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Inflation shock could derail UK recovery, warns IMF

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IMF inflation Britain UK recovery pandemic economics - Hollie Adams/Bloomberg
IMF inflation Britain UK recovery pandemic economics - Hollie Adams/Bloomberg

The UK is vulnerable to an inflation shock that could stifle its economic rebound, the International Monetary Fund has warned.

Britain and the US and some emerging markets face a risk of surprisingly strong and sustained price growth, the global lender of last resort said.

Central bankers need to be ready with higher rates if inflation jumps too much, the IMF said, even if it means delaying a labour market recovery.

The group cut its forecast for global growth this year by 0.1pc to 5.9pc as part of its latest World Economic Outlook (WEO), warning the momentum of the post-pandemic recovery had “weakened”.

It predicted the UK economy will grow 6.8pc this year, down 0.2 percentage points from its July forecast, but 0.2 percentage points more quickly next year at 5pc.

The IMF said it expected inflation to return to pre-pandemic levels by midway through next year, but warned of “considerable” differences between different countries. It named the UK and US as among those facing an “upside risk”.

06:23 PM

It's goodnight from us!

Busy day – thanks for reading, and do come back tomorrow.

04:41 PM

High energy prices could derail electric cars progress

Britain’s hopes of electrifying the car industry are endangered by the country’s high energy prices, the boss of the trade group representing the automotive sector has warned, writes Alan Tovey.

The warning came from Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT) on the sidelines of the body’s global trade summit on Tuesday.

Mr Hawes said: “If you are a global car manufacturer looking to invest in the UK, energy prices give you reason to pause or look away.”

All of Britain's major car plants are owned by foreign parents.

The Government is hoping the industry can switch over to the production of electric vehicles, having put in place a ban from 2030 on the sale of new cars powered solely by conventional petrol and diesel engines.

Although car manufacturing is not classed as an energy intensive sector in the way that steel or chemicals production is, power is still a major cost in industry.

However, producing batteries to power electric vehicles is energy intensive.

Mr Hawes said should the current surge in power costs prove to be more than temporary, then relief will be needed to encourage companies to build battery “gigafactories” in the UK essential to support domestic car manufacturing.

The warning came as the SMMT detailed trade data for the sector for 2020.

It showed that the automotive sector generated £75bn of trade revenue, though this was down 24pc on the previous year as a host of problems including coronavirus and chip shortages weighed on the sector.

Brexit is also putting the brakes on the industry, with trade barriers leading 90pc of the industry to report costs rising as a consequence of leaving the EU.

04:08 PM

Handing over

That's all from me for today, thanks for following! Laura Onita will take over from here.

03:59 PM

FTSE 100 falls on inflation worries

The FTSE 100 has closed lower as inflation worries continue to rattle investors.

The blue-chip index fell 0.2pc to 7,130 points, ending its three-day streak of gains.

Miners and travel stocks were the biggest drag on the index, with British Airways owner IAG falling 3.4pc on worries about higher fuel prices.

Ocado bucked the trend, rising 5.4pc after US partner Kroger said it will expand its delvery offering through new fulfillment centres run by the British grocery firm.

The domestically-focused FTSE 250 closed marginally lower.

However, the biggest mover of the day was The Hut Group, which crashed by more than third after an influential advisory firm raised concerns over its valuation.

03:43 PM

Lego doubles profit as playtime demand builds

Lego profit doubles lockdown  - REUTERS/Brendan McDermid
Lego profit doubles lockdown - REUTERS/Brendan McDermid

Lego's profit more than doubled in the first half of the year as locked-down consumers looked for ways to entertain their children.

Net profit jumped 140pc to 6.3bn kroner (£719m), while revenue grew 46pc.

The Danish toymaker has been one of the major winners of the pandemic, posting record sales and profits last year. It said the easing of Covid restrictions this year meant factories could operate without interruptions and most stores have reopened.

Chief executive Niels B. Christiansen said: “As we look ahead to the second half of 2021, we continue to see strong demand for our products.

“Longer-term, we expect top-line growth to stabilise to more sustainable levels as people return to pre-pandemic spending patterns.”

The company, which is controlled by the family of billionaire Kjeld Kirk Kristiansen, said top-selling products included its classic Lego City series as well as products based on the Star Wars and Harry Potter franchises.

03:32 PM

Blackstone pumps $1bn into royalties firm behind Beyonce

Blackstone Hipgnosis Beyonce song rights - Kevin Mazur/Getty Images For Parkwood Entertainment
Blackstone Hipgnosis Beyonce song rights - Kevin Mazur/Getty Images For Parkwood Entertainment

Blackstone is pumping around $1bn (£7.4bn) into music rights and song catalogues by partnering with industry executive Merck Mercuriadis.

The asset manager said it will also take a stake in Hipgnosis, the London-listed company founded and run by Mr Mercuriadis.

The deal comes amid a frenzy of activity in the music royalties market as rivals race to snap up lucrative catalogues.

This has been partly led by Mr Mercuriadis, a former manager of Elton John and Beyonce, who has built up a portfolio of rights worth around $2.2bn through Hipgnosis.

The company now holds the rights to songs by artists including Blondie, Fleetwood Mac, Beyonce and Neil Young.

03:17 PM

The Hut Group plunges amid stock market jitters

There's been no respite for The Hut Group's share price slide, with the e-commerce firm dropping a further 25pc during a key shareholder meeting today.

The Manchester-based company, run by billionaire Matt Moulding, has been in the spotlight after an influential research group raised concerns over its valuation and corporate governance.

The Analyst, which was an early critic of Wirecard and said shares in both Carillion and Debenhams were worthless, issued a note to its clients advising them to short the shares.

Mr Mouding appeared alongside John Gallemore at THG's first capital markets day since its stock market float a year ago, but the executives have failed to halt the sell-off.

03:03 PM

City watchdog staff push to unionise

Staff at the City watchdog have launched a formal petition to be recognised as a union amid a row over pay and bonuses, writes my colleague Simon Foy.

Unite, Britain’s largest trade union, said it has seen “significant growth” in membership from employees at the Financial Conduct Authority (FCA) in recent months due to “growing disenchantment” with the regulator’s leadership team.

The union said staff want to be represented by an independent trade union and a formal petition has been set up to gauge broader interest. The results will be presented to the FCA.

In order to seek union recognition, a group of staff need to demonstrate it has membership of 10pc or more of all colleagues, or among a certain section of the business. It is understood that Unite has not yet applied to begin this process at the FCA.

It comes after Nikhil Rathi, the regulator’s chief executive, launched a consultation to overhaul staff pay last month amid internal opposition and fears that its bonus pool could be slashed.

Staff are concerned that the new proposals will result in three out of four employees facing pay cuts of up to 10pc, the union claimed.

02:53 PM

IMF warns of 'sizeable' risk of stocks and housing sell-off

Bloomberg has some more detail from the IMF's stability report:

The International Monetary Fund warned of the risk of sudden and steep declines in global equity prices and home values as the Federal Reserve and other central banks withdraw the support they’ve provided during the pandemic.

Ultra-easy monetary policy has led to “pockets of market exuberance and rising financial leverage” that could unwind in disorderly ways and put the economic recovery at risk as credit tightens, the IMF said on Tuesday in its semi-annual Financial Stability Report.

“Shocks could be coming from the central banks themselves because they’re tightening more quickly than previously anticipated,” Tobias Adrian, director of the Monetary and Capital Markets Department at the IMF, said in an interview. “We worry that we could see a sell-off of sizeable magnitude, given the level of stretched valuations.”

Complicating the central banks’ calculus, he said, is the emergence of inflation pressures “unlike anything we’ve seen before.”

While the IMF agrees with the Fed and other central banks that the burst of inflation will likely prove temporary, “there’s quite a bit of uncertainty” around that forecast, Adrian said. That raises “some question marks” about how policy makers would respond to a financial-market meltdown.

02:46 PM

Walmart charters ships to sidestep port queues

Walmart ship port supply chains - NICHOLAS KAMM / AFP
Walmart ship port supply chains - NICHOLAS KAMM / AFP

There's some more detail on America's port troubles from our US correspondent David Millward.

He writes:

Some major retailers including Walmart, Target, Home Depot and Dollar Tree have chartered their own ships to sidestep the busiest terminals.

In desperation some shippers are looking at alternative ports including Portland, Oakland, Oxnard and San Diego.

Others are bringing goods in by air, which costs three times as much or even diverting ships to the East Coast to avoid the California logjam.

02:43 PM

IMF calls for 'decisive' action to ensure stability

Policymakers must "act decisively" and provide continued economic support without promoting instability in financial markets, the International Monetary Fund (IMF) has said.

In its latest Global Financial Stability Report, the IMF warned that economies were entering a tricky phase of the pandemic recovery.

The group warned that prompt action and clear communication ahead of any policy shifts will be critical to ensure economic support gets where it is needed without encouraging inflation or increasing volatility.

The report stated: "Policymakers are confronted with a challenging trade-off: maintaining near-term support for the global economy while preventing unintended consequences and medium-term financial stability risks."

It comes as central banks weigh up moves to withdraw stimulus measures amid rising inflation.

The IMF flagged some early "warning signs" of instability, pointing to increased financial risk-taking and fragilities among non-bank institutions such as life insurance funds.

In recent weeks, markets have been unsettled by fears of a potential default by Chinese property giant Evergrande, as well as by soaring energy prices which have seen some energy companies collapse.

The IMF said policymakers must "urgently" address fragilities and potential increases in market volatility.

02:25 PM

US job openings decrease for first time this year

US job openings declined in August for the first time this year, though they remained near a record high.

The number of available positions slipped to 10.4m from an upwardly revised 11.1m in July, according to new figures from the Labor Department. This was below the 11m forecast in a Bloomberg survey of economists.

Meanwhile, more people voluntarily left their jobs, suggesting that more workers believe they have leverage over employers amid talk of labour shortages. The quits rate, or the number of quits in the month as a percent of total employment, increased to a record 2.9pc.

02:18 PM

UK's biggest dairy supplier warns on inflation risk

Arla Foods dairy inflation supply chain shortages - Tolga Akmen / AFP
Arla Foods dairy inflation supply chain shortages - Tolga Akmen / AFP

The boss of Britain's largest dairy supplier has warned it is facing a triple threat of inflation from higher energy, packaging and labour costs

Ash Amirahmadi, managing director of Arla Foods, said his company was also struggling with driver shortages that have left it unable to deliver milk to hundreds of shops every day.

Mr Amirahmadi told Sky News: "Just simply being able to get the product from our factories to supermarkets is a real challenge.

"We are very mechanised when it comes to our production of milk and dairy products in factories but we need drivers to take that to the shops."

He added: "On average we're delivering to about 2,300 shops a day and we're regularly not able to deliver to about 10pc of our shops. That gives you an idea of the type of shortage we're dealing with."

02:06 PM

Harry and Meghan join sustainable investing fintech

Harry Meghan Ethic fintech  -  NDZ/Star Max/GC Images
Harry Meghan Ethic fintech - NDZ/Star Max/GC Images

Prince Harry and Meghan Markle are joining a US fintech firm that specialises in ethical investing, marking the latest business move by the royal couple.

The pair will join Ethic, a fintech asset manager with a focus on environmental, social and governance issues, as “impact partners” and investors. Ethic has $1.3bn under management.

The move, first reported by the New York Times, is the latest corporate venture since Harry and Meghan moved to Los Angeles and relinquished their royal duties. They have inked major production deals with Spotify and Netflix and have secured several book deals.

Ethic, which was founded in 2015, runs screens on companies and sectors based on social responsibility criteria, including racial justice, climate and labour issue.

It's backed by 9Yards Capital, the venture capital firm run by George Osborne's brother.

01:47 PM

Wall Street rises ahead of results season

US stocks have rebounded to inch higher this afternoon as traders gear up for some major corporate results.

The S&P 500 opened 0.2pc higher after a two-day drop, while the Dow Jones inched up 0.03pc at the opening bell. The tech-heavy Nasdaq was the best performer, gaining 0.4pc.

It comes as traders weigh up the risk of growing inflation on major corporate earnings. Wall Street banks will kick off the third-quarter results calendar later this week.

01:22 PM

Cargo ships crowd off LA coast

Meanwhile, there's no improvement on the situation over in the States either.

We've pulled together data showing a build-up of cargo ships still waiting on the coast off Los Angeles, which boasts one of the country's biggest ports.

Much like in the UK, US ports are struggling with a shortage of drivers. This has also been compounded by the increasing size of cargo ships in recent years.

01:13 PM

Felixstowe port: UK supply chain can't handle imports

We've just had an updated statement in from Felixstowe port, which acknowledges that some shipping companies are having to hold back services due to supply chain bottlenecks.

A spokesman said:

We are working closely with all our shipping lines customers to accommodate their vessels.

This can be challenging as a high proportion of ships are off schedule due to the well-publicised global supply chain issues and imports continue to arrive faster than the UK supply chain can handle them due to the well documented haulier shortage.

As a result, and on occasions, we understand and regret lines have to prioritise the services they have.

01:07 PM

IMF chief survives 'difficult episode'

IMF managing director Kristalina Georgieva - Olivier Douliery / AFP
IMF managing director Kristalina Georgieva - Olivier Douliery / AFP

The timing of the WEO update is awkward for IMF chief Kristalina Georgieva, who received the backing of the fund’s board on Monday after it reviewed allegations she had pressured staff to alter data in China’s favour while leading the World Bank.

The Bulgarian economist vehemently denied claims she had lobbied for China to receive a better ranking in the development group’s “Doing Business” report, which has now been scrapped.

Ms Georgieva welcomed the report, saying it had “obviously been a difficult episode for me personally”.

01:04 PM

IMF: Countries may need to tighten monetary policy

More from Louis:

The IMF said it expected inflation to return to pre-pandemic levels by midway through next year, but warned of “considerable” variations between different countries. It named the UK and US as among those facing an “upside risk”.

It said monetary policy “may need to be tightened to get ahead of price pressures, even if that delays the employment recovery.”

“The alternative of waiting for stronger employment outcomes runs the risk that inflation increases in a self-fulfilling way, undermining the credibility of the policy framework and creating more uncertainty.”

The Bank of England is expected to raise rates soon in response to rapid price increases that are expected to peak next year. Markets see a roughly 80pc chance the Monetary Policy Committee will back a rise at its December meeting.

US growth projections were cut particularly heavily, estimated growth of 6pc this year – a percentage point lower than forecast in July. Germany also saw a large cut, of 0.5 percentage points to 3.1 as the country struggles with a manufacturing slowdown.

The fund warned of the long-term economic consequences of the pandemic, saying Covid-19 could deal a cumulative blow of $5.3 trillion to global GDP if it had a “prolonged impact” across the next half decade.

Ms Gopinath said: “Monetary policy will need to walk a fine line between tackling inflation and financial risks and supporting the economic recovery.”

01:00 PM

IMF: Inflation shock could derail UK recovery

Just in from my colleague Louis Ashworth:

The UK is vulnerable to an inflation shock that could stifle its economic rebound, the International Monetary Fund (IMF) has warned.

Britain and the US and some emerging markets face a risk of surprisingly strong and sustained price growth, the global lender of last resort said.

Central bankers need to be ready with higher rates if inflation jumps too much, the IMF said, even if it means delaying a labour market recovery.

Gita Gopinath, the IMF’s chief economist, said: “Pandemic outbreaks in critical links of global supply chains have resulted in longer-than-expected supply disruptions, further feeding inflation in many countries.

“Overall, risks to economic prospects have increased, and policy trade-offs have become more complex.”

The group cut its forecast for global growth this year by 0.1pc to 5.9pc as part of its latest World Economic Outlook (WEO), warning the momentum of the post-pandemic recovery had “weakened”.

It predicted the UK economy will grow 6.8pc this year, down 0.2 percentage points from its July forecast, but 0.2 percentage points more quickly next year at 5pc.

12:46 PM

Steel industry bemoans 'hostile' backdrop amid energy crisis

The steel industry has taken aim at the "hostile" environment for investment in the UK as it dials up pressure on the government for support during the energy crisis.

Business Secretary Kwasi Kwarteng has submitted a formal bid to the Treasury to secure support for energy-intensive industries such as metals and chemicals after companies warned surging gas prices could force them to shutter factories.

Gareth Stace of UK Steel said: “The key measure of success for this proposal is whether it places UK steel producers on a level playing field on energy costs compared to the European counterparts.

“This is a hostile environment for industrial investment in the UK and for the government’s levelling up agenda.”

He said a mechanism to shield producers from extreme wholesale price spikes will be key, and that there should also be measures to cut excessive policy and network costs for UK producers.

12:27 PM

London fuel shortages 'still serious'

UK fuel prices petrol station panic buying - ANDY RAIN/EPA-EFE/Shutterstock
UK fuel prices petrol station panic buying - ANDY RAIN/EPA-EFE/Shutterstock

Fuel shortages in London and the south east "remain serious", industry bosses have warned, with a tenth of petrol stations in the region still dry.

Brian Madderson, chairman of the Petrol Retailers Association, said: "A large majority of retailers continue to express concerns that they have no forward visibility of their next deliveries... The situation in London and the South East remains serious."

Around 10pc of filling stations were dry on Tuesday, down from 16pc on Friday last week, according to the PRA.

The situation is worse in the capital as petrol stations serve a higher number of cars on average than the rest of the country, meaning they have to be refilled more often. This has been exacerbated by panic buying.

12:12 PM

Felixstowe port battles lorry driver shortage

We've got some more details on what's causing the bottleneck at Felixstowe port.

Industry group Logistics UK says some of its members are struggling to find drivers to pick up and deliver some containers, meaning new arrivals can't be unloaded. There are also issues finding drivers to work in the port itself.

Alex Veitch at Logistics UK told Bloomberg: “The logistics industry is resilient and adaptable, and Logistics UK would like to provide reassurance that everything possible is being done to mitigate the situation.

“Businesses are working tirelessly, around the clock, to find alternative routes to bring goods to the UK while the situation at Felixstowe eases.”

Mr Veitch called on the government to ease the crisis by accelerating driver testing, expanding the temporary visa scheme for US drivers and providing short-term assistance for businesses to move containers to inland facilities.

The port problems are linked to wider supply chain troubles that have roiled global markets since the start of the pandemic, though they have been compounded by Brexit.

Other ports such as Rotterdam, which sees an average of 80 ships per day, are also struggling with bottlenecks.

11:45 AM

French Connection narrows losses as founder steps aside

French Connection founder Stephen Marks - Nick Ansell/PA Wire
French Connection founder Stephen Marks - Nick Ansell/PA Wire

French Connection has unveiled slimmed down losses in the first half of the year as boss Stephen Marks confirmed plans to retire once the sale of the company is completed.

The fashion retailer has agreed a £27m takeover by a consortium of buyers led by its second largest shareholder, Apinder Singh Ghura. Mr Marks, who founded the company in 1972, said he'll step down once the acquisition is done and dusted.

Early in his career the retail tycoon earned the moniker "The Hotpants King" after he successfully imported the trend from Paris to the UK.

He has also invested in the Hard Rock Cafe and helped to finance Guy Ritchie films including Lock, Stock And Two Smoking Barrels.

The 75-year-old is expected to take home around £12m from the takeover deal, having sought a sale for a number of years.

French Connection suffered a torrid pandemic year, tumbling to a £12m loss for the 12 months to January.

It posted an underlying loss of £900,000 for the six months to July, an improvement on the £3.6m loss in the same period last year. Revenue dropped by 21pc to £40.2m due to the impact of restructuring efforts and pandemic restrictions.

11:27 AM

Tech stocks set to push Wall Street higher

Gains for tech stocks are poised to push Wall Street higher when markets open as attention turns to the start of results season later this week.

Futures tracking the the tech-heavy Nasdaq are up 0.2pc thanks to momentum from Microsoft, Facebook, Amazon, Google owner Alphabet and Tesla.

Oil firms including Exxon Mobil and Chevron have risen 0.1pc and 0.3pc respectively as Brent crude hit a near-three year high on energy crunch fears.

However, elsewhere shares are pointing lower as inflation fears linger ahead of results season. Futures on the benchmark S&P 500 have slipped 0.06pc, while the Dow Jones is flat.

11:12 AM

Ikea plots alternative routes as ports clog up

Ikea shipping Felixstowe port supply chains - REUTERS/Anna Ringstrom/File Photo 
Ikea shipping Felixstowe port supply chains - REUTERS/Anna Ringstrom/File Photo

A bit more on port delays now – this time from flatpack specialists Ikea.

The Swedish retailer says it's only been "minimally impacted" by the congestion at Felixstowe port. Still, it says wider supply chain troubles have prompted shortages for some of its products, adding that it's looking to increase its delivery by rail to help tackle the issue.

An IKEA spokesman said:

Like many retailers, we are experiencing ongoing challenges with our supply chains due to a variety of factors, and as a result, are experiencing low availability in some of our ranges.

With Felixstowe nearing capacity, we have faced some isolated issues returning some containers to the port but have only been minimally impacted by the current situation.

Since the start of the pandemic, we have explored and implemented alternative routes to secure product availability, including increasing transportation by rail.

11:06 AM

Gymshark sets its sights on stock market float

Gymshark founder Ben Francis IPO 
Gymshark founder Ben Francis IPO

Gymshark is reportedly in talks over a potential stock market float in a move that could make the company's 29-year-old founder even richer.

The athleisure brand and its private equity backers have begun talks with institutional investors and investment banks about a possible flotation, Sky News reported. It comes a year after the firm hit a £1bn valuation.

If confirmed, a stock market float for Gymshark would be one of the biggest for a British consumer-facing company in recent years.

It could also add to the riches of Ben Francis, who founded the company in his parents' garage in Birmingham in 2012.

Mr Francis oversaw the sale of a 21pc stake to private equity firm General Atlantic last year. He retains a controlling stake, making him one of the wealthiest people in Britain under 30.

10:55 AM

GSK shares rise on £40bn takeover report

Shares in GlaxoSmithKline have jumped to the top of the FTSE 100 amid reports it's the target of what could be the largest private equity buyout ever.

The pharmaceutical giant's consumer arm is attracting attention from a string of suitors alongside preparations for a potential listing, Bloomberg reports.

Advent International, Blackstone, Carlyle Group, CVC Capital Partners, KKR and Permira are also said to be among the interested parties.

A sale could also attract some of the world's largest pharmaceutical and consumer goods firms, with the consumer unit valued at as much as £40bn.

Shares in GSK rose as much as 4.8pc before dipping back to a rise of 2.7pc, giving the company a market valuation of just under £72bn.

10:46 AM

Treasury plots easing of capital raising rules

London Stock Exchange capital raising rules Treasury -  REUTERS/Toby Melville/File Photo
London Stock Exchange capital raising rules Treasury - REUTERS/Toby Melville/File Photo

From commodities to equities now, as the Treasury has unveiled what could be a major post-Brexit overhaul of stock exchange rules.

The government is launching a review to examine whether rule changes and new technology could make capital raising more efficient for companies already listed on UK markets.

It will look at shortening the time frames for lengthy cash stock offerings such as rights issues, alongside other changes such as allowing enhanced retail investor participation in capital raisings.

It's part of wider-ranging reforms that are being considered to boost the UK's status as a financial hub after Brexit, and follows recommendations made in Lord Hill's report on listing rules, published in March.

The call for evidence launches today, with a report to government due early next year. Mark Austin, a lawyer at Freshfields, will lead the process.

10:33 AM

EU looks to secure gas supply to Ukraine

Meanwhile, the EU is now looking at different ways to ensure Ukraine has a steady supply of gas over the winter amid concerns Russia could slash its output.

European Commission President Ursula von der Leyen said reverse flows could come from Slovakia, which since September 2014 has had an interconnector with Ukraine.

It comes amid rising tensions as Ukraine pushes the EU to punish Russia for what it says is Moscow's attempt to use gas supplies as a weapon against Europe.

Ukraine is also feuding with Hungary after its neighbour signed a new long-term energy deal with Russia that threatens Ukraine's future supply.

10:21 AM

Russia taps into gas stockpiles to stabilise market

Russian energy gas prices Gazprom Europe supply -  REUTERS/Benoit Tessier/File Photo
Russian energy gas prices Gazprom Europe supply - REUTERS/Benoit Tessier/File Photo

Russia says it's begun tapping into its stockpiles to start pumping more natural gas into Europe in an effort to stabilise the turbulent market.

Sergei Ryabkov, deputy foreign minister, told the BBC that state-owned energy giant Gazprom had started using its reserves, while denying that Russia that been withholding supplies from Europe even as prices soared.

He said: "We favour energy security of Europe; we want to work collaboratively... Gazprom has in fact started pumping out from its reserves into the pipelines to stabilise the market."

He added: "We work deliberately, quietly, soberly towards stabilisation. It's not in our interest to rock the boat further."

A group of EU politicians has asked the European Commission to investigate Gazprom's role in the rising prices, saying its behaviour has made them suspect market manipulation and an "effort to pressure" Europe to agree a fast launch of the Nord Stream 2 gas pipeline between Russia and Germany.

Both Gazprom and the Kremlin have denied the accusations.

10:04 AM

Money round-up

Time to check in on the Telegraph's Money team – here are some of their top stories today:

09:59 AM

Consumers warned over price rises as aluminium soars

Aluminium prices products iPhone - Chris Ratcliffe/Bloomberg
Aluminium prices products iPhone - Chris Ratcliffe/Bloomberg

Tom Jones, chief executive of Aluminium Federation, has warned that surging aluminium prices are bound to lead to bigger price tags for a host of consumer products, from cars to iPhones and canned drinks, reports my colleague Matt Oliver.

Prices have jumped to 13-year highs on the back of the energy crisis, ongoing supply chain disruption and rocketing demand as economies bounce back from Covid-19.

Mr Jones told the Telegraph: "The rise in prices we're seeing started well before the energy crisis but it has now been compounded by it – and if factories are forced to shut down that will result in less being produced and prices could rise even further.

"Almost everything you touch these days has aluminium in it, whether that is cars, your smartphone, computers or canned soft beverages. And as a company, if your input costs are going up then your output costs are absolutely going to go up as well.

"So this could very well affect the prices consumers pay - perhaps not immediately, but it will filter through."

He called on the Government to provide more support to UK heavy industry, which he said was being left at an increasing disadvantage after European governments stepped in to help their own companies.

09:52 AM

Felixstowe port asks shipping firms to help clear backlog

There's some more in from Flexistowe port, which is asking shipping lines to remove empty containers as quickly as possible to help clear the backlog.

A spokesperson said:

In common with other major ports in the UK and beyond, the Port of Felixstowe is experiencing impacts of the global supply chain crisis.

The pre-Christmas peak, combined with haulage shortages, congested inland terminals, poor vessel schedule reliability and the pandemic, has resulted in a build-up of containers at the port. The vast majority of import containers are cleared for collection within minutes of arriving and there are over 1,000 unused haulier bookings most days. However, the situation is improving and there is more spare space for import containers this week than at any time since the beginning of July when supply chain impacts first started to bite.

Empty container levels remain high as import containers are returned and we are asking shipping lines to remove them as quickly as possible.

09:43 AM

Fuel price surge weighs on airlines

While there are positive noises coming from airlines this morning, it's worth also pointing out a major potential headwind.

Though bookings are picking up as restrictions ease, the surge in oil prices is sparking fears that jet fuel prices could also rocket over the winter months.

EasyJet chief executive Johan Lundgren said: "There are cost pressures on the industry at the moment – the type of things that will hit everybody.

"Clearly of course it depends on your hedging, but the pressure are the same for everyone."

The worries took their toll in airline stocks. Alongside EasyJet's decline, British Airways owner IAG was down 2.4pc while Ryanair – which has said it's 50pc hedged on jet fuel for the second half of the year – fell 2pc.

09:36 AM

Lufthansa pays back £1.3bn in state aid

Lufthansa state aid airline recovery - REUTERS/Kai Pfaffenbach/File Photo
Lufthansa state aid airline recovery - REUTERS/Kai Pfaffenbach/File Photo

There are more signs of recovery in the airline sector courtesy of Lufthansa, which said it's paid back €1.5bn (£1.3bn) in state aid obtained during the pandemic.

The payment comes on the back of a €2.2bn capital increase as the carrier, which is part-owned by the German state, banks on a revival of demand for air travel next year.

Lufthansa added it also intends to pay off an aid tranche worth €1bn by the end of the year. The carrier had already paid back a state loan of €1bn in February.

09:31 AM

EasyJet shares slide on £1bn loss

EasyJet has struck an upbeat tone about the recovery in air travel, but that's failed to impress investors, who seem to be focusing in on the airline's headline loss.

The company said it expects to fly 70pc of its pre-Covid capacity in the autumn after enjoying a sharp jump in bookings as travel restrictions were relaxed.

However, it predicts a pre-tax loss of between £1.14bn and £1.18bn for the year to the end of September, when travel bans had an even more severe impact on bookings.

In the best case scenario this would beat consensus of a loss of £1.175bn. Still, shares slid 2.3pc following the update.

09:16 AM

German investor confidence plunges to pandemic low

German investor confidence has fallen for the fifth straight month to its lowest level since the start of the pandemic as Europe's largest economy is hammered by material shortages.

The latest survey from ZEW places sentiment at 22.3 in October, down from 26.5 in September and below forecasts. It's the lowest reading since March 2020, when the first wave of Covid-19 hit.

Germany's key manufacturing industry – in particular car makers – has been hit hard by supply chain bottlenecks that have left factories unable to keep up with demand.

Major car manufacturers including Volkswagen and Opel have been forced to curb production or shut plants entirely due to shortages of material such as semiconductors.

08:52 AM

Cyclone closes Chinese port

Yantian port Shenzhen China bottleneck supply chain - Chen Wen/China News Service via Getty Images
Yantian port Shenzhen China bottleneck supply chain - Chen Wen/China News Service via Getty Images

Global supply chains are facing further pressure after a tropical cyclone forced the closure of a major Chinese port.

The number of ships waiting to enter Yantian port in Shenzhen – one of the world's busiest ports – has jumped to the highest level since August.

There are currently 67 vessels waiting outside the port, according to data compiled by Bloomberg, raising fears of further pressure on supply chains.

The port suspended pickup and drop-off of containers as cyclone Kompasu approached China's southern coastline. It's the second tropical storm to affect the region in the last few days.

The shutdown comes on top of bottlenecks at two major US ports, as well as Felixstowe.

08:44 AM

Credit Suisse turns cautious on UK stocks amid bottlenecks

It's not just retailers who'll be worried about backlogs at ports – it seems the UK's supply chain issues could have a wider impact on stocks.

Credit Suisse have struck a more cautious tone on the market due to the ongoing challenges.

In a note strategists wrote that supply bottlenecks in product and labour markets "appear worse than elsewhere".

They recommended that investors buy pricing power through overweight-rated stocks such as Diageo, Relx and Kingfisher.

However, they argued that non-energy supply chain troubles were near their peak.

08:24 AM

EasyJet sales jump five-fold as rules relaxed

Some more details on EasyJet's positive update this morning:

The airline said it saw a five-fold increase in bookings in the days after the government relaxed travel restrictions, with passengers on the hunt for winter sun.

Boss John Lundgren described the announcements as a "good step in the right direction", but called for an end to all travel restrictions for double-jabbed passengers.

He said: "We had a 400pc increase to Egypt and Turkey, so customers are eager to go and the testing is a big obstacle for them to go.

"It's important to note that from July 1 the rest of Europe removed all restrictions for double-vaccinated passengers and clearly that's what we'd like to see happen in the UK."

08:13 AM

Pound steadies on jobs recovery signs

Sterling has steadied against the dollar this morning after fresh figures showed UK payrolls rose above pre-Covid levels with record hiring.

The pound was trading flat at $1.3592 after dipping as much as 0.1pc. Against the euro it gained 0.1pc to 85p.

Thu Lan Nguyen at Commerzbank said: "Labour market data was mostly GBP positive. Employment growth was decent and wage growth even surprised slightly on the upside, which might fuel inflation concerns among Bank of England monetary policy committee members."

Payrolls climbed by a record 207,000 last month, while job vacancies hit an all-time high of 1.2m.

08:07 AM

Shopping trips drop amid petrol panic buying

Supermarket Kantar petrol panic buying - Dominic Lipinski/PA Wire
Supermarket Kantar petrol panic buying - Dominic Lipinski/PA Wire

The number of trips to the supermarket made by shoppers slumped over the last month – in part because of the panic buying of fuel.

The latest figures from Kantar show the average household made 15.5 store visits, marking the the lowest monthly figure since February.

Among the major supermarkets, Tesco continues to grow ahead of its rivals with sales rising by 1.2pc in the 12 weeks to Oct. 3 compared to last year. Its market share now stands at the highest level since February 2019.

Lidl was the only other retailer to post growth over the 12 weeks, and sales there edged up by 0.4pc, while Aldi 12-week sales dipped by 0.4pc.

At the rest of the big four supermarkets, Sainsbury sales fell by 1.5pc, Morrison sales dropped by 4pc and sales at Asda were down 1.7pc. Ocado's sales fell by 5.9pc, while sales at Waitrose were flat.

07:53 AM

Ladbrokes owner posts online growth amid takeover talks

Entain, the owner of brands including Ladbrokes and Coral, said its online business has continued to grow strongly as it mulls a £16.4bn takeover offer from US rival Draftkings.

The FTSE 100 company posted net gaming revenue growth of 4pc in the fourth quarter, rising to 7pc for its online division. Retail revenue slipped 1pc over the period.

Draftkings has made an approach to buy Entain's non-US assets, leaving MGM Resorts free to buy Entain’s 50pc share of its American joint venture.

The company said BetMGM continued to deliver "strong growth", with a 23pc market share across the US in sports betting.

Shares dipped 0.3pc in early trading.

07:40 AM

FTSE risers and fallers

The FTSE 100 has started in negative territory this morning, sliding 0.8pc to 7,091 points.

Miners Anglo American and Rio Tinto are among the biggest drags after iron ore and metals prices halted their recent rally.

AstraZeneca is also weighing on the index, even after a positive update on its Covid cocktail antibody on Monday. Packaging firm Bunzl is a rare bright spot, rising 1.7pc.

Meanwhile, the domestically-focused FTSE 250 is down 0.5pc.

07:31 AM

EasyJet boosts capacity as recovery takes off

EasyJet capacity travel restrictions - Chris J. Ratcliffe/Bloomberg
EasyJet capacity travel restrictions - Chris J. Ratcliffe/Bloomberg

EasyJet has said it will boost its capacity to around 70pc of pre-Covid levels this quarter after enjoying a surge in bookings since the easing of travel restrictions.

The budget airline said its losses halved over the summer compared to last year, while cash flow turned positive. Bookings have soared to places like Egypt and Turkey and capacity to the Canary Islands is at 140pc of 2019 levels for the half-term holidays later this month.

Chief executive Johan Lundgren said: “We have seen city breaks beginning to return alongside growing demand for leisure travel from customers looking for flights and holidays to popular winter sun destinations.”

EasyJet was flying at only about 58pc of 2019 levels in July, August and September as travel restrictions lingered. It's now hoping to capitalise on pent-up demand and said it expects capacity to grow throughout 2022.

Shares rose as much as 1.7pc in early trading, before turning negative.

07:23 AM

Job figures fuel rate rise fears

Get the full lowdown on the employment figures from my colleague Tim Wallace.

He writes that Britain is battling a dramatic labour shortage as markets bet on a rise in interest rates to hold back inflation.

It raises pressure on the Bank of England to increase interest rates sooner rather than later as officials fear shortages combined with booming demand will push inflation well above their 2pc target. If wages follow suit, the fear is that inflation could become entrenched, requiring sharper rate rises later if prices are not controlled promptly.

Read Tim's full story here

07:18 AM

Expert reaction: Jobs market has a 'vacancy paradox'

Kitty Ussher, chief economist at the Institute of Directors, says the latest employment numbers highlight the gulf between available jobs and skills.

Unemployment is now on a firm downward march. And, with the number of people reporting they are ‘away from work’ now at or even below pre-pandemic levels it seems unlikely that the end of the furlough scheme will cause the spike in unemployment that was previously feared.

We are starting to see a vacancy paradox in the jobs market: record-high job adverts but still more people unemployed than there were before the pandemic. The answer appears to be that those people seeking work do not have the skills or availability that employers need. Businesses will be looking to the government to prioritise lifelong skills and retraining to help them find the teams they need to expand and grow.

07:14 AM

Port congestion threatens Christmas

More on the situation at UK ports, which is adding further pressure to supply chains that are already under strain.

Congestion has been widespread at ports around the world since last year, but the problem is said to be particularly acute in Britain due to the shortage of HGV drivers.

Felixstowe port said it was now taking about 10 days before cargo could be taken inland to be unloaded, up from the usual four and half days.

It told the Financial Times that the “situation was improving” and that it had the most space for inbound containers since the beginning of July.

Still, as cargo begins to pick up as we approach Christmas, some importers are now looking for alternative modes of transport – such as rail and air – to get their goods into the country.

Meanwhile the US is also facing severe supply chain troubles, with 62 ships waiting to dock at America’s two largest ports.

Los Angeles and Long Beach in California, which handle 40 per cent of containerised cargo entering the country, are struggling to cope with the backlog.

07:08 AM

FTSE 100 opens lower

The FTSE 100 has dropped at the open as surging oil prices offset recovery in the jobs market.

The blue-chip index is down more than 1pc at 7,072 points.

06:57 AM

Employment and wage growth

There are two other key stats to pull out of the deluge of data this morning.

First is the unemployment rate, which was 4.5pc in the three months to August. This is 0.5 percentage points higher than before the pandemic, but 0.4 percentage points lower than the previous quarter.

Second is wage growth, which rose to between 4.1pc and 5.6pc in the three months through August – a sign of further price pressures that could push the Bank of England to act.

06:51 AM

Payrolled employees recover

Meanwhile, HMRC figures show there were 29.2m payrolled employees in September, a rise of 3.6pc compared with the same period of the previous year and a rise of and a rise of just over 1m people over the 12-month period.

Compared with the previous month, the number of payrolled employees increased by 0.7pc last month – equivalent to 207,000 people.

The growth means the number of people on payrolls has recovered to pre-pandemic levels.

HMRC payroll labour job market - HMRC
HMRC payroll labour job market - HMRC

06:46 AM

Transport and storage lead vacancies

Job vacancies have bounced back from pandemic lows and are now at the highest level on record.

The ONS figures show that transport and storage were the sectors with the highest rate of quarterly growth, reflecting the labour shortage – especially among HGV drivers – that has put a strain on supply chains.

ONS vacancies job growth - ONS
ONS vacancies job growth - ONS

06:39 AM

Job vacancies hit record high

Good morning.

Job vacancies have surged to a record high while the number of payrolled employees has recovered to its pre-Covid levels, signalling a robust recovery in the UK job market.

Vacancies rose to 1.1m in the three months to September, while employers added 207,000 workers to their payrolls.

The figures, which cover the last months of the furlough scheme, may embolden the Bank of England to increase interest rates as soon as this year.

5 things to start your day

1) More tax raids inevitable to beat social care crisis, economists warn Further tax rises will be necessary to tackle the health and social care crisis as the hikes announced by Boris Johnson are not enough to fund the NHS.

2) UK start-ups score record £20bn from tech investors Technology backers have ploughed record amounts of cash into British SMEs this year.

3) Cost of living crisis triggers recession fears Escalating energy prices, supply chain bottlenecks and tax hikes mean some economists now worry Britain faces fresh fall.

4) ‘Making a profit is more stressful than overseeing public finances’, says John Lewis boss Chairman Dame Sharon White said last night that overseeing billions of pounds of taxpayer money was an easier job than running the retailer.

5) Ex-Chancellor Hammond joins London crypto firm 'Spreadsheet Phil' will serve as an adviser to Copper in his latest private job since leaving politics.

What happened overnight

Asian shares dropped and the safe-haven dollar held firm on Tuesday as a global energy crunch fuelled inflation fears, clouding investor sentiment before the US corporate earnings season.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.9pc in early trade, after US stocks ended the previous session with mild losses. US stock futures, the S&P 500 e-minis, fell 0.43pc.

Australian shares slipped 0.29pc while Japan's Nikkei stock index slid 1.03pc.

China's blue-chip CSI300 index was 0.75pc lower, while Hong Kong's Hang Seng index opened down 1.35pc.

Coming up today

Interim results: French Connection

Trading update: Entain

Economics: BRC retail sales (UK), unemployment rate (UK), claimant count rate (UK), average earnings (UK), economic sentiment (EU)

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