Economy

UK households face a heightened risk of shortages of carrots and leeks this year as the domestic farming sector struggles to adapt to more extreme weather and higher input costs, the president of the National Farmers’ Union has warned.Minette Batters said on Wednesday that rising energy bills and labour shortages meant there was a “real danger” of the UK losing its horticulture expertise and becoming “ever more” reliant on imports of food. That would leave it more vulnerable to supply-chain disruption and increase the likelihood of empty supermarket shelves, she added. “Leeks, cauliflowers, carrots, parsnips. There has been a lot less grown this year because of these challenges,” Batters told the Financial Times. “So we have become more reliant on imports . . . with weather events, disease problems, you don’t need many things to go wrong whereby you create a shortage.”Batters’ comments followed a warning by leek growers last week that extreme weather had reduced harvests by “between 15 and 30 per cent”. Tim Casey, chair of the Leek Growers’ Association, said supplies of home-grown leeks would be exhausted by April, leaving the country dependent on imports.The NFU on Wednesday urged the government to provide more support for growers in light of the recent rationing of products such as tomatoes and cucumbers by supermarkets.It reiterated its call for ministers to add farmers to the roster of “energy-intensive” industries requiring extra help with costs, which the government last week rejected.When the current energy bill relief scheme ends for businesses at the end of March, the industry will lose its price cap, with suppliers receiving a discount on their bills if costs rise above a certain threshold.The NFU also called for a five-year rolling seasonal worker scheme with no “unrealistic” cap on numbers — a pressing demand since eastern European workers stopped coming in the same numbers after Brexit. According to NFU estimates, in the first half of 2022, £60mn of food rotted in fields because of a workforce shortfall. Post-Brexit seasonal labour schemes have been plagued with problems, including claims of exploitation of Nepalese migrant workers, which led UK farmers to stop recruiting from the Himalayan country. The government has said that it will issue 45,000 visas for agricultural labourers in 2023, with a contingency of 10,000 more. Batters said post-Brexit red tape had contributed to the shortages of salad items in supermarkets over the past few weeks, which have led five of the six biggest supermarkets to introduce rationing. Her remarks contrasted with the view of Spain’s agriculture minister, who yesterday acknowledged that red tape was a problem but said it was not the reason for the shortages. “Brexit has added a level of complexity and friction and cost to those trading relationships,” said Batters. “We are a difficult marketplace. A marketplace of last resort for some [suppliers].”The Department for Environment, Food and Rural Affairs said it agreed with the NFU that “the domestic horticulture sector is crucial to the resilience of our food system”. “Although there are currently some issues with the supply of fresh vegetables, caused by the poor weather in Spain and north Africa, the UK has a highly resilient food chain and is well equipped to deal with disruption.” More

German inflation rebounded in February, defying forecasts of a drop and adding to signs that the European Central Bank will need to raise eurozone interest rates to record levels to tackle stickier than expected price pressures.The acceleration in German consumer price growth to 9.3 per cent in the year to February, up from 9.2 per cent in January, mirrors similar rises in French and Spanish inflation. Economists polled by Reuters had expected a dip in German inflation to 9 per cent.Eurozone government borrowing costs rose on the news as investors bet on further significant ECB rate increases. The German government’s two-year borrowing costs rose 0.07 percentage points to 3.21 per cent, their highest level since the 2008 financial crisis.Swap markets are pricing in a jump in the ECB’s deposit rate to 4 per cent later this year, up from the current 2.5 per cent. That would overtake the benchmark’s 2001 peak of 3.75 per cent, when the ECB was still trying to shore up the value of the newly launched euro.“The ECB still has work to do,” said Ralph Solveen, an economist at German lender Commerzbank, predicting that while inflation was likely to fall this year, it would remain high, “especially as the next wave of costs is heading for companies with much stronger wage increases on the horizon”.German energy price growth continued to slow in February but this was more than offset by increases in food and services inflation in the period, according to an initial estimate published by Destatis, the German statistical agency, on Wednesday.Consumer prices rose 1 per cent between February and January, up from 0.5 per cent from January to December — a rise that economists said showed last year’s energy shock was still feeding through into other goods and services prices. The rise in the month-on-month rate also highlighted the recent pick-up in European wage growth.The figures indicate eurozone inflation may prove more persistent than previously thought. They come ahead of the publication of February price growth data for the bloc on Thursday, which economists expect to show a slowdown to 8.2 per cent, from 8.6 per cent in January.Germany’s central bank president Joachim Nagel, one of the more hawkish members of the ECB’s rate-setting governing council, said on Wednesday he expected inflation to fall “only gradually,” warning that “above-average wage increases are likely to be increasingly reflected in prices”. Nagel warned of “a great danger” that high inflation would “continue to eat into our lives”.

The Bundesbank president said interest rates needed to be “sufficiently high” and to stay there “until we see strong enough evidence in the data and projections for inflation to return to our 2 per cent medium-term target”. The ECB has raised rates by 3 percentage points since the summer and has signalled it intends to raise borrowing costs by a further half-point this month. “To act hesitantly now, to end the tightening early, or even to relax it, would be a cardinal mistake,” Nagel said, calling on the ECB to speed up the shrinking of its balance sheet from the €15bn monthly reduction starting in March to €20bn when this pace is reviewed in July.Melanie Debono, an economist at research group Pantheon Macroeconomics, calculated that German core inflation — a measure central bankers focus on as it excludes energy and food to show underlying price pressures — rose from 5.4 per cent in January to 5.7 per cent in February. Debono forecast core inflation in the overall eurozone would also rise to a new record high of 5.5 per cent in February, predicting this would be a key factor to “support the idea of the ECB continuing its string of 50 basis point rate hikes into the start of the second quarter”. More

Viruses thrive on ignorance. China’s refusal to co-operate with investigations into Covid’s origins is thus self-harming. Not only does it deepen fears that China will be late in alerting the world to the next novel virus outbreak; it fans conspiracy theories that coronavirus was a Chinese plot. More than three years after Covid erupted, the world has made little progress on preparing for the next pandemic, which is probably a question of time. The fact that the US and China are ensnared in a cold war makes such transparency seem increasingly fanciful. Cold wars stem from mistrust. Global health warning systems are built on trust.Whether Covid came accidentally from a lab in Wuhan or a seafood market is almost beside the point. Last week, the US Department of Energy joined the FBI in saying it thought the virus leaked from a Chinese lab. Neither have strong confidence in that explanation, while the CIA is undecided. Other US government bodies think Covid is more likely to have come from an animal.We may never get to the bottom of this. But discovering Covid’s origins is not the real concern. Whatever their line on this one, most scientists agree that the next pandemic could come either from the wild or a laboratory. Humanity’s interest is to stop it from happening. The diplomatic freeze between the US and China is making that very difficult.America’s growing tendency to demonise China — and the fact that China keeps supplying it with material — poses a threat to global health. No part of the US political spectrum has covered itself in glory. On the left, and in much of the media, there has been a tendency to rubbish any lab leak theory as conspiracy, or even racist. This was partly in reaction to then president Donald Trump talking of “Chinese flu” and the “Wuhan virus”. The fact that Trump began the pandemic repeatedly congratulating Xi Jinping on his handling of it makes this even more bizarre.On the right, Covid was an ideal weapon to expose the perfidies of communist China. The “China lied, Americans died” line quickly took hold and has stuck. Often the same figures claiming that Beijing covered up the origins of the deadly virus, or unleashed it as a bioweapon, insisted that Covid was no worse than flu. Culture warriors are rarely overburdened with logic. Rage against them blinded liberals to the possibility that the virus may have escaped from a lab. To underline: people with no scientific background are dealing in the kind of certainty that scientists are trained to avoid. Where Americans stand on Covid largely depends on their politics. The same is true for geopolitics. It is worth stressing that the US and China were not yet in a cold war when Covid broke out. Few observers would dispute that they now are. Disease may thus be both an accelerant of a new cold war and a by-product of it. China deserves a lot of the blame. Beijing’s wild policy swings on Covid have contributed to America’s increasingly bipartisan Sinophobia. Two effects stand out. First, China gives the impression it has something to hide. It has penalised anyone claiming that it has not been transparent. Australia, which was the first country to call for an inquiry in 2020, paid the highest price, when Beijing imposed steep tariffs on a range of Australian exports. If Xi thought that killing the chicken would scare the monkey, his efforts backfired. China’s reaction made Australia more hawkish and did nothing to deter the US. China did eventually agree to a World Health Organization inquiry but closed it down after scientists requested access to the Wuhan virology lab.Second, Xi’s U-turns on Covid have damaged China’s reputation. They have abetted those who argue that US foreign policy should respond to a regime’s internal character, rather than its national interests. Whatever America’s faults, it would be hard for a democracy to suppress inquiries into a pandemic, let alone jail its whistleblowers, as China did. Joe Biden’s goal is both to co-operate and compete with China. Combining these contrary aims was always going to be a tightrope walk. It is now alarmingly hard to picture. Beijing’s reluctance to play global citizen on pandemic warning systems — on top of climate change and other common threats — means we are hearing far less from Washington about co-operating with China and far more about confronting it. If past is prologue, the next pandemic will probably come from China. This is simply a function of population density. It is understandable that Beijing reacted defensively to any hint that it caused a disease that claimed close to 7mn lives and cost the world trillions of dollars. But it is self-defeating. Ensuring the scientific trail goes cold guarantees the focus will be on the nature of China’s political system.The cost of Covid can also be measured in damage to global psychology, including a form of diplomatic long Covid. The world’s superpower and its rising great power are both now working from home and nourishing paranoia about each other. When we look back on Covid that may be its biggest cost. [email protected] More

SAN FRANCISCO (Reuters) – U.S. electric vehicle startups are seeing an unsettling trend, with demand evaporating as potential customers look for deals or hold off on purchases altogether.Quarterly reports from several companies indicated weakening interest for many of their newer products, a bad sign for companies wrestling with high costs.Luxury sedan maker Lucid, pickup and SUV maker Rivian and electric semi truck maker Nikola all flagged economic pressure, with industry experts saying price cuts by industry behemoth Tesla (NASDAQ:TSLA) and the availability of cheaper EV models from traditional automakers sapped demand for the startups’ new vehicles. An exception was Fisker, which has barely kicked off production of a $37,499 SUV. That is one of the cheapest prices in the EV group, and Fisker, which has produced only 56 vehicles so far, saw orders improve. The Model Y from Tesla retails for at least $54,990 after recent price cuts, Rivian’s R1S SUV is priced around $78,000 and Lucid sells its Air Pure sedans for about $87,400. How EV prices stack up against Tesla’s cars https://www.reuters.com/graphics/TESLA-ELECTRIC/STARTUPS/zdpxdrgrzpx/chart.png “EV startups have this sort of double whammy,” Danni Hewson, head of financial analysis at British investment platform AJ Bell told Reuters. “On the one hand, competition and rate hikes, meaning money ain’t so cheap anymore. And on the other hand, inflation, creating a situation where a consumer is thinking hard about the choices that they make now.”New federal incentives of up to $7,500 for electric cars made in America raised expectations that demand in the sector would jump, although conditions for what counts as U.S.-made have tempered enthusiasm.Tesla also ignited a price war this year by aggressively slashing vehicle prices, financially secure in its industry-leading profit margins. By contrast, Lucid reported a slump in reservations to over 28,000 as of Feb. 21 from 34,000 on Nov. 7, adding it would not disclose the number going ahead. Nikola said issues hurting demand for its battery-powered trucks would not ease any time soon.Rivian forecast 2023 production well below analyst estimates on Tuesday, citing nagging supply chain shortages, sending shares down 8% in after-hours trading. “Certainly, what we’re witnessing in the macro and what we’re seeing in terms of interest rate is … across the industry, having an effective moderating overall demand,” Rivian Chief Executive R.J. Scaringe said on a Tuesday conference call.Rivian did not provide current orders, a number they have updated every quarter. Lucid and Nikola shares have fallen about 9% and 5% respectively since releasing results, while Fisker has jumped 31% since reporting a rise in orders. Venture capitalist Cassie Bowe, a partner at Energy Impact Partners, sees demand picking up from next year as the current sentiment forces EV makers to cut prices and introduce lower-priced models this year, and as the supply chain improves.Bowe oversees investments in a host of startups, including EV charging companies, and said she was looking at investment opportunities in EV makers. But the four companies have already lost a combined $84 billion in value over the past year, given production woes and supply chain disruptions.”Across the world, there’s a little dose of realism that’s coming in saying, maybe the targets that have been set up for EVs aren’t realistic and cannot be achieved,” said Bala Lakshman, a partner at KPMG’s automotive strategy advisory. EV startup stocks fall in the past year https://www.reuters.com/graphics/ELECTRIC-STOCKS/zdvxdxqngvx/Pasted%20image%201677629806035.png More

The fine comes amid growing international concern over the Chinese short video-sharing app and who accesses its user data. Government institutions in Europe and Canada banned the app from staff phones and the United States is discussing a bill giving President Joe Biden the power to ban TikTok.The KVKK said it had decided to fine the company for “not taking all necessary measures to ensure the appropriate level of security to prevent unlawful processing of personal data.”The data protection authority also said in a statement on its website that TikTok should translate its Terms of Service into Turkish and update its privacy and cookies policy texts in line with the country’s regulations.TikTok said they are looking into the Turkish regulator’s fine, adding that they remain committed to providing a safe and protected platform for users.”Our uncompromising commitment is to provide all users with the peace of mind they deserve by ensuring the safety, security and protection of their personal information – because their trust matters to us,” a TikTok spokesperson said.Turkey has the ninth most users of TikTok in the world, with some 30 million accounts on the social media platform, data from Statista showed.($1 = 18.8867 liras) More

BENGALURU (Reuters) – The drop in home prices in Canada this year will be steeper than forecast three months ago but mild compared with an historic run-up during the COVID pandemic, leaving many first-time buyers still priced out of the market, a Reuters poll showed.Following nearly a year of mostly aggressive interest rate rises from near-zero that the Bank of Canada has only recently set on pause at 4.50%, mortgage rates have soared over 170 basis points, restricting activity in the once red-hot market.Average home prices in Canada have already fallen roughly 15.0% from their early 2022 peak and are forecast to drop 12.0% this year, according to the median view from a Feb 15-28 poll of 13 housing experts. That is slightly more severe than the 10.0% fall predicted in a November survey. But that expected decline is dwarfed by the more than 50% rise during the height of the pandemic, and is a very small fraction of prices that roughly tripled over the past two decades, suggesting the dream of owning a home will remain out of reach for many prospective first time buyers.While most analysts said such a fall in house prices would improve affordability somewhat, others said they needed to drop a lot more to make any difference.”We think in normal times a 30% house price decline would be a crash, but in this context of what we’re coming from with the two-year surge, it’s a necessary correction to restore affordability,” said Tony Stillo, director of economics for Canada at Oxford Economics.Asked how much average house prices would fall from peak to trough, the median response was 20.0%, more than the 17.5% predicted in the November poll. The range of forecasts varied from 12.5% to 30.0%.House prices in Toronto and Vancouver, front runners in the recent house price boom, were forecast to drop 15% and 12%, respectively, in 2023, compared with rises of over 50% and 30% during the pandemic. Without a large correction, prospective homeowners will continue renting. A strong majority, 7 of 10 analysts, said home ownership would decrease over the next two to three years.”We view the drop in average prices as only offsetting the run-up in mortgage rates, so net affordability really hasn’t improved in the past year,” said BMO Capital Markets chief economist Douglas Porter. “Of course, the Canadian housing market is rarely ‘affordable’ for many potential first-time buyers.”Urban rent affordability is also set to worsen over the next two years, according to eight of 11 respondents, with rents kept elevated through ever-expanding demand from immigration and supply not keeping pace. “Strong rental demand and low vacancy rates will maintain intense upward pressure on rents,” said Robert Hogue, assistant chief economist at RBC.(For other stories from the Reuters quarterly housing market polls:) (Polling by Milounee Purohit and Mumal Rathore; Editing by Hari Kishan, Ross Finley and Toby Chopra) More

The local IMACEC index, a close proxy of gross domestic product (GDP), rose 0.4% in January from the same month last year, the central bank said on Wednesday, while economists polled by Reuters had expected a 0.5% fall.Chile’s overall economy has been facing a slowdown after a rapid post-pandemic recovery, with high interest rates in place to combat soaring consumer prices affecting economic growth.The positive January result alone is unlikely to bring major changes to that scenario, with government forecasts released earlier this month pointing to a 0.7% economic contraction in 2023, but showed some economic resilience in the Andean country.”This is a very good start to the year…but leading activity indicators, hard data and the extremely low level of consumer confidence suggest growth momentum will remain subpar in the near term,” said Andres Abadia, chief economist for Latin America at Pantheon Macroeconomics.He expects activity to gather speed from late second quarter onwards, driven by falling inflation and interest rates.Traders polled by the central bank see the central bank kicking off a monetary easing cycle in May, when policymakers are expected to cut the benchmark interest rate to 11% from the current 11.25%. Rates would then fall to 6.5% within 12 months, the poll showed.In January, when compared with the previous month, the IMACEC index rose 0.5%, the central bank said.The year-on-year results was explained by services and mining, which were partly offset by a drop in trade, while the monthly increase was driven by basically all groups surveyed, it added. The IMACEC accounts for nearly 90% of the South American country’s GDP. More

UK house prices registered the largest decline in more than a decade last month as higher interest rates and the wider cost of living crisis hit demand, according to a closely watched survey.Property prices fell 1.1 per cent in February compared with the same month last year, the biggest drop since November 2012, and a reverse of a 1.1 per cent increase in January, mortgage provider Nationwide said on Wednesday. Economists polled by Reuters had expected a fall of 0.9 per cent.It was the first annual contraction since June 2020 when the housing market was effectively shut during the Covid-19 lockdown. Robert Gardner, Nationwide’s chief economist, said the drop in prices reflected low buyer confidence “as well as the cumulative impact of the financial pressures that have been weighing on households for some time”.The weak state of the housing market was underlined by separate Bank of England data that showed mortgage approvals for house purchases fell to 39,600 in January, down from 40,500 the previous month and the lowest since May 2020. Excluding the onset of the Covid-19 pandemic, this was the lowest level of approvals since January 2009, when Britain was mired in recession following the banking crisis.Separately, Persimmon, one of the UK’s largest housebuilders, warned on Wednesday that sales of new homes could fall as much as 40 per cent this year if high mortgage rates and economic uncertainty continued to depress buyer demand.The average interest rate on new mortgages rose to 3.9 per cent in January, the highest since 2010, BoE data showed, with the markets still anticipating further rises in interest rates as the central bank seeks to rein in inflation.The average house price fell to £257,406 in February, down from a peak of £273,751 in August, but still £41,000 above level of January 2020, before the pandemic hit.House prices were down 0.5 per cent on January, the sixth consecutive monthly decline since the August peak, marking the longest period of contraction since 2009.Adjusted for inflation, house prices have fallen 11 per cent from their peak and are below their pre-pandemic level, which compares with a fall in real terms of 19 per cent between 2007 and 2009, according to Andrew Wishart, senior property economist at Capital Economics.Luke Thompson, mortgage adviser at PAB Wealth Management, said: “[Sellers] have had to become more accustomed to the fact that they may not achieve the full asking price for their property as we aren’t seeing multiple people bidding for a property like we were at the end of 2021 and into 2022.”Many economists think the slowdown in the property market will continue for some months. “It will be hard for the market to regain much momentum in the near term since economic headwinds look set to remain relatively strong,” Gardner said.Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said house prices would “continue to decline over the next six months or so, resulting in a peak-to-trough fall of about 8 per cent”. However, she expected house prices to return to expansion in 2024 if the BoE started reducing interest rates and energy price pressures eased. Nationwide tracks house prices based on the mortgage it issues, providing the most timely measure of property values. More