Switching to markets, the FTSE 100 has recovered to make solid gains today, despite wider concerns over a slowdown in consumer activity in China.

The index ended the day up 0.6pc at 7,464, helped by commodity stocks such as Fresnillo, Glencore and Antofagasta.

"After an early dip prompted by a sharp slowdown in Chinese retail sales in April, markets in Europe have recovered to some extent from their intraday lows, however, there has been a big mismatch between how the FTSE 100 is performing and weakness in the Dax," commented Michael Hewson, chief market analyst at CMC markets UK.

04:30 PM

Bailey attacked from cabinet minister

The Sunday Telegraph revealed that cabinet ministers have turned on the Bank of England over rising inflation, with one warning that the Bank had been failing to "get things right" and another suggesting that it had failed a "big test". Edward Malnick and Tom Rees reported:

In a highly unusual attack, one of the senior ministers warned: "It has one job to do – to keep inflation at around two per cent – and it's hard to remember the last time it achieved its target."

The other said government figures were "now questioning its independence", suggesting Rishi Sunak, the Chancellor, should do more to hold Andrew Bailey, the Bank Governor, to account.

Read the full story here

04:19 PM

Twitter infuriated over Bailey's comments on negotiating higher wages to cope with inflation

04:06 PM

Streaming ended

The streaming has now ended.

Among the key points, Bailey said a series of shocks that the UK central bank couldn’t anticipate are responsible for driving inflation well past the 2pc target.

The war in Ukraine, a worsening of the coronavirus in China and a sizable drop in the size of Britain’s workforce are all putting upward pressure on prices, and policy makers have been surprised by each of those, Bailey said.

The remarks answer criticism from members of Parliament that the bank acted too slowly to contain inflation, causing the biggest squeeze in living standards in a generation. Bailey said there’s little that he or the Monetary Policy Committee could do differently.

“I should emphasize, I don’t feel at all happy about this,” Bailey told lawmakers. “There’s been a series of supply shocks. We can’t predict things like wars. It is well established practice to accommodate supply shocks where they’re expected to be transient. A sequence of shocks like this, which have really come with no gaps like this between them, is almost unprecedented.”

04:01 PM

Bailey: quantitative tightening needs an orderly market

When asked about quantitative tightening, Bailey says we've never done it and the US has done a little bit, so we don't know much about it.

He says that we shouldn't do it in a disrupted market, but in an "orderly" market.

He says it's more sensible now to unwind the balance sheet over time.

03:56 PM

Sir Dave: would raising interest rates in November have helped?

Sir Dave wonders whether raising rates in November instead of December would have made a big difference.

03:54 PM

Saunders: Covid uncertainty more recent than Brexit

Saunders says Brexit has become less of a source of uncertainty since Covid occurred, as the latter caused more uncertainty, and that's why the Bank has focused on Covid most recently.

03:52 PM

Sir Dave: Brexit not only factor fueling inflation

Sir Dave says that data in EU, UK and US are having the same levels of inflation. He says it's hard to disentangle the effect of global supply constraints and Brexit on inflation, and many countries are hit by higher prices despite Brexit.

03:50 PM

Bailey: Bank still thinks Brexit would negatively hit trade

Bailey says the Bank of England hasn't changed its view on Brexit for a while, which is that it would have a negative effect on trade and it would take a long time for the economy to adjust that, although it eventually would.

03:49 PM

Bailey: Brexit and Covid both caused labour shortage

When asked about Brexit and the drop in immigration, Bailey says Brexit and Covid were both causing a fall in mobility of people, as restrictions limited the movement of workers.

Bailey is being asked why this is not included in the Bank of England's guidance.

Sir Dave jumps in to say that it features in some of the guidance but it's difficult to disentangle from other data such as Covid.

"Our guidance is framed by the analysis of the labour market... it's there, it's just not top line of the guidance," he says.

03:45 PM

Bailey: furlough scheme posed questions

When asked whether rates should have been put up last year at times of acute labour shortages after the end of the furlough scheme, Bailey says that had been a key question at the time.

It was unclear what the impact of the end of the furlough scheme would have been, whether the people who used it would have been reabsorbed in the jobs market.

03:39 PM

Sir Dave: recent wage growth shows signs of inflation worries

Sir Dave: We are seeing the beginnings of concerns around inflation influencing wage growth and bargaining, but we need to avoid the inflation mentality.

03:38 PM

Bailey: US has stronger risk of wage spiralling compared to the UK

Bailey says that the US is experiencing pressure on demand and inflation, while the euro is experiencing a shock due to higher energy and goods prices, like in the UK.

The US has a stronger risk of wage spiralling compared to the UK because of this.

03:35 PM

Michael Saunders: monetary policy can't affect labour supply

Michael Saunders says that his main concern is about pricing strategies about companies seeking to pass costs on the consumers.

He says that monetary policy can't affect labour supply. The market has been hit by long-term sickness recently, such as long Covid, rather than a lack of availability of jobs. Brexit also played a part as people didn't come to Britain to work.

03:33 PM

Sir Dave Ramsden: businesses closer to consumers are feeling the cost of living crisis more

Sir Dave Ramsden says that the closer businesses are to the consumers, the more challenging it is to pass costs on due to the cost of living crisis.

03:29 PM

Sir Dave Ramsden: state of pandemic could change again

Sir Dave Ramsden says that the state of the pandemic could change again, and the seasonal nature of Covid means there may be more infections in the autumn.

03:26 PM

Bailey: UK focused on keeping jobs

The US handed people money while the focus in the UK was to keep jobs, says Bailey, while Britain is also being hit much less from Covid compared to other countries.

03:18 PM

Andrew Bailey: The Government hasn't spoken to me

Mel Stride asks Andrew Bailey to clarify whether any ministers had approached him over monetary policy amid all the briefings and attacks in the press.

Bailey says no one has spoken to him, prompting Stride to respond that he's "glad to hear it".

03:07 PM

Bailey: Higher earners should reflect on pay demands

We're back to the question of wages, which has been a hot topic since Bailey suggested workers should show restraint in their pay demands.

The Governor reiterates that he thinks those on higher earnings should reflect on their pay demands, adding that he asked the Bank not to give him a pay rise.

He says it's a "societal" question, but insists he's not telling anyone what to do.

03:00 PM

Andrew Bailey: This is the Bank's biggest ever test

The Governor is asked again about his response to attacks by Tory MPs on the Bank's response to inflation.

He says: "I don't live in the world of anybody's politics... I read about it but I don't respond to it."

Bailey adds that this is the Bank's biggest test in its 25 years of independence, and insists that the crisis only makes independence and the inflation target more important.

02:57 PM

Andrew Bailey warns of food crisis

It seems like food is Andrew Bailey's major talking point of the day.

He describes the outlook for food prices as a "major worry" and insists that everything possible should be done to help Ukraine's exports continue normally.

02:55 PM

MPC members: Policy can have an effect

Dave Ramsden and Michael Saunders both chip in to clarify that monetary policy can have an effect.

They say there's nothing policy could do about external factors such as an energy crisis and a war in Europe.

But they say interest rates can help to ensure inflation doesn't become embedded once these initial shocks fade.

02:53 PM

Andrew Bailey: I've felt helpless

Andrew Bailey and the other MPC members have said 80pc of the inflation shock has come from external factors.

The Governor is asked if he's felt helpless during the process.

He responds: "Yes. It's a very, very difficult place for us to be in."

02:50 PM

Bailey: Ukraine is the 'big one'

Andrew Bailey has now turned his attention to risks from abroad.

He points to supply chain disruption in China caused by recent Covid outbreaks and lockdowns.

But he says Ukraine is the "big one". He boils this down to two things: a further energy price shock (mainly linked to the cutting off of supplies from Russia) and food.

Bailey is apologetic and says he's going to sound a bit "apocalyptic" about the threat to food supplies.

02:46 PM

Bailey warns on income shock

Back to Andrew Bailey now, who's issuing a stark warning on the looming shock on household incomes.

He says it will dampen economic growth and could lead to a rise in unemployment.

The Governor says the Bank has to walk a "very narrow path" between surging inflation and these risks to growth.

02:43 PM

Ramsden: Monetary policy was never going to do the job

Dave Ramsden adds that monetary policy was never going to do the job in these circumstances, given the impact of external supply shocks.

But he insists the recent rises in interest rates is having an effect, with the rise in borrowing costs helping to tackle the second-round effects.

02:41 PM

Saunders: Bigger rate rises wouldn't bring down inflation to target

Michael Saunders suggests that even if the Bank had raised rates more aggressively last year, it's unlikely that would have brought inflation back down to the target of 2pc.

He says that's because of the scale of the energy price shock and food price rises.

Dave Ramsden agrees, saying: "It would have made a different only at the margin, if it had made a difference at all."

02:39 PM

Michael Saunders: I'd rather move back to neutral policy stance

Mel Stride is now asking about divisions on the MPC over interest rate rises.

Michael Saunders, who voted for a more hawkish 50 basis point increase at this month's meeting, says he wants the Bank to move more aggressively.

He says the advantage of doing so is to ensure the mix of wage and price rises doesn't become more embedded.

02:28 PM

Job dropouts are 'unusual'

Mel Stride presses Andrew Bailey on why the Bank failed to predict the decline in labour market participation – i.e. people who have jobs or are looking for them.

The Bank insists that the trend has been unusual. He points to possible impacts from Covid, with people either ill or unwilling to return to work after the pandemic.

"These are pretty hard judgements to make," he says.

Mr Stride suggests that inflation may have been exacerbated by the Bank's misjudgment on the labour market recovery.

02:25 PM

Bailey: Labour force has shrunk

Andrew Bailey draws the committee's attention to a fall in the size of the UK's labour market.

He says it's declined by 450,000, or 1.3pc, adding that the "persistence and scale" of the drop has been a surprise.

The fall is partly due to an increase in long-term sickness.

02:22 PM

Bailey points finger at China

Andrew Bailey points to a "further leg" of Covid that's taken hold in China and sparked fresh worries about supply chains and economic growth.

He makes reference to Beijing's zero-Covid policy and the weak economic data released this morning.

02:20 PM

Bailey: This is a 'bad situation' to be in

Andrew Bailey admits that the state of inflation in the UK is a "bad situation to be in", with price rises expected to top 10pc later in the year.

But he emphasises the external factors driving up inflation, including the energy crisis and the war in Ukraine.

"We can't predict things like war," he says. "A sequence of shocks like this that have come one after another with almost no gaps is almost unprecedented I think."

02:17 PM

Committee hearing kicks off

We've started, and chairman Mel Stride goes straight for the jugular, asking Andrew Bailey to respond to claims he's been "asleep at the wheel".

02:08 PM

Andrew Bailey to appear in front of MPs

Bank of England chief Andrew Bailey has arrived at Portcullis House to face MPs on the Treasury Select Committee.

It could be a fiery session, with Tory MPs launching an attack on the Bank over its response to surging inflation and the cost-of-living crisis.

Stay tuned for all the updates here.

01:58 PM

UK gas prices surge 21pc as National Grid limits capacity

UK gas prices surged 21pc as National Grid turned away crucial supplies of liquefied natural gas from ports.

The Grid has cut the amount of liquid natural gas it is accepting at Milford Haven terminals in Wales over fears that it is running out of storage for millions of tonnes of fossil fuel meant to replace Russian deliveries across the Continent.

It dramatically reduced the amount of capacity offered at the port in June at an auction held last Wednesday.

UK gas prices jumped more than 20pc this afternoon to 178.50p per therm.

Read more: Crucial gas supplies turned away from UK ports

01:43 PM

Wall Street opens lower after glum China data

Wall Street's main indices opened lower as investors digester lacklustre economic data from China and worries about a slowdown in global economic growth.

The benchmark S&P 500 fell 0.3pc, while the Dow Jones was down 0.1pc. The tech-heavy Nasdaq dropped 0.7pc.

01:36 PM

Russia's current account surplus triples to $96bn

Russia's current account surplus more than tripled in the first four months of the year to $95.8bn (£78.2bn) as prices for its oil and gas exports surged and imports plunged amid tough sanctions.

The surplus stood at its highest since at least 1994. The figure for the first four months of last year was $27.5bn, according to Russia's central bank.

Continued revenue from energy exports, combined with strict capital controls, have helped to prop up the rouble, turning the Russian currency into the best global performer this year.

01:12 PM

Pilots call for return to pre-Covid pay at Ryanair

Ryanair pilots pay Balpa - Paul Faith / AFP
Ryanair pilots pay Balpa - Paul Faith / AFP

The pilots' union has called for staff at Ryanair to have their pay restored to pre-Covid levels, following cuts over the past two years.

The budget airline has pledged to increase pay over the next three years, but said it will restore wages for workers earlier if the company begins to trade back at levels seen before the pandemic struck.

Martin Chalk, general secretary of the British Airline Pilots Association, said:

Ryanair pilots, who made huge sacrifices to help the company though the Covid crisis, are pleased they've helped the company to a position where it is able to make profit. Our members now need to see management acknowledge their loyalty.

Balpa is in negotiations with management to end the Covid mitigation measures put in place over the last two years and to see some recognition, from management, of the loyalty and sacrifices the workforce has made.

01:02 PM

Bitcoin falls as China data dents sentiment

The sell-off in cryptocurrencies has gathered pace, with Bitcoin falling back below $30,000 after weak Chinese economic data dented investor sentiment.

The largest cryptocurrency fell as much as 5.3pc to $29,450. Other digital coins including Ether were also on the back foot.

Overall, though, crypto markets were calmer than last week's turmoil over the collapse of a stablecoin.

Bitcoin dropped as much as $25,425 on Thursday after the TerraUSD stablecoin unraveled, throwing the market into disarray.

Read more on this story: Why cryptocurrencies crashed – and what happens next

12:47 PM

EU ministers urge Hungary to back Russian oil ban

EU foreign ministers have ramped up the public pressure on Hungary to back a ban on Russian oil imports, with Lithuania saying the bloc was being "held hostage by one member state".

Germany, the EU's biggest economy and a major buyer of Russian energy, said it wanted a deal to authorise the oil embargo, which it suggested could last for years.

But Hungary has said it wants hundreds of millions of euros to mitigate the cost of the ban. All 27 member states need to agree to the embargo for it to go ahead.

12:07 PM

Russian undersea cable threat shifts tech business to UK

ICYMI – An American tech company behind the NHS vaccine rollout has moved its UK security operations to Britain amid growing fears of a Russian attack on internet cables under the Atlantic.

James Titcomb has more:

Palantir has switched its security operations for UK customers from the United States, allowing it to monitor threats and issue critical software updates from British soil.

It said the change will reassure UK clients as companies are on high alert to the risk of a Kremlin cyber attack. The company, best known in Britain for its work with the NHS in the pandemic, also works with the Ministry of Defence.

Issuing updates from the UK rather than the US is designed to prevent companies being cut off or less able to respond if internet services are disrupted. It will mean all cyber security telemetry is managed in the UK from where it is less likely to be intercepted.

Concerns about a Russian attack on undersea internet cables connecting the US to Europe are growing. Admiral Sir Tony Radakin, the head of the Armed Forces, pointed earlier this year to a “phenomenal” increase in Russian submarine activity, which could pose a risk to global digital networks.

The Russian military has been suspected of targeting a concentrated area of cable off the south west coast of Ireland during manoeuvres last year.

11:26 AM

EU to offer Ukraine new loans

The EU is set to unveil a new package of aid to Ukraine, including new loans and commitments for the long-term financing of the country's reconstruction.

The size of the short-term financial support is still under discussion, but it's expected to cover Ukraine's financial needs for two months, Bloomberg reports.

The funding is set to come largely through loans from the EU budget and member states, rather than the issuance of joint bonds.

The International Monetary Fund estimated in April that Ukraine needed around $5bn dollars a month for at least three months to plug the immediate financial shortfall caused by Russia's invasion.

11:08 AM

US futures slip after weak China data

Wall Street looks set to slip at the opening bell after poor economic data from China fuelled fears of slowing economic growth.

China’s industrial output and consumer spending hit the worst levels since the pandemic began as Covid lockdowns took their toll.

That's feeding into wider concerns about surging inflation and a cost-of-living squeeze that threaten to slam the brakes on global economic growth.

Twitter fell in pre-market trading, on course to wipe out all their gains since billionaire Elon Musk disclosed his stake in the social media platform.

Futures tracking the S&P 500 and Nasdaq fell 0.3pc and 0.5pc respectively, while the Dow Jones lost 0.1pc.

10:55 AM

Funeral firm Dignity appoints new boss

Funeral giant Dignity has appointed Kate Davidson as its next boss.

She'll take over from Gary Channon as the company's next chief executive officer from June 10.

Ms Davidson, currently chief operating officer, has over 15 years' experience in the industry and has served on the company's board since the start of the year.

The appointment comes days after Dignity reported a "weak" performance over the last three months due to a "drop in the death rate".

Dignity was among the funeral firms that benefited from a surge in deaths during the pandemic, but is now coming under pressure from the successful vaccination programme and regulatory scrutiny over prices for customers.

10:42 AM

Shareholder hits out at Shell's energy transition plan

Shell energy transition Royal London - Peter Boer/Bloomberg
Shell energy transition Royal London - Peter Boer/Bloomberg

A major shareholder in Shell has hit out at the oil giant's climate transition plan ahead of its annual general meeting tomorrow.

Royal London Asset Management, which holds a stake worth around £1.2bn, said it will abstain on the plan, arguing it didn't go far enough in cutting out fossil fuels.

Carlota Garcia-Manas at RLAM said:

RLAM has decided to abstain on Shell’s climate transition plan. We acknowledge the considerable progress made in Shell’s climate efforts and the 2021 delivery, however, we cannot fully support the plan as it currently stands.

In our view, there is not enough certainty in the plan that it aligns with the goals of the Paris agreement and the global necessary efforts to constraint temperature increases to below 1.5 degree Celsius.

Shell’s climate plan is heavily reliant on nature-based offsets and divestments. It also includes strategies to continue new oil and gas frontier exploration between now and 2025. We would prefer the company to stop all exploration imminently in line with the most recent IEA and IPCC reports.

We will continue our engagement on those topics, as we would like to see more stringent short and medium-term targets that seek to reduce emissions in absolute terms and for all emission scopes, including scope 3.

10:26 AM

Jeff Bezos turns on Biden over 'misdirection' on inflation and wealth tax

Jeff Bezos has turned on Joe Biden over 'misdirection' after the US president linked higher taxes on businesses with rising inflation, writes Gareth Corfield.

The billionaire Amazon founder was responding to tweets by Mr Biden calling for tax rises, including one which said: "You want to bring down inflation? Let’s make sure the wealthiest corporations pay their fair share.”

In an unusual public political statement, Mr Bezos said that rising inflation “hurts the least affluent”.

He added: “Raising corp taxes is fine to discuss. Taming inflation is critical to discuss. Mushing them together is just misdirection.”

Mr Bezos went on to praise Democrat senator Joe Manchin, who voted against Mr Biden’s Build Back Better economic stimulus plan, saying Mr Biden’s party had “tried hard to inject even more stimulus into an already over-heated, inflationary economy.”

US inflation is running at about 8.1pc, having slowed from March’s 8.5pc rate.

“Inflation is a regressive tax that most hurts the least affluent,” Mr Bezos continued. “Misdirection doesn’t help the country.”

The White House backed Mr Biden. Deputy press secretary Andrew Bates said: "It doesn't require a huge leap to figure out why one of the wealthiest individuals on earth opposes an economic agenda for the middle class that cuts some of the biggest costs families face, fights inflation for the long haul, and adds to the historic deficit reduction the president is achieving."

10:08 AM

McDonald's pulls out of Russia

McDonald's Russia - Oleg Nikishin/Getty Images
McDonald's Russia - Oleg Nikishin/Getty Images

McDonald's has confirmed it's pulling out of Russia in response to the war in Ukraine.

The fast food giant said it will exit the market after more than 30 years of operations in the country, and has started a process to sell its Russian business.

It comes after the company announced in March that it had temporarily closed restaurants and paused operations in March.

McDonald's said the humanitarian crisis caused by the war in Ukraine had led it to conclude that continued ownership of the Russian business was "no longer tenable, nor is it consistent with McDonald's values".

The chain will sell its entire portfolio of restaurants to a local buyer. They will no longer use the McDonald's name, logo, branding or menu, though the company will retain its trademarks in Russia.

Chris Kempczinski, president and chief executive of McDonald's, said:

We have a long history of establishing deep, local roots wherever the Arches shine. We're exceptionally proud of the 62,000 employees who work in our restaurants, along with the hundreds of Russian suppliers who support our business, and our local franchisees.

Their dedication and loyalty to McDonald's make today's announcement extremely difficult. However, we have a commitment to our global community and must remain steadfast in our values. And our commitment to our values means that we can no longer keep the Arches shining there.

09:56 AM

Andrew Bailey braced for grilling amid inflation criticism

All eyes will be on Andrew Bailey this afternoon, when the Bank of England Governor faces a grilling by MPs.

The central bank chief will appear in front of the Treasury select committee amid criticisms of his response to the cost-of-living crisis.

Mel Stride, chairman of the committee, accused the Bank of being “slow off the mark” in raising interest rates to combat inflation.

He added that the Bank had failed to spot the emerging “wage-price spiral”, heightening the risk that the Monetary Policy Committee will have to raise interest rates more rapidly to cool the economy.

The comments set the scene for what could be a fiery meeting...

Read more: Andrew Bailey faces scrutiny as Bank of England accused of being 'slow off the mark' on inflation

09:40 AM

EU 'needs more time' for Russian oil ban

The EU will need a few more days to reach an agreement on a sixth package of sanctions against Russia, German Foreign Minister Annalena Baerbock has said.

EU nations have been discussing the details of the latest measures for more than two weeks, with Hungary holding up the process amid concerns over an oil ban.

Ms Baerbock said: "As Germans, we know that this [an oil embargo] is not an easy step. Certain issues still need to be resolved, and this will not happen today. But I am confident that we will find agreement in the coming days."

Germany is reportedly planning to ban imports of Russian oil by the end of the year, regardless of whether the EU can reach an agreement or not.

At the same time, the bloc is also preparing new guidance on how companies can keep paying for Russian gas without breaching sanctions, after Putin demanded payment in roubles.

09:30 AM

China's oil refining drops to two-year low

In further signs of how China's zero-Covid policy is hurting its economy, the country's crude processing tumbled to its lowest level in around two years last month.

Refiners processed 51.8m metric tonnes in April – about 10pc lower than a year earlier, official data showed. That’s equivalent to 12.7m barrels a day, according to Bloomberg calculations, the lowest level since March 2020 during the early days of the pandemic.

Demand for fuel dropped sharply after a fresh wave of lockdowns confined millions of people to their homes and sparked a sharp fall in industrial output.

09:16 AM

Cost-of-living crunch: Why does the UK have it so bad?

The cost of living crisis is a global phenomenon, no doubt – but Britons may end up having it worse than anyone else.

Tom Rees and Matt Oliver analyse the toxic combination of price drivers facing the UK.

Why Britain is facing a more severe cost-of-living crisis than other countries

09:05 AM

Diesel prices hit new record high despite fuel duty cut

UK petrol diesel fuel prices - NEIL HALL/EPA-EFE/Shutterstock
UK petrol diesel fuel prices - NEIL HALL/EPA-EFE/Shutterstock

Diesel prices have jumped to new record high, despite Chancellor Rishi Sunak's cut to fuel duty.

Average pump prices for diesel hit 180.29p a litre on Sunday, according to the AA. That tops the previous high of 179.90p reached on the day of the Chancellor’s Spring Statement.

Petrol prices reached 166.65p – less than a penny short of its all-time high.

It came as research by the AA showed Britons were opting to fly abroad this summer, go on a non-driving holiday or even stay at home due to surging pump prices.

Edmund King, AA president, said:

More than a third of drivers will mainly drive during their summer holidays. However, it was expected that the cost of living crisis would lead to more doing so and vacationing in the UK, instead of jetting off somewhere.

Instead, the huge volatility of pump prices has pointed many people to holiday packages with controllable set prices. Flying abroad therefore becomes more attractive.

That’s not good news for a UK tourism industry already facing millions of pounds of potential visitor spending being siphoned off at the forecourts. Added to that, visitor numbers could be thinned by those staying at home – although day trips may be the big thing this summer.

08:52 AM

Pound struggles ahead of Andrew Bailey grilling

Sterling lost ground against both the dollar and the euro this morning as traders turn their attention to comments from Andrew Bailey.

The Bank of England Governor will be grilled by MPs on the Treasury select committee this afternoon amid concerns about sky-high inflation.

There's already a political row brewing over the cost-of-living crisis, with several top Tories blaming the Bank for failing to keep inflation under control.

The pound fell 0.2pc against the dollar to $1.2232, while it was down 0.4pc against the euro at 85.22p.

08:42 AM

Not a single car sold in Shanghai last month

There's some fresh data in highlighting just how extreme the economic downturn in Shanghai has been: not a single car was sold in the city last month.

Most of Shanghai's 25m residents were forced to stay at home as part of a sweeping lockdown to tackle the country's biggest Covid outbreak since the first wave in 2020.

Almost all dealerships in the city were closed during the month and there were zero sale, according to the Shanghai Automobile Sales Association.

For comparison, 26,311 vehicles were sold in the city in April last year.

08:33 AM

Russian diesel tanker blocked by Greenpeace activists

Greenpeace Russia diesel - Fionn Guilfoyle
Greenpeace Russia diesel - Fionn Guilfoyle

A tanker carrying 33,000 tonnes of Russian diesel has been forced to make a U-turn in the Thames after it was blocked by Greenpeace activists.

A dozen climate activists reached the Andromeda tanker’s intended berth at Navigator Terminals by boat late last night and climbed onto it.

Images from a vessel-tracking website show the tanker being turned around in the Thames shortly after the activists were in position.

Police began making arrests earlier this morning. However, several protesters remain in place, with one activist on the offloading pipes, another hanging off the jetty, and others occupying the jetty preventing the tanker from docking.

08:18 AM

Wheat prices soar as India restricts exports

Wheat prices surged this morning after India moved to restrict exports, threatening to drive up food prices even more as the war in Ukraine hits supplies.

The Indian government has said it will suspend overseas sales to manage its food security, drawing criticism from G7 ministers that the move will make the global food crisis worse.

Benchmark prices rose as much as 5.9pc to $12.47 – the highest in two months. Prices have surged about 60pc this year, increasing the cost of everything from bread to cakes and noodles.

The jump is particularly concerning given India isn't even a major exporter. War has crippled Ukraine’s exports, and now droughts, floods and heat waves threaten crops in most major producers.

08:06 AM

Made.com shares tumble on loss forecast

Shares in Made.com tumbled as much as 22pc after the online furniture retailer said it will post a loss in 2022.

The company revised its forecasts from previous expectations of a profit, adding the market would remain "highly challenging" for the rest of the year.

Analysts at Liberum said the outlook was "well below" what they were expecting, though they said the firm was performing better than its rivals.

Shares in Made.com have lost almost three-quarters of their value since the company went public in June 2021.

07:54 AM

Greggs warns on rising costs as sales bounce back

Greggs sausage roll prices inflation - Chris Ratcliffe/Bloomberg
Greggs sausage roll prices inflation - Chris Ratcliffe/Bloomberg

Greggs has warned of rising costs, but didn't say whether it will push up prices further for consumers.

In March, the sausage roll specialist warned that changes to taxes and higher costs for energy, food and staff would push up its costs between 6pc and 7pc.

Prices that it charges customers already went up in the early part of 2022, and the firm said it expects more changes this year.

In an update this morning, Greggs said like-for-like sales rose by more than 27pc in the first quarter, with particularly strong growth for chicken goujons and potato wedges.

But it also pointed out that this was a flattering comparison due to the Covid restrictions in place a year ago. Shares fell 1.3pc after the update.

07:42 AM

EasyJet offers £1,000 bonus as hiring wars heat up

EasyJet bonus flight cabin crew - Matt Alexander/PA Wire
EasyJet bonus flight cabin crew - Matt Alexander/PA Wire

EasyJet is offering new and existing cabin crew a £1,000 bonus at the end of the key summer holiday season as airlines battle it out to recruit and retain staff.

The budget airline said the pay bumps would acknowledge efforts by staff during what's expected to be a busy summer, as travel rebounds close to pre-Covid levels.

It comes after the Telegraph revealed that British Airways is trying to lure cabin crew from rivals with a £1,000 welcome bonus.

Holidaymakers are facing long queues at airports as the aviation sector grapples with a dearth of staff both on the ground and in the air.

07:32 AM

FTSE risers and fallers

It's a sluggish start to the week for the FTSE 100, which has lost ground amid falls for consumer staples and wider jitters fuelled by China's weak economic data.

The blue-chip index shed 0.4pc in early trading, with consumer goods giant Unilever and pharmaceutical group AstraZeneca among the biggest drags.

Data showed China's retail and factory activity fell sharply in April as tough Covid lockdowns kept people at home and hit supply chains.

Vodafone bucked the wider trend, rising 3pc after UAE-based telecoms group e& bought a 9.8pc stake in the company for $4.4bn.

The domestically-focused FTSE 250 fell 0.6pc.

07:25 AM

Germany to ban Russian oil regardless of EU sanctions

Germany is planning to halt imports of Russian oil by the end of the year even if the EU fails to agree on a ban in its next set of sanctions.

The Government is making progress in securing deals with alternative suppliers and expects to resolve the remaining problems in the next six to seven months, Bloomberg reports.

EU foreign ministers are meeting in Brussels today to discuss the next round of sanctions, but some diplomats have warned the ban will have to be delayed after Hungary objected.

Josep Borrell, the EU's policy chief, warned this morning that an agreement on the oil ban was not guaranteed, adding that there were some "strong positions from some member states".

07:17 AM

Gas prices drop as EU plans Russian payments

European gas prices have fallen as the EU draft a plan to offer energy firms a way to pay for Russian gas without breaching sanctions.

Benchmark prices fell as much as 3pc this morning, extending Friday's 9.2pc loss.

The European Commission is set to offer buyers new guidance on how to pay for gas, bowing to Putin's demands for roubles while avoiding a breach of sanctions.

Traders have been waiting for an update on guidance, with most payment deadline due by the end of the month.

The EU plans to tell companies they should make a clear statement that they consider obligations fulfilled once they pay in euros or dollars – in line with existing contracts.

The bloc could also cap prices if Russia cuts or significantly limits shipments, Bloomberg reports.

07:09 AM

Renault sells Russian assets back to state

Renault Russia nationalisation - Andrey Rudakov/Bloomberg
Renault Russia nationalisation - Andrey Rudakov/Bloomberg

Renault is selling its majority stake in Avtovaz to a Russian science institute in what's essentially a nationalisation of the business by Moscow.

The French car maker said its stake of almost 68pc will be sold to the Russian Central Research and Development Automobile and Engine Institute, called Nami.

Its 100pc shares in Renault Russia will go to the City of Moscow.

Luca de Meo, chief executive of Renault, said: "Today, we have taken a difficult but necessary decision, and we are making a responsible choice towards our 45,000 employees in Russia."

07:02 AM

FTSE 100 opens lower

The FTSE 100 has dropped at the open as disappointing economic data from China weighs on markets.

The blue-chip index fell 0.6pc to 7,377 points.

06:59 AM

Ryanair cuts losses and eyes return to profit

Ryanair airline Michael O'Leary - Adam Berry/Getty Images
Ryanair airline Michael O'Leary - Adam Berry/Getty Images

Ryanair has narrowed its losses and said it hopes to return to "reasonable profitability" in its current year.

The budget airline reported a loss of €355m (£302m) for the year to the end of the March, down from €1.02bn the previous year when trading has hammered by the pandemic.

Ryanair's traffic recovered strongly as it carried 97.1m passengers, up from just 27.5m the year before. It hopes to boost this further to 165m this year.

However, boss Michael O'Leary warned it was "impractical, if not impossible" to give guidance for 2022-23 due to the risk to holiday bookings from Covid and the Ukraine war..

The airline said it was having to slash prices to secure bookings amid ongoing uncertainty.

Mr O'Leary added it would be "challenging" getting through airports this summer. He warned there were "pinch-points" at airports such as Heathrow and Manchester, where he said "too many people" have been sacked.

06:51 AM

Oil drops on weak China data

Oil prices have tumbled for the first time in four sessions as Covid lockdowns strained the economy of the world's biggest importer.

Benchmark Brent crude dropped 1.4pc to $110 a barrel, while West Texas Intermediate reversed earlier gains to trade at around $109.

Ugly economic data from China is fuelling concerns of a drop in demand. Traders have been weighing this risk against the war in Ukraine, sparking tumultuous trading over the last few months.

06:46 AM

China's economy slumps as zero-Covid takes its toll

China economy Covid lockdown - Kevin Frayer/Getty Images
China economy Covid lockdown - Kevin Frayer/Getty Images

China's economy slumped in April as strict Covid lockdowns took their toll on retail and factory activity.

Full or partial lockdowns were imposed in major centres across the country in March and April, including in Shanghai, confining workers and consumers to their homes.

Retail sales shrank 11.1pc from a year earlier – the biggest fall since March 2020. Factory production fell 2.9pc, dashing expectations for a rise and the largest decline since February 2020,

Analysts warned China's current downturn may be harder to shake off than the one seen during the height of the first Covid wave in early 2020.

Capital Economics said: "The upshot is that while the worst is hopefully over, we think China's economy will struggle to return to its pre-pandemic trend."

The weak data sent Chinese stocks into reverse and put an end to the rally enjoyed by other Asian markets this morning.

06:35 AM

Surge in gas deliveries pulls down prices

The overhaul comes as a huge wave of gas deliveries have helped to bring UK prices back down to their pre-crisis lows.

UK gas prices have dropped 13pc since the start of the year and are just a fifth of the benchmark European price.

That's thanks to massive cargoes of liqufied natural gas, which have been delivered to UK ports to be passed on to Europe through pipelines.

However, the Telegraph revealed critical shipments of natural gas are being turned away from British ports because National Grid fears it will be overwhelmed by supplies.

Read more on this story: National Grid slashes gas shipments meant to tackle energy crisis

06:28 AM

Ofgem aims for 'fair and resilient' market

Jonathan Brearley, chief executive of Ofgem, says the changes are needed to cope with unprecedented market conditions:

Our top priority is to protect consumers by ensuring a fair and resilient energy market that works for everyone. Our retail reforms will ensure that consumers are paying a fair price for their energy while ensuring resilience across the sector.

Today’s proposed change would mean the price cap is more reflective of current market prices and any price falls would be delivered more quickly to consumers. It would also help energy suppliers better predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures, which ultimately pushes up costs for consumers.

The last year has shown that we need to make changes to the price cap so that suppliers are better able to manage risks in these unprecedented market conditions.

06:25 AM

Price cap set for overhaul

Good morning

UK energy bills could be reviewed every three months under new proposals by Ofgem.

The regulator is launching a consultation into whether the price cap should be updated quarterly from October, rather than every six months.

The plan is designed to keep energy bills more up-to-date, allowing customers to benefit from cheaper bills sooner once prices start to fall from their current highs.

It will also help suppliers work out how much energy they need to buy for their customers.

5 things to start your day

1) National Grid slashes gas shipments meant to tackle energy crisis Company fears network will be overwhelmed by deliveries to LNG terminals

2) Ministers pile more pressure on Andrew Bailey over inflation mistakes Business Secretary Kwasi Kwarteng says inflation overshoot 'is an issue' for the Bank of England

3) Traders bet £5bn against the pound Markets expect sterling to plunge even lower as UK economy weakens

4) Goldman boss warns of 'very high' recession risk in US Banking giant's senior chairman Lloyd Blankfein said firms and households should prepare for a recession

5) UAE rival launches shock $4.4bn raid on Vodafone Etisalat Group becomes biggest shareholder in UK telecoms giant with 9.8pc stake

What happened overnight

Hong Kong equities opened higher on Monday, following a Wall Street bounce sparked by a rally among tech-rich stocks.

The Hang Seng climbed 1.2pc. The Shanghai Composite Index rose slightly by 0.5pc, while the mainland's second exchange the Shenzhen Composite increased 0.8pc.

Tokyo shares also opened higher, with the benchmark Nikkei 225 index gaining 1.2pc, while the broader Topix index rose 1pc.

Coming up today

  • Corporate: Diploma (Interim results); Greggs (Trading update)

  • Economics: Growth forecasts (EU); retail sales, industrial prod (China)

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