Aurelia Butler

Stay informed with free updatesSimply sign up to the More

This article is an on-site version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesFor up-to-the-minute news updates, visit our live blogGood evening.Shares in Ørsted, the world’s largest offshore wind developer, nosedived today as it ditched two key US projects and announced a higher than expected writedown of its portfolio, highlighting the fragile situation of an industry that is meant to be a key element in the switch to more sustainable energy.The Danish company blamed supply chain delays, higher interest rates and problems with construction permits as well as changes to its assumptions around the tax credits available under US president Joe Biden’s Inflation Reduction Act. Offshore projects have also been coming under heavy fire from residents on the Jersey Shore, citing concerns for marine life and fisheries as well as having their ocean views spoiled by giant spinning turbines. BP’s head of low carbon energy told a Financial Times conference today that the US offshore wind industry was “fundamentally broken” and would not grow without a “fundamental reset”. As our Big Read explains, the sector faces multiple challenges as governments around the world set ambitious targets to tackle climate change but balk at the potential rise in power prices that might entail. “Offshore wind projects around the world have faced a triple whammy of high supply chain inflation, rising interest rates and a reluctance on the part of governments to adjust auction parameters to respond to these new market conditions as they prioritise keeping costs to consumers down,” says Simon Virley, UK head of energy at KPMG.The sector has grown rapidly since the world’s first offshore wind farm was built off Denmark in 1991, aided by increases in turbine sizes and ultra-low interest rates helping to push down costs of construction and operation 60 per cent between 2010 and 2021. Ørsted is not the only European offshore turbine cluster operator buffeted by strong headwinds. Sweden’s Vattenfall in the summer halted a project in the North Sea off England’s coast — one of the most attractive areas in the world for wind farm developers — as surging costs made it unviable given the low price locked in for its electricity. Spain’s Iberdrola has also cancelled or sought to renegotiate power contracts for offshore projects after costs surged.Turbine manufacturers have also been hit: Siemens Energy, one of the world’s biggest, is in talks with the German government to secure guarantees for long-term projects after warning turbine losses would be higher than forecast. The EU meanwhile is considering an anti-subsidy probe into Chinese turbines amid concerns that Europe was simply swapping its dependency on Russian gas for one reliant on Chinese clean energy equipment.  Other policy problems abound. In the UK, the failure to attract any bids from offshore developers in its recent annual renewable energy auction, despite the North Sea’s huge potential, was, as the FT editorial board noted, both worrying and embarrassing. On the positive side, others, such as today’s Lex newsletter (for Premium subscribers), argue that some of the doom-mongering around the still young renewables industry, and wind in particular, is overdone. “Fair winds will prevail again, sooner or later, as pressure to decarbonise reasserts itself,” it concludes. Need to know: UK and Europe economyEurozone inflation fell more than expected to 2.9 per cent in October, the slowest annual growth in consumer prices since July 2021, driven by falling energy prices and lower food price increases. The slowdown reflected weaker activity in the economy, which shrank 0.1 per cent in the three months to September.UK shop price inflation fell to the lowest level in a year, according to industry data. UK house prices however rose unexpectedly in October, although mainly due to the lack of properties for sale.Moscow tightened capital controls on western companies’ asset sales in a bid to shore up the weakening rouble. Companies exiting Russia must agree on a sale price in roubles or, if sellers insist on receiving foreign currency, face delays and even losses on the amounts that can be transferred abroad. Need to know: Global economyThe US government is demanding data from insurers to see if more frequent extreme weather is making insurance unaffordable for homeowners. Insurance covered just 60 per cent of the $165bn losses from climate-related disasters in 2022.Governments are still at odds over the future of fossil fuels ahead of the UN climate summit. France, Spain, Ireland, Kenya and 11 other countries are pushing for an end to new oil and gas projects.Chinese stocks fell after manufacturing activity unexpectedly shrank in October, according to the official purchasing manager’s index as well as a closely watched private measure. Beijing signalled a further tightening of centralised Communist party control over its $61tn financial sector.Worsening drought means the number of ships allowed to cross the Panama Canal each day will be slashed in the coming months. More than 3 per cent of world trade passes through the nearly 110-year-old canal, which relies on freshwater to operate its locks.Need to know: businessTata Steel is poised to confirm up to 3,000 jobs could be lost in Wales as part of a restructuring of its UK operations. The company, whose Port Talbot site is the biggest single emitter of carbon dioxide in the UK, is under pressure to move to greener, less carbon-intensive forms of steelmaking.BP reported a steeper than anticipated drop in third-quarter profits to $3.3bn as energy prices fell and its gas trading business faltered, but interim chief executive Murray Auchincloss dismissed speculation about a takeover. Recent mega deals have raised hopes of a gusher of advisory fees for Wall Street banks Morgan Stanley and Goldman Sachs. European energy companies are using Ukraine to store gas as their usual tanks near capacity, taking advantage of Kyiv’s tariff and customs incentives. The tanks are situated deep underground in the west of the country, far from the war’s front lines.The $110bn airline maintenance market is in rude health as airlines struggle to keep planes in the sky to meet surging passenger demand. A shortage of new planes caused by supply chain issues and a jump in labour costs have led to airlines spending more on maintenance and repairs than ever before.A new Big Read series details the impact of high interest rates on business, starting with the private equity industry, where dealmakers have been pummelled. In the UK, the sector has a fight ahead over the Labour party’s plans to raise buyout taxes on bosses if it wins power.Company insolvencies in England and Wales have hit the highest level since the global financial crisis as businesses struggle with high borrowing costs and slowing demand.The World of WorkGovernment and Bank of England officials have been focused on the problem of the UK’s shrinking workforce but faults in official data have raised doubts as to whether they are tackling the right problem.The new Working It podcast discusses the UK’s productivity problem and what it could learn from places such as Scandinavia. As Morgan Stanley picks a new boss, US financial editor Brooke Masters highlights the pitfalls of succeeding a star CEO.The impenetrable job definition of the late actor Matthew Perry’s Chandler character in Friends reflected the work-to-live mentality of a different office age, writes columnist Emma Jacobs, presaging the current discourse around “bullshit jobs”.Some good newsDespite the widely held belief that cases of dementia are set to rocket as global populations age, experts believe that, in the developed world at least, the prospects of avoiding the disease are stronger than they were a generation ago. Our Big Read explains.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Recommended newslettersWorking it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up hereThe Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up hereThanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. And please share your feedback with us at [email protected]. Thank you More

After 15 years in the same two-bed property, Lucy is being forced to move because her landlord wants to sell. The business manager, who currently lives in St Albans, has a monthly housing budget of £1,400 and has looked at over 50 rentals in the past few months. (She requests anonymity for fear of stigma; “Lucy” is a pseudonym.) But she cannot find even a one-bedroom property for her and her youngest son, who is currently at university. She is far from alone. Surging rents and a lack of housing supply have made it difficult for most renters to find affordable housing in the UK. But with lower-than-average incomes and more caregiving responsibilities, women are disproportionately affected by the crisis.It is now almost impossible for the most vulnerable women to rent in some parts of the country, according to a Financial Times analysis of social survey and rental data from the Office for National Statistics (ONS) for the year ending March 2023. This has led to higher rates of homelessness and a dramatic decline in the number of single mothers in London.On the median salary, the average one-bedroom property in England was affordable for a single man but not a single woman, based on the ONS benchmark that housing should cost no more than 30 per cent of a household’s income.The problem is more acute for single mothers, who account for one in five UK families with dependent children. A one-bedroom property cost more than half their average income in the East, South East and South West. In London, it cost 106 per cent, compared with 64 per cent for the average single father.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.These numbers are especially concerning as lone parents with dependent children — 90 per cent of whom are women — are much more likely to be private renters than couples with dependent children.Lucy, a single mother of two sons, says that she has struggled to find properties in her price range and even when she has, landlords turn her down in favour of people who are “financially stronger”. “People are offering more money on top of the price, or they offer six months rent in advance,” she adds. “When I did find a place, the landlord wanted a guarantor who earns £50,000 a year and I didn’t have one.”The lack of access to affordable housing has forced many women into substandard housing, says Thomas Wernham, research economist at the Institute for Fiscal Studies (IFS). “The quality of the properties that remain affordable has gone down rapidly because people who are reliant on housing benefit are looking at the very bottom end of the market,” he says. “If children are living in low-income households, they’re likely to be forced into lower quality housing.”Poor quality housing is known to have a wide-ranging impact on children’s physical and emotional health, as well as putting them at higher risk of developing educational and behavioural problems.If Lucy does not find somewhere by the end of this month she will be homeless. But she says the council has told her she is not a priority because she does not have younger children and is not in an abusive relationship. “I just never thought it’s going to be this difficult. For the first time, I am struggling with anxiety,” she says. ‘Cosy box room’A home in London, the east and south of England is now almost unobtainable for the average single mother. In the capital, they could afford to rent less than 0.1 per cent of one-bedroom lets on the median London salary and no advertised two-bedroom lets between April 2022 and March 2023, according to property consultancy TwentyCi. Of those that were affordable, almost all were in houses with multiple other renters. You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Some of the limited options a single mother in London on an average income can afford, according to research by the FT on the largest rental platforms including Rightmove and SpareRoom, are: a room on a boat housing 10 other people; cheap rent in exchange for 15 hours of part-time care each week; or a “cosy box room” with a single bed in a house share. Such conditions are likely forcing some women to relocate. The number of single mothers with dependent children fell by a quarter in the South East between 2021 and 2022, according to ONS estimates, and by almost a third in London between 2015 and 2022. Victoria Benson, chief executive of Gingerbread, a charity supporting single parents, says they often hear from single mothers struggling as a result of the affordability crisis. “We know of single mums who have been forced to move to unsuitable accommodation and others who have had to move away from their support networks and even their children’s schools due to rental costs,” she says. You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.The crisis is inevitably taking a toll on mental health: three in five women say they have been anxious as a result of housing problems in the past year, according to a survey by charity Shelter. Women are also having to make other difficult decisions to get by, such as cutting back on necessities and staying in unsafe or unhappy relationships. A Gingerbread poll by Savanta of 500 single parents in February found that in order to cope with rising costs of living, half of the single mothers had cut back on food and meals for themselves in the past year, while 3 per cent had stayed in a broken relationship or moved back in with an ex. Homelessness is also on the rise across England. Rates increased by 15 per cent for single mothers and 12 per cent for single women in the first quarter of 2023 compared with the same period in 2022. In London, they rose by more than a fifth for single mothers.The risk of becoming homeless has been magnified by cuts to housing benefits, of which single women are the main recipients. Local housing allowance rates have not changed since April 2020 but rents for new lets have risen by almost a third in that time. The average monthly cost of a new rental agreement in London increased from £1,668 to £2,179, according to the HomeLet Rental Index.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Earlier this year, the Institute for Fiscal Studies (IFS) found that the cost of only one in 20 advertised new lets in Great Britain was covered by the local housing allowance in the first quarter of 2023, down from around one in four in April 2020. Women are bearing the brunt of the crisis caused by the broken private rental market, says Shelter chief executive Polly Neate. “Decades of failure to build genuinely affordable social homes has meant that competition for rentals is fierce and the barriers to finding and keeping hold of a safe home are higher than ever,” she says.Restoring living standardsThe UK’s housing crisis is high on the political agenda. New legislation to improve security and conditions for private renters is currently being debated in parliament. If implemented, the Renters (Reform) bill will remove the threat of no-fault evictions and allow tenants to appeal “excessively above-market” rents. Emma Thackray, research and data officer at think-tank the Women’s Budget Group, says this is a “step in the right direction” but more needs to be done to tackle the wider crisis of affordability, such as restoring the link between rents and the local housing allowance.“Punitive measures” such as the cap on total benefits and limiting tax credits and universal credit to two children are pushing women further into poverty, adds Thackray. “They must be abolished if we want to restore women’s living standards.”The situation may get worse before it gets better — if it gets better at all. Wernham of the IFS says that affordability has deteriorated much more in the past few years than it did over the entire 2010s and adds that there is more pain to come.“Even if [rental] prices do not continue to go up really rapidly, the pinch is going to be felt by more and more renters as they move house or as their landlord decides to put up the rent,” he says. “Not all the hardship that we expect to see eventually has been felt yet.” More

It plans to sell $112 billion in its quarterly refunding next week, which will raise $9.8 billion in new cash and refund $102.2 billion in securities. This will include $48 billion in three-year notes, $40 billion in 10-year notes and $24 billion in 30-year bonds.The Treasury said it plans to increase the size of its two-year and five-year auctions by $3 billion per month, and to increase the size of its 3-year and 7-year auctions by $2 billion and $1 billion per month, respectively.It will increase the size of its 10-year new issue and reopenings by $2 billion and raise its $30-year bond new issue and reopenings by $1 billion. The 20-year bond auction sizes will remain unchanged.The Treasury will also increase the size of its two-year floating rate note new issue and reopenings by $2 billion.Some Treasury Inflation-Protected Securities (TIPS) auction sizes will also be increased, with a $1 billion increase in the December 5-year TIPS auction and January 10-year TIPS auction.The Treasury also said it expects to implement “modest reductions” to short-dated bill auctions by early December, which are expected to be maintained through mid- to late-January. The bill auctions will be held at current levels through late in November.It is also considering changing its regular 6-week cash management bill to a benchmark, and will announce this decision at the next refunding. The Treasury added that it continues to make “significant progress” on its plans to launch a regular buyback program in 2024. More

OTTAWA (Reuters) -As Canada grapples with a possible recession and its highest debt costs in more than two decades, economists say Prime Minister Justin Trudeau should curb his spending habits to ensure that future policy choices are not forced on him.Trudeau’s Liberal government has a reputation for bold spending. In 2015, lagging in the polls, he pledged to run deficits to bolster public infrastructure and won the election. Amid the economic turmoil of the pandemic, his government racked up Canada’s highest ever deficit.However, debt servicing costs are nearing a critical 10% of revenue – a ceiling some economists say is needed in order not to burden future generations or risk cutting government programs. Those debt payments are likely to rise further after bond yields soared globally in recent weeks, they say.Failing to curb spending now risks “the market dictating to you what you have to do with fiscal policy,” said Doug Porter, chief economist at BMO Capital Markets.”I do think they have to trim the sails a bit,” he added.But it looks like there could be more spending on the way. Finance Minister Chrystia Freeland is expected to unveil measures in the Fall Economic Statement (FES), which could be published as early as next week, including tools to help Canadians’ tackle housing and affordability.The finance ministry, citing the International Monetary Fund, said the country has the lowest deficit and net debt-to-gross domestic product in the G7.”Canada’s economic plan is sound, sustainable, and fiscally responsible,” said Katherine Cuplinskas, a spokesperson for the ministry.Trudeau now faces his lowest poll numbers since taking power, but unlike 2015, deficit spending cannot provide relief for his declining popularity without complicating the Bank of Canada’s (BoC’s) efforts to quell inflation.Under current spending plans, the federal and provincial governments already will be adding to inflation next year, BoC Governor Tiff Macklem told reporters last week.”It’s going to be easier to get inflation down if monetary and fiscal policy are rowing in the same direction,” Macklem said.’POLITICAL DYNAMICS’The Trudeau government says it keeps its fiscal outlook anchored by putting the debt-to-GDP ratio on a downward path in the medium-term. There is scant room for additional expenditure if they want to meet this goal, especially since the economy appears to be in a shallow recession already, analysts say.Canada’s general government net debt, which includes provincial and municipal borrowing but is reduced by pension assets, is the lowest by far among the G7 countries, but its gross debt, at an estimated 106.4% of GDP in 2023, is higher than that of Germany and the UK, IMF data shows.This year the government has continued to spend on initiatives including subsidies for the electric vehicle supply chain and tax exemptions on new rental apartment construction.”They’re quickly chewing through any fiscal space that they have,” Desjardins economist Randall Bartlett said. He had estimated the government could spend about C$13 billion ($9.4 billion) each year and keep the debt-to-GDP ratio from rising, but that was before the summer.The government has not tallied this additional spending and will outline it in the upcoming FES.High T-bill issuance in recent months is another possible sign of weaker-than-expected government finances, said Simon Deeley, director of Canada rates strategy at RBC Dominion Securities Inc.If the opposition New Democrats continue supporting his minority government, Trudeau could stay in power for two more years until his term ends.But that support comes with costly demands, including legislation on a national program to pay for prescription medicines, which would cost C$11.2 billion in the first year alone, the parliamentary budget officer estimates.”If they proceed with things like pharmacare, or are much more aggressive on housing, credit rating agencies will start asking a lot of questions,” said Robert Asselin, senior vice president of policy at the Business Council of Canada and a former finance ministry official.Fitch Ratings stripped Canada of its triple-A credit rating in June 2020, citing pandemic spending. Moody’s (NYSE:MCO) Investors Service, S&P Global Ratings and DBRS Morningstar continue to give Canada their highest rating.”We’re monitoring the political dynamics in the country,” said Julia Smith, lead analyst for Canada at S&P Global Ratings, adding “there will have to be some decisions made potentially on other policy initiatives” as debt servicing costs rise and growth slows.($1 = 1.3848 Canadian dollars) More

FRANKFURT (Reuters) – European Central Bank policymakers are reviewing the interest the bank pays on government cash deposits, including a potential cut, to try and rein in mounting losses resulting from its fight against inflation, two sources told Reuters.The ECB and the 20 central banks of the countries that share the euro have started reporting large losses after raising interest rates on deposits to a record high in a bid to curb lending and price growth in the euro zone.Looking to reduce those interest payments, the euro zone’s central bankers revived a debate on the remuneration of government deposits at their policy meeting last Thursday, the two sources close to the matter said.But they put off any decision after last week’s preliminary discussion, fearing any change might backfire, the sources added. Governors worry that slashing the interest they pay on public cash would simply cause governments to switch to commercial banks, which would then park that money back at the ECB for even higher remuneration, according to the sources.An ECB spokesperson declined to comment.Policymakers will likely revisit the topic next year, the sources said, when the ECB is also due to tackle the broader issue of the excess cash sloshing around the banking system. The ECB earlier this year set a ceiling on the remuneration on deposits held by governments at euro zone central banks to equal the Euro Short-Term Rate (€STR), currently at 3.9%, minus 20 basis points.The Bundesbank, traditionally a magnet for public funds due to Germany’s perceived safety, and some others of the euro zone’s national central banks have already lowered their own rates to zero.Governments have in the meantime whittled down their deposits at central banks in the bloc from 647 billion euros ($683 billion) in July 2022 to 205 billion euros at the latest count.FINANCING STATES?Traditionally governments did not earn any interest on their cash balances at the central bank, in line with an ECB ban on financing public coffers.But years of ECB purchases of government bonds and the more recent surge in interest rates have complicated that picture.The ECB pushed its rate on commercial banks’ deposits above zero in September 2022.Fearing “an abrupt outflow” of public cash into the money market, which had been deprived of vital collateral by the ECB’s own bond purchases, the central bank started remunerating government deposits too.The issue may now turn out to be political as well as financial. Commercial banks have seen their profits soar thanks to the ECB’s high interest rates, attracting public criticism and even taxes from governments in Lithuania, Spain and Italy.Euro zone governments have only enjoyed part of that bonanza but may foot the full bill if their central bank needs a bailout, as the Dutch National Bank warned it might one day. Euro zone commercial banks earn 4.0% on the excess cash they park at their central bank, which is a whopping 3.5 trillion euros after the ECB flooded the system with money over the past decade, when it was trying to boost too-low inflation via massive bond purchases. On the other hand, governments enjoyed rich dividends from their central banks in recent years from the proceeds of those same purchases.ECB President Christine Lagarde said last week the central bank does “not have as a purpose to show profits or to cover losses”, adding policymakers had not discussed raising the share of banks’ unremunerated reserves.But the issue is plaguing central banks across rich countries. The Swiss National Bank decided on Monday to reduce the amount of interest it pays commercial banks and the Federal Reserve and Bank of England are also posting losses.($1 = 0.9472 euros) More