Today’s top stories
UK inflation hit a more-than-expected 40-year high of 10.1 per cent in September, driven by huge increases in food prices. The September figure has extra significance as it is used to calculate increases in pensions and benefits. Prime Minister Liz Truss said today the “triple lock” protecting pensions would stay but did not make commitments on benefits. The other unanswered question is where public spending cuts may fall. Either way, there isn’t much left to cut, says columnist Sarah O’Connor.
Suella Braverman quit as UK home secretary in another blow to Liz Truss’s government. Braverman insisted she had committed “a technical breach” of security rules, but her resignation letter contained a broadside against Truss and the breaking of election pledges. She was replaced by Grant Shapps.
President Joe Biden authorised the sale of more oil from the US’s strategic reserve and set out a plan to replenish the stockpile.
Nestlé, the world’s largest foodmaker, increased prices by 7.5 per cent in the first nine months of the year — the biggest amount in decades — pushing its sales growth to the highest level in 14 years.
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Good evening,
As temperatures begin to drop and energy prices continue to rise, European households and industry face a bleak winter.
Yesterday, ahead of an EU summit tomorrow, Brussels unveiled a fresh package of emergency measures. These include a cap on the traded price of gas and measures to limit volatility in derivatives markets. The moves form part of what European Commission chief Ursula von der Leyen called “further steps towards an energy union”.
The need for a common EU energy policy is also the subject of today’s column by chief economics commentator Martin Wolf, who argues that it needs to accelerate the shift to renewables as well as help member states cushion households from the worst of the price shock.
Meanwhile, a separate rebellion is growing among EU member states over an international energy treaty that allows multinationals to sue governments to protect their investments. Campaigners say the pact, designed in the 1990s, hinders governments’ efforts to curb greenhouse gases.
Finding alternatives to Russian gas is still the most pressing demand.
European countries have been holding talks with Qatar, the world’s largest exporter of liquefied natural gas. The country’s energy minister told the FT that next year could be “much worse” once reserves were depleted, especially if there was a harsh winter and gas did not start flowing again from Russia.
Countries outside the bloc have problems too. In the UK, campaigners warned yesterday that 11mn homes could be pushed into fuel poverty after the government ditched its commitment to help all households with bills for two years, replacing it with six months of support followed by targeted help for the most vulnerable.
Meanwhile, Europe’s industrial companies, which employ about 35mn people, or 15 per cent of the working population, are strapping themselves in for an exceptionally difficult winter, as today’s Big Read explains.
Some sectors have already halted production and many worry that industry could start migrating to places with cheaper energy. “We are risking a massive deindustrialisation of the European continent,” said Alexander De Croo, Belgium’s prime minister.
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Gas is EU industry’s single most important source of energy (it consumes more than a quarter of the EU’s total supply) and is critical to the chemical and fertiliser sectors in particular, as well as the bloc’s wider industrial strategy.
“If the German chemicals industry goes down, three weeks later every supply chain in Europe has a problem,” said the head of the industry’s trade body.
Could we soon witness the end of electricity sharing as countries focus on their own energy needs? Read the first instalment of our new Climate Exchange dialogues.
Need to know: UK and Europe economy
British workers are on track to suffer two decades of lost wage growth, according to Frances O’Grady, the outgoing head of the country’s trade union movement, with each worker losing £24,000 in real terms since 2008 as pay growth lags inflation.
The UK’s recent disastrous “mini” Budget can trace its origins back to the decision to leave the EU. Watch our new film on why there has not yet been a convincing case for a “Brexit dividend”. A new poll suggests the British people support a reset in relations with Brussels.
Giorgia Meloni, Italy’s likely new prime minister, is set to take power against a backdrop of looming recession and swingeing increases in energy prices for households and businesses. Public debt stands at 150 per cent of GDP — the highest of any major eurozone economy.
Need to know: global economy
The delay of Chinese GDP data that might have reflected badly on Xi Jinping during the Communist party congress has fuelled concern over the country’s economy. It is also the topic of today’s Behind the Money podcast with China correspondent Edward White.
Pakistan will ask international lenders for billions of dollars in new loans to rebuild the country after floods uprooted 33mn people and caused an estimated $30bn of damage. These funds would be in addition to its existing external debt of $130bn.
Latin America’s central banks can teach big economies a thing or two about handling inflation, writes LatAm editor Michael Stott.
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Need to know: business
Netflix shares shot up on news that the streaming company had stemmed its subscriber losses, adding 2.4mn members in the third quarter — more than double its forecast.
Goldman Sachs profits plunged 43 per cent in the third quarter to $3.1bn or $8.25 per share, although they were still better than analysts expected. The bank is pulling back from retail operations to focus on wealth management.
Demand for air travel is still surging (United is the latest carrier to forecast an increase in demand), but so are fares. International business editor Peggy Hollinger says airlines could still come unstuck, as the darkening economic outlook hits consumer spending.
One of the consequences of the UK’s ill-fated “mini” Budget has been pressure on property funds to sell offices and warehouses, leading real estate investors to pick up some bargains. Funds have faced a wave of withdrawals, meaning they have to sell assets to meet the redemption requests.
Small business confidence in the UK has fallen to its lowest level since the depths of the pandemic, according to an industry survey. More than 40 per cent expect revenues to continue to fall over the next three months. A separate survey highlights a rise in corporate financial distress, especially in hospitality and retail.
The World of Work
Middle managers: blocks in the road of success and innovation, or deeply needed allies and vital links between senior management and an increasingly demanding workforce? Listen to the new Working It podcast.
Elizabeth Uviebinene, author of The Reset: Ideas to Change How We Work and Live, reports from the UK Black Business Show, the biggest event of its kind in Europe that aims to develop, empower and inspire black professionals and entrepreneurs.
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Some good news
Uğur Şahin and Özlem Türeci, the team behind the pioneering BioNTech Covid-19 jab, told the BBC that vaccines to treat cancer would be possible by 2030. (Full interview at 35m30s). You can read more on their cancer development work in global pharma correspondent Hannah Kuchler’s Big Read.
Source: Economy - ft.com
