The German government has taken the first formal step towards gas rationing as it braces itself for a potential halt in deliveries from Russia due to a dispute over payments.
Germany is one of the biggest purchases in Europe of Russian pipeline gas but is trying to drastically reduce the imports. Last week, the government in Berlin vowed to all but wean itself off Russia’s gas by mid-2024 and become “virtually independent” of its oil by the end of this year.
The US president Joe Biden vowed to help Europe cut its dependence on Russian energy after a summit in Brussels last week by redirecting at least 15bn cubic metres of additional liquefied natural gas to the EU.
The decision by Germany to prepare for gas rationing is the latest in a growing dispute that has raised the prospect of Russian gas supplies to Europe halting. Russian officials said yesterday they were not prepared to “supply gas for free” to Europe, a day after G7 countries unanimously rejected President Vladimir Putin’s directive requiring rouble payments.
Volker Wieland, a professor of economics at Frankfurt University and a member of the German council of economic advisers, warned that a halt in Russian energy supplies would create a “substantial” risk of a recession and bring Europe’s largest economy “close to double-digit rates of inflation”.
Europe’s wholesale gas price rose 8 per cent to €114.45 a megawatt hour today in early trading.
More on the war in Ukraine:
Peace talks: Russia’s announcement that it would scale back its military activities near Kyiv were met with scepticism by Volodymyr Zelensky and western leaders.
Military: For almost three decades Russia’s military has supplied China with missiles, helicopters and advanced fighter jets. Russia’s recent request for military assistance from China suggests the tide is turning.
Markets: What explains the calm in global stock markets despite the conflict? There are warnings of systemic risks still to be uncovered.
Opinion: Is the west able to keep creditors from picking away at Moscow’s frozen money? Read Alphaville’s guide to seizing Russian assets.
Thanks to all our readers who participated in yesterday’s poll. Just over half agreed with Gideon that Nato should not directly intervene in the Ukraine war. Here’s the rest of today’s news — Gordon.
Five more stories in the news
1. US yield curve inverts in possible recession signal The yield on the two-year Treasury note yesterday rose above those of the 10-year US government bonds for the first time since August 2019. Inversions typically signal malaise about the economy’s long-term growth prospects and have preceded every US recession in the past 50 years.
2. Ackman to abandon public activist battles Billionaire hedge fund manager Bill Ackman is abandoning his use of aggressive activist campaigns to publicly shame company boards and executives to bring about change and bolster share prices, he said in an annual report to investors.
3. More than $600mn in crypto stolen from Ronin Network The programme that allows users to transfer assets in and out of the popular cryptocurrency game Axie Infinity said it had discovered a security breach that resulted in 173,600 ether and 25.5mn USD Coin being removed by unidentified hackers from the system on March 23. It marks one of the largest hacks of the booming digital assets sector.
4. Democrats push for Supreme Court ethics code Senior Democratic lawmakers are increasing calls to create a code of ethical conduct for the US Supreme Court amid mounting scrutiny of associate justice Clarence Thomas and his wife, Virginia “Ginni” Thomas.
5. Big Four under pressure over Chinese developer audits International auditors are resigning from China’s heavily indebted property developers as delayed financial results increase uncertainty over the full scale of the sector’s worst-ever crisis and raise concerns of hidden debts.
The day ahead
Economic data The Commerce Department is scheduled to release the 2021 fourth quarter US gross domestic product data, which is likely to have increased at an annualised rate of 7.1 per cent, compared to an earlier gain of 7 per cent.
Monetary policy Federal Reserve Bank of Richmond’s president Thomas Barkin gives opening remarks virtually to the hybrid format Investing in Rural America Conference. Federal Reserve Bank of Kansas City president Esther George speaks virtually on the economic and monetary policy outlook before the Economic Club of New York.
Corporate earnings AerCap, the world’s largest airline leasing company, is to report full-year results; the sector was severely affected by the fallout from the Ukraine conflict. BioNTech reports fourth-quarter earnings.
What else we’re reading and listening to
A new world of currency disorder A global money, one that people rely upon in their cross-border transactions and investment decisions, is a public good. But the providers of that public good are governments of some countries that lack a true rule of law, writes Martin Wolf.
‘We’re braced for the impact of Russian cyber attacks’ In the second of our new Tech Exchange series, Kevin Mandia, founder of cyber security company Mandiant, talks to tech correspondent Hannah Murphy. Mandia’s company has spent years tracking cyber campaigns orchestrated by state actors and was recently bought by Google.
The Oscars slap masked a more significant event for cinema Apple’s Best Picture award for CODA, a film about the ambitions of the hearing child of deaf parents, stunned Hollywood, writes Los Angeles correspondent Christopher Grimes. It is a moment many in the movie industry had been dreading, he says.
El Salvador courts crypto ‘whales’ The appetite of crypto enthusiasts and investors with large digital currency holdings is likely to be crucial to El Salvador’s plans for a $1bn bitcoin-backed bond after institutional investors shunned the fundraising.
Should you bring your dog to the office? This week’s edition of the Working It podcast delves into perhaps the most divisive issue in the workplace. Presenter Isabel (a cat person) talks to Lindsay Bumps (a dog person) from ice cream maker Ben & Jerry’s that has allowed pooches at work since the 1970s.
Property
Southern charm, a growing tech scene and low taxes are drawing ‘transplants’ to the American country music capital of Nashville. Among the recent arrivals is ousted WeWork founder Adam Neumann, who has bought a 268-apartment block called Stacks on Main, with a dog park and saltwater pool.
