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    Omicron Is an Economic Threat, but Inflation Is Worse, Central Bankers Say

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    Within 24 hours, the Federal Reserve, Bank of England and European Central Bank all stepped forward to deal with price increases.There is still a lot scientists do not know about Omicron. There is cautious optimism — but no certainty — about the effectiveness of vaccines against this fast-spreading variant of the coronavirus, and experts do not fully understand what it means for public health or the economy.But central banks have concluded they don’t have the luxury of waiting to find out.Facing surging inflation, three of the world’s most influential central banks — the Federal Reserve, Bank of England and European Central Bank — took decisive steps within 24 hours of each other to look past Omicron’s economic uncertainty. On Thursday, Britain’s central bank unexpectedly raised interest rates for the first time in more than three years as a way to curb inflation that has reached a 10-year high. The eurozone’s central bank confirmed it would stop purchases under a bond-buying program in March. The day before, the Fed projected three interest rate increases next year and said it would accelerate the wind down its own bond-buying program.The perception that the Bank of England would “view the outbreak of the Omicron variant with greater concern than it actually did” caused the surprise in financial markets, ” Philip Shaw, an economist at Investec in London, wrote in a note to clients. The Fed also “carried on regardless” with its tightening plans, he added.Aside from Omicron, the central banks were running out of reasons to continue emergency levels of monetary stimulus designed to keep money flowing through financial markets and to keep lending to businesses and households robust throughout the pandemic. The drastic measures of the past two years had done the job — and then some: Inflation is at a nearly 40-year high in the United States; in the eurozone it is the highest since records began in 1997; and price rises in Britain have consistently exceeded expectations.It is still unknown how Omicron will affect the economic recovery. Vaccine makers are still testing their shots against the variant.Alessandro Grassani for The New York TimesThe heads of all three central banks have separately decided that the price gains won’t be as temporary as they once thought, as supply chains take a while to untangle and energy prices pick up again.Andrew Bailey, the governor of the Bank of England, said that policymakers in Britain were seeing things that could threaten inflation in the medium-term. “So that’s why we have to act,” he said on Thursday.“We don’t know, of course, a lot about Omicron at the moment,” he added. It could slow the economy, and already there are canceled holiday parties, fewer restaurant bookings, less retail foot traffic and signs that more people are staying home. But Omicron could also worsen inflationary pressures, he said. “And that’s, I’m afraid, a very important factor for us.”Already, price gains have popped higher this year as snarled supply chains and goods shortages have raised shipping and manufacturing costs. Depending on the severity of Omicron and how governments react, the variant could cause factories to shut down and could keep supply chains in disarray and workers at home, prolonging goods and labor shortages and pushing inflation higher.At the same time, policymakers are assuming the impact on the economy will be milder than previous waves of the virus. With each surge in cases and reintroduction of restrictions, the dent to the economy has gotten smaller and smaller. This would lessen the risk that the central banks end up tightening monetary policy into a downturn.Still, it is an awkward balancing act. On the same day the Bank of England raised rates, its staff cut half a percentage point from their growth forecasts for the final three months of the year. By the end of 2021, the British economy will still be 1.5 percent smaller than its prepandemic size, the bank estimated.Christine Lagarde, the president of the European Central Bank, said Omicron had created uncertainty in the face of a strong recovery.Pool photo by Ronald Wittek“From a macroeconomic perspective, it’s unlikely that the fourth wave is going to have as meaningful an impact as we’ve seen even during last winter,” said Dean Turner, an economist at UBS Global Wealth Management.The economic recoveries from the pandemic, though bumpy, haven’t been derailed yet. Unemployment rates are falling in Europe and the United States, and businesses are complaining that is difficult to hire staff. That, combined with the burst of inflation, was enough to bolster the case for some monetary tightening.“There’s a lot of uncertainty with the new variant, and it’s not clear how big the effects would be on either inflation or growth or hiring,” Jerome H. Powell, the Fed chair, said on Wednesday. But there is a “real risk” inflation could be more persistent, he also said, which was part of the reason the bank sped up its plans to taper its bond purchases.Ending the Fed’s bond purchases sooner would give the central bank room to react to a wider range of economic outcomes next year, Mr. Powell said.“The data is pretty glaring,” Mr. Turner of UBS said of recent statistics on inflation and employment. “There’s only so much caution you can get away with,” before central banks need to take action, he said.Omicron has created uncertainty in the face of a strong recovery, Christine Lagarde, the president of the European Central Bank said on Thursday after she outlined how the bank would end its largest pandemic-era stimulus measure.Vaccine-makers are still testing their shots against Omicron and medical officials are encouraging restraint when it comes to socializing rather than implementing new lockdowns, but central bankers are marching ahead because time isn’t on their side. The effect of monetary policy decisions on the wider economy isn’t immediate.The Bank of England is forecasting that inflation will peak at 6 percent in April, three times the central bank’s target. Within such a short time frame, there is little policymakers can do to stop that from happening, but they can try to signal to businesses and unions setting wages that they will act to stop higher inflation from becoming entrenched, said Paul Mortimer-Lee, the deputy director of the National Institute of Economic and Social Research in London. This may prevent higher prices from spilling over into significantly higher wages, which could cause businesses to raise prices even more.While all three central banks are facing similar problems with high inflation and are keeping watch over wage negotiations, their future challenges are different.The Federal Reserve and Bank of England are worried about the persistence of high inflation. For the European Central Bank, inflation in the medium term is too low, not too high. It is still forecasting inflation to be below its 2 percent target in 2023 and 2024. To help reach that target in coming years, the central bank will increase the size of an older bond-buying program beginning in April, after purchases end in the larger, pandemic-era program. This is to avoid “a brutal transition,” Ms. Lagarde said.She warned against drawing strong comparisons between Britain, the United States and the eurozone economies.“Those three economies are at a completely different states of the cycle,” she said. “We are in a different universe and environment,” even though there might be some spillover effects across countries from the actions each central bank takes.Melissa Eddy More

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    Cambo, an Oil Project off Scotland, Is Halted by Owner

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    An oil project off the coast of Scotland that had become a test of Britain’s environmental credentials was shelved by its main owner on Friday.The decision to halt Cambo, as the oil field is known, is a huge win for environmental groups like Greenpeace, and a blow to the North Sea oil industry. It comes just over a week after Shell, which owns 30 percent of the project, pulled out of the investment.“We are pausing the development while we evaluate next steps,” said Siccar Point Energy, a London-based company that is backed by private equity firms, including Blackstone, the financial management giant.Siccar Point said it had planned to invest $2.6 billion in Cambo, and had already spent $190 million on the field since acquiring it in 2017. The firm said that developing Cambo, a potentially valuable source of oil and natural gas, would have created 1,000 jobs.Environmental groups, on the other hand, said that starting new drilling projects was not compatible with Britain’s goals on tackling climate change and reaching net zero greenhouse gas emissions by 2050. The British government has been considering whether to let Cambo go ahead.Located northwest of Scotland’s Shetland Islands, Cambo became a target of protests, including at the recent United Nations climate summit in Glasgow. Scotland’s top politician, First Minister Nicola Sturgeon, has said she did not think it should be given a green light.On Dec. 2, Shell said it would not go ahead with investment because the economic case was not strong enough.Shell’s decision, which was also prompted by the potential for delays from protests and lawsuits, led Siccar Point to decide it could not “progress on the originally planned time scale,” the firm said. More

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    New Virus Restrictions in Britain Worry Businesses

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    “None of it’s going to be good,” an economist warns as people are likely to retreat from some aspects of social life as Covid measures tighten.LONDON — On Thursday morning, a group of 50 called to cancel their holiday party booked for that evening at Luc’s Brasserie, a French restaurant in the financial district of Britain’s capital. That same morning, a group of 21 canceled their party too, also for Thursday night.The previous night, Prime Minister Boris Johnson announced that stricter Covid measures were coming, and the impact was immediate for Darrin Jacobs, the owner of Luc’s. There had been a “multitude of cancellations,” he said.But thanks to a waiting list of reservations, he said, the restaurant was still fully booked until Christmas. And many of the canceled bookings had optimistically rescheduled their celebrations for early next year.“We won’t lose the business, we’ll just move the business on,” Mr. Jacobs said. But “it’s not easy because we’ve already bought food and moved staff around,” he said.For months, businesses across Britain have been desperately trying to maneuver around supply chain disruptions, labor shortages and rising costs as they emerged from various stages of lockdown.Offices reopened, which filled up commuter buses and trains; restaurants and pubs advertised to host holiday parties; and lines grew longer at city center coffee shops.Now, the emergence of the fast-spreading Omicron variant has unexpectedly dealt those efforts a blow. The government has revived coronavirus restrictions that are likely to weigh on hospitality and travel businesses during the critical holiday season and put a dent in the economy.Some 70 percent of British workers said they had traveled to work at least some days each week in early December, according to the Office for National Statistics.Daniel Leal/Agence France-Presse — Getty Images“I don’t know where this is going to go next week,” Mr. Jacobs said. “I think this is a tip of the iceberg-type scenario and it may get a lot worse next week and, if that’s the case, we’ll really have to scale it back.”For now, he’s still cautiously optimistic. But his business relies on people who work in nearby offices and walk to his restaurant in Leadenhall Market, especially several insurance companies. On Thursday, Mr. Jacobs heard that two large companies were closing their offices again.In England beginning Friday, face masks will be required in most indoor public places including cinemas and theaters. Starting Monday, people who can work from home should. And starting in the middle of next week, passes showing vaccination or a recent negative Covid test will be required for large events and nightclubs, Mr. Johnson announced this week. The rules will be voted on in Parliament next week. Scotland, Wales and Northern Ireland have set their own measures, which are slightly stricter.“Unless you go to a full or partial lockdown, the effect of the measures themselves will be rather small,” said Paul Mortimer-Lee, the deputy director of the National Institute of Economic and Social Research in London. “What will be hurting the economy is individuals’ responses.” People are likely to take more precautions to protect themselves from the virus, especially by socializing less.While the rules are relatively light, for some businesses this will be an unwelcome retreat.Before the Omicron variant was discovered, the British economy was losing some momentum while prices were rising rapidly, putting inflation at its highest level in nearly a decade. Gross domestic product grew 1.3 percent in the third quarter, down from 5.5 percent in the previous three months. And that growth was driven by spending on services, especially in hotels, restaurants and entertainment as the last of the major pandemic restrictions were lifted in the summer. In October, economic expansion slowed sharply, to just 0.1 percent from the previous month.Now, there are early indications that restaurant reservations are declining and Christmas parties are being canceled.Restaurants, cafes and shops primarily serving office workers were contending with the lost trade from hybrid working but had at least seen a notable return of workers. Some 70 percent of British workers said they had traveled to work at least some days each week in early December, according to the Office for National Statistics, up from about 50 percent earlier in the year, when the country was under a strict lockdown.Restaurants, bars and hotels helped propel growth as lockdowns were lifted earlier in the year. New measures have added to concerns for the coming months.Facundo Arrizabalaga/EPA, via ShutterstockSales at Pret A Manger, the coffee and sandwich chain whose shops tend to be clustered around office hubs and transport locations, only returned to prepandemic levels about two weeks ago. Now those sales are starting to slip again.“Christmas has been canceled for many City shops, restaurants, pubs and other businesses that rely on footfall from workers in nearby offices,” Catherine McGuinness, the policy chairwoman of the City of London Corporation, which governs the capital’s financial district, said in a statement.Her organization will encourage workers and businesses to follow the new rules but said the government needed to lay out a road map for lifting the restrictions again in the new year, Ms. McGuinness said.The new measures will also complicate the next steps for the Bank of England. Policymakers at the central bank had been preparing to raise interest rates in response to inflation, provided unemployment remained low. Some analysts believed an increase could come as soon as next week. But the potential for Omicron to further slow the economy makes it harder to justify tightening monetary policy.The extra uncertainty could dampen productivity and employment growth, according to Mr. Mortimer-Lee. It’s likely to make companies more cautious about hiring and investment, especially businesses that rely on face-to-face interactions, like restaurants. Also, high case numbers will keep children out of schools and parents away from their jobs.The City of London financial district. Starting next week, people who can work from home should. Henry Nicholls/Reuters“It’s those millions of individual decisions, rather than Boris Johnson’s decision, that’s going to affect the economy,” said Mr. Mortimer-Lee. “And none of it’s going to be good.”Even before the latest measures, hotels were seeing about a fifth of their corporate bookings canceled, according to UKHospitality, an industry lobby group, after the government required travelers into Britain to take a Covid test within two days of arriving, and isolate until receiving the results. Christmas bookings weren’t as strong as they traditionally are for hospitality businesses in a quarter that usually brings in about 40 percent of the industry’s annual revenue.And so, the industry is asking for relief from business rates (a type of tax on commercial properties), more grants, rent protection and an extension of the reductions on VAT, a sales tax. “Anything less would prove catastrophic,” Kate Nicholls, the chief executive of UKHospitality, said in a statement.The latest measures have been particularly disappointing for nightclubs, one of the last businesses allowed to reopen earlier this year. The Night Time Industries Association said Covid passes have been damaging to their industry in the parts of Britain where they were already in place.Michael Kill, the chief executive of the lobbying group, said businesses were experiencing a “honeymoon period” since reopening in the summer and were trying to rebuild cash reserves before the quieter months at the start of the year.“We’re now seeing some concern around cancellations and ticket purchases hesitancy,” Mr. Kill said. “These sorts of things that are leaving people in a vulnerable position, because many of them stocked up and purchased and staffed for a busy Christmas period.”The group accused the government of enacting the changes to draw attention away from public fury over accusations that the prime minister’s staff broke lockdown rules by holding an office party last Christmas.“It feels that nightclubs and bars have been thrown under the bus by the prime minister for him to save his own skin,” Mr. Kill said in a statement on Wednesday. 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    How Omicron Could Knock Economic Recovery Off Track

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    The latest zigzag in the pandemic has already curtailed travel, but its broader impact on growth and inflation isn’t likely to be known for several weeks.LONDON — This week, Marisha Wallace finally had to admit that her planned five-day ski holiday in Switzerland in mid-December was not salvageable: The Swiss government’s sudden decision to impose a 10-day quarantine on some international travelers meant she wouldn’t be able to leave her hotel or return home to London on her scheduled flight.“It’s the way of the world right now,” said Ms. Wallace, an actress and a singer. “You can’t plan anymore.”That provisional state, amplified across the world, has left the still-fragile economy in a state of suspense as spiking coronavirus infections and the new variant Omicron have popped up around the globe.“There’s no way to know how bad it will get,” said Ángel Talavera, head of European economics at Oxford Economics.The forecasting firm has sketched out three scenarios, including one that predicts no discernible effect on economic growth and one severe enough to slash next year’s in half. It will take several weeks before there is more clarity, Oxford concluded.The current round of restrictions has already reduced travel and dampened consumer confidence. A virulent, vaccine-resistant strain could send the economy into a tailspin again, while a mild one could leave health care systems unburdened and allow the recovery to get back on track.As a report released Wednesday from the Organization for Economic Cooperation and Development showed, although growth has been uneven, the world economy this year bounced back more quickly and strongly than had been anticipated. The report, compiled largely before the latest coronavirus news, nevertheless warned that growth was projected to slow: in the eurozone, to 4.3 percent next year from 5.2 percent in 2021; and in the United States, to 3.7 percent in 2022 from 5.6 percent.The organization characterized its outlook as “cautiously optimistic.” But it reiterated how much economic fortunes are inextricably tied to the coronavirus: “The economic policy priority is to get people vaccinated,” the report concluded.Travelers from South Africa being tested at the Amsterdam airport on Tuesday.Remko De Waal/Anp/Agence France-Presse — Getty ImagesIndeed, Omicron’s threat to the recovery is just the latest in a series of zigzags that the world economy has endured since the coronavirus began its march across continents last year. Hopes that an ebbing pandemic would permit daily life and commerce to return to normal have been repeatedly frustrated by the virus.Even before this latest variant was discovered, a fourth wave of infections transformed Europe into a Covid hot spot and prompted new restrictions like lockdowns in the Netherlands and Austria.During earlier outbreaks, trillions in government assistance helped quickly resuscitate the struggling U.S. and European economies. It also brought some unexpected side effects. Combined with pent-up demand, that support helped produce a shortage of labor and materials and rising inflation.Given how much debt was racked up in the past 18 months, such aid is unlikely to recur even with a sharp downturn — and neither are wholesale closures. Vaccines provide some protection, and many people say they are unwilling to go back into hibernation.People and business alike have shifted into a wait-and-see mode. “A lot of things do seem like they are on hold, like labor market or overall consumption decisions,” said Nick Bunker, director of economic research for the job site Indeed.How that will affect unemployment levels and inflation rates is unclear. Jerome H. Powell, the Federal Reserve chair, indicated on Tuesday that concern about stubborn inflation was growing. The O.E.C.D. also warned that inflation could be higher and last longer than originally anticipated.Omicron’s appearance just adds to the uncertainty, Laurence Boone, the organization’s chief economist, said in an interview.The Nativity Hotel in Bethlehem. Israel on Sunday decided to close its borders to foreign tourists after the Omicron variant was detected.Hazem Bader/Agence France-Presse — Getty Images“If it’s something we can cope with, like the virus we have so far, then it may prolong disruptions of the supply chain, and inflation could take longer to sort out,” she said. But if the new variant causes wider shutdowns and plunging confidence, she added, it could reduce the spending binge and dampen rising prices.In recent days, governments have reacted with a confusing hodgepodge of stern warnings, travel bans, mask mandates and testing rules that further cloud the economic outlook. That patchwork response combined with people’s varying tolerance for risk means that, at least in the short term, the virus’s latest swerves will have a vastly different effect depending on where you are and what you do.In France, Luna Park, an annual one-month amusement fair held in the southern city of Nice and slated to open this weekend, was called off after the government suddenly requisitioned the massive warehouse where roller coasters, shooting galleries and merry-go-rounds were being set up in order to convert the space to an emergency vaccination center.“Today I find myself trying to save my company, and I’m not sure that I can,” said Serge Paillon, park’s owner. He feared he would face huge losses, including 500,000 euros (about $566,000) he had already invested in the event, as well as refunds for tickets that had been on sale for several monthsMr. Paillon furloughed 20 employees. Another 200 festival workers who were coming from around the country to manage the 60 games and rides were told to stay home.“For a year and a half, it was already a disaster,” Mr. Paillon said. “And now it’s starting again.”Israel’s decision on Saturday to shut its borders to all foreign tourists for two weeks is likely to reduce the number of tourists in Israel and the occupied territories this December by up to 40,000, or nearly 60 percent of what was expected, according to a government estimate.Wiatt F. Bowers had to cancel his trip to Tel Aviv, the fifth time in 18 months he has had to scrap a planned trip to Israel.Agnes Lopez for The New York TimesWiatt F. Bowers, an urban planner, had planned to leave Jacksonville, Fla., for Tel Aviv on Wednesday but had to cancel — the fifth time in 18 months that he had to scrap a planned trip to Israel. He will rebook, but doesn’t know when.Foreign tourism, which brought a record 4.55 million tourists to Israel in 2019, had already nearly vanished. Between March 2020 and September 2021, nonresident foreigners were barred from entering Israel — and, by extension, the occupied territories, where entry and exit are controlled by Israel.In Bethlehem, where tourism is the main industry, income consequently fell more than 50 percent, said the mayor, Anton Salman, in a phone interview.Elias al-Arja, the chief of the Arab Hotel Association, which represents about 100 Palestinian hotels in the occupied territories, said he was concerned less about the short-term effect of the sudden travel ban than about the long-term message of unpredictability it sent to potential visitors.“The disaster isn’t the groups who canceled over the next two weeks,” Mr. al-Arja said. “How can I convince people to come to the Holy Land after we promised them that you can come, but then the government closes the border?”Reluctance to travel, though, could mean an upswing in other sectors if the new variant is not as harmful as people fear. Jessica Moulton, a senior partner at McKinsey & Company in London, said previous spending patterns during the pandemic showed that some money people would otherwise use for travel would instead be spent on dining.She estimated that the roughly $40 billion that British consumers saved on travel last summer was used for shopping and eating out.At the moment, Ms. Moulton said, “to the extent that Omicron decreases travel, which will happen as we head into Christmas, that will benefit restaurants.”Even before the latest variant was discovered, a fourth wave of infections transformed Europe into a Covid hot spot and prompted new restrictions like lockdowns in Amsterdam.Peter Dejong/Associated PressIn Switzerland, where travelers from Britain and 22 other countries must now quarantine, the effect of the policy change on hotels was immediate.“The majority of travelers from England — between 80 to 90 percent — have already canceled,” said Andreas Züllig, head of HotellerieSuisse, the Swiss hotel association.Ms. Wallace, who canceled her trip to the Cambrian Hotel in Adelboden, was one of several people who changed their reservations at the hotel after the Swiss government made its announcement on Friday, just one week before the slopes open.“This obviously has an impact on our very important winter and Christmas business,” said Anke Lock, the Cambrian’s manager, who estimated that 20 percent of the hotel’s December bookings were at risk.For now, though, most guests are watching and waiting, Ms. Lock said: “We’ve changed the bookings from guaranteed to tentative.”Extreme uncertainty about the economy may turn out to be the only certainty.Patrick Kingsley More

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    U.K. Inflation Hits a 10-Year High

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    Inflation in Britain rose to its highest level in nearly a decade in October after soaring energy prices hit household bills.The Consumer Price Index rose to 4.2 percent from a year earlier, the highest since November 2011, and up from 3.1 percent in September, the Office for National Statistics said on Wednesday. The price increases were more than twice the central bank’s target of 2 percent, increasing the likelihood that policymakers will go ahead with the interest rate increases they have signaled are coming.The biggest contributor to higher inflation was a surge in energy costs, including wholesale natural gas, which has caused nearly two dozen energy suppliers in Britain to collapse and disrupted manufacturers. The cap on energy bills, which protects about 15 million households, was raised 12 percent sharply in October.Other large contributors were higher prices for gasoline and at hotels and restaurants, the statistics agency said.The Bank of England has said it expects inflation to peak at about 5 percent in the spring. “This period of higher inflation is likely to be temporary,” Andrew Bailey, the central bank’s governor, said this month. But there was “no fixed unit of time” that defines transitory, he said.The central bank said that “it would be necessary over coming months” to raise interest rates if the economic data played out as policymakers anticipate, especially if the end of the government’s furlough program doesn’t result in a large increase in unemployment. In the three months through September, the unemployment rate was 4.3 percent, 0.2 of a percentage point lower than in the three months through July, and early payroll data indicated that only a small number of people lost their jobs in October when the furlough program expired.As the global economy emerged from successive lockdowns over the past year, supply bottlenecks, labor market shortages and other shortages have disrupted supply chains around the world. Policymakers are now warning that the supply problems and the higher prices that result will last longer than they initially expected, adding pressure on central bankers to act more aggressively to stop inflation from getting out of their control.In the United States, the Consumer Price Index jumped to 6.2 percent in October, the fastest annual increase since 1990, and prices rose 4.1 percent in the eurozone last month, the fastest in 13 years. In China, the prices wholesalers pay to producers climbed to the highest in 26 years amid rising commodity prices and power shortages. More

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    U.K. Braces for a Difficult Holiday Season Due to Shortages

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    Military personnel are driving transport trucks. Pig farmers may start culling their stock. Even the government says shortages will affect Christmas, as Britons brace for a challenging winter.BUNGAY, England — To understand the deep sense of anxiety Britons feel about the supply shortages currently afflicting the nation — and threatening disruptions to the Christmas dinner table — one need only travel to Simon Watchorn’s pig farm, about two hours northeast of London.In 2014, Mr. Watchorn was England’s pig farmer of the year, with a thriving business. But this year, he said, the outlook for the fall is bleak.Slaughterhouses are understaffed and are processing a smaller-than-usual number of pigs. There is a shortage of drivers to move pork to grocery stores and butcher shops. And there are fewer butchers to prepare the meat for consumers.If the problems persist, Mr. Watchorn may have to start culling some of his 7,500 pigs by the end of next month. Pigs grow about 15 pounds each week, and after a certain point, they are too big for slaughterhouses to process.Mr. Watchorn said the last time he can remember things being this bad was during an outbreak of mad cow disease in the late 1990s. “It’s a muddle,” he said. “It’s worse than a muddle, it’s a disaster, and I don’t know when it’s going to finish.”Mr. Watchorn, 66, is one of many producers of food and other goods warning of a daunting winter ahead for Britons. Shortages continued to bedevil the British economy on Monday as gas stations in London and in southeastern England reported trouble getting fuel, and the government began deploying military personnel to help ease the lack of drivers. Supermarket consortiums say pressures from rising transport costs, labor shortages and commodity costs are already pushing prices higher and will likely continue to do so.The chancellor of the Exchequer, Rishi Sunak, acknowledged on BBC Radio on Monday that there will shortages at Christmastime. He said the government was doing “everything we can” to mitigate the supply chain issues but admitted there was no “magic wand.”Mr. Watchorn, whose farm is near the town of Bungay, England, northeast of London, is convinced that Brexit is responsible for the current distress.Andrew Testa for The New York TimesMr. Watchorn, who prides himself on running a farm where all adult stock live outside, is convinced that Brexit is responsible for the current distress, saying the exodus of European workers from Britain had led to damaging labor shortages. The British people voted to break with the European Union to reduce immigration, he believes, without realizing how damaging a cliff-edge exit from the bloc would be for businesses.“They didn’t vote for supermarket shortages,” he said on Sunday as dozens of pigs gathered around him to be fed. “They didn’t understand that was going to be a probable, likely outcome.”Mr. Sunak and other Conservative leaders say supply problems are a global issue largely attributable to the pandemic and not limited to Britain. Indeed, businesses around the world are facing rising energy prices, product shortages and labor shortages.But the challenges in Britain are acute, with many industries facing a shortage of workers — in part because of the pandemic, but also, many business owners say, because of stricter immigration laws that came into effect after Britain’s exit from the European Union on Jan. 1.“We are desperately trying to find workers,” said Jon Hare, a spokesman for the British Meat Processors Association, which estimates that Britain is short of about 25,000 butchers and processing plant workers.He called on the government to issue more short-term visas to foreign workers to help the industry with the transition outside of the European Union. “There are only so many people you can take out of the production system before the system starts breaking down,” he said.A shopper confronted sparse food shelves in a Co-op supermarket in Harpenden, England, in September.Peter Cziborra/ReutersThe specter of disruptions to the holiday season is particularly resonant in Britain, where Christmas isn’t Christmas without traditional foods. And yet British meat producers say the dinner table could be lacking some of the seasonal specialties that people count on every December. That includes pigs in a blanket (bacon-wrapped sausages that are different from the American version), glazed ham and Yorkshire pudding, which require additional labor to prepare, Mr. Hare said.The National Pig Association has warned that about 120,000 pigs are backed up on farms because of a lack of slaughterhouse workers, and the British Poultry Council said it expected to cut Christmas turkey production by 20 percent. On Monday, protesters gathered outside of the Conservative Party conference in Manchester with signs that said “All we want for Christmas is our pigs in a blanket” and “#saveourbacon.”Consumers are already anticipating shortages. One farmer in Leeds said that by last month, customers had already ordered all 3,500 turkeys she was raising for Christmas — a first.A lack of truck drivers has also caused sporadic shortages for staples including eggs, milk and baked goods. One in six people in Britain said that in recent weeks they had not been able to buy certain essential food items because they were unavailable, according to a report by the Office for National Statistics, which surveyed about 3,500 households.Some consumers interviewed in recent days said they had not had any trouble finding what they wanted at grocery stores. But Meriem Mahdhi, 22, who moved from Italy to Colchester in southeast England last month to attend college, said she had struggled to find essential items at her local grocery store, Tesco, Britain’s largest supermarket chain.“All the dried foods like pasta, canned fruit, it’s all gone, every day,” she said. Tesco did not respond to a request for comment.Seeking a quick fix, 200 military personnel in fatigues on Monday arrived at refineries to help deliver fuel to gas stations. About half of them drove civilian vehicles and the others provided logistical support. “As an extra precaution we have put the extra drivers on,” Mr. Sunak said.Over the weekend, the government said it had extended thousands of temporary visas for foreign workers to work in Britain until the first few months of next year. But economists said the temporary visas were unlikely to be enough to make much of a difference, since there are shortages at every link in the supply chain.“There is a lack of workers coming in, and British people are not willing to do the job,” said Robert Elliott, a professor at the University of Birmingham. He said it was difficult to say how much of the supply-chain issues were a result of Brexit versus the pandemic, but regardless, the government has chosen policies that have not made the situation better.The government has underinvested in training workers to drive trucks, he said, and too few young people are pursuing the profession to replace ones who have retired.Even before Brexit, the meat industry had difficulties attracting workers because of the hard work, low pay and remote locations of processing plants. Producers have raised wages for butchers by an average of 10 percent this year, the British Meat Processors Association said, but shortages are still so severe that members of the British Poultry Council reported they had cut weekly chicken production by five to 10 percent.Mr. Watchorn said the situation was “a disaster, and I don’t know when it’s going to finish.”Andrew Testa for The New York TimesJames MacGregor, the general manager at Riverford, an organic food company based in Devon, England, said he was short of about 40 workers, or about 16 percent of the company. Butchers have been particularly hard to find, he said. To cope with the shortages, Riverford will likely offer fewer products for sale around Christmas.“It feels like we’re staring down the barrel of a gun a little bit at the moment,” Mr. MacGregor said. “It’s highly likely if we don’t see movement in terms of fuel and labor, we will ultimately end up passing some of this cost on to the consumer.”Kathy Martyn, the owner of Oakfield Farm in East Sussex, which has about 100 pigs, said she was relieved to find fuel on Friday, just in time to make it to a catering job for a wedding over the weekend. She said that fuel shortages have made planning difficult, and that she may have to cull about 20 of her pigs this year.“We’ll just roll up our sleeves and take a deep breath,” Ms. Martyn said.Mr. Watchorn, the pig farmer, said his farm will be losing money this year. Even culling pigs is costly. If it comes to that, he would have to find someone to slaughter the animals and then take them away. Financial help from the government to do that would help, but he said he was not counting on it. “When pigs fly,” he quipped.Mr. Watchorn said the last time he can remember things being this bad was during an outbreak of mad cow disease in the 1990s.Andrew Testa for The New York TimesAina J. Khan More

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    British Tourists Return to Portugal, Unleashed but (Mostly) Masked

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    Sorely in need of sun and a change of scene, British travelers returned to the newly “green-listed” country and were met by relief, exasperation — and hardly anyone.After enduring a winter of strict lockdown, and a spring that saw a gradual reopening but lousy weather to spend it in, the first British tourists to Portugal since the country was “green-listed” for quarantine-free travel were elated by the thrill of escape, even if their trips were not quite as carefree as in past summers. “We just wanted to go anywhere that wasn’t London, basically,” said the singer and songwriter Celeste Waite, 27, as she climbed a hilly street in Lisbon’s Alfama district last Saturday with Sonny Hall, 22, a model and poet.“It’s been nice finally getting back to normal,” said Karen Kaur, 35, of Kent, England, after she and Jay Singh, 38, downed shots of ginjinha, a cherry liqueur, from a street vendor in Praça da Figueira, a large square in the city’s center. But British travelers expecting a kind of pre-pandemic travel experience found something different in Lisbon during the first weekend it reopened to them. Though the Portuguese capital still offered its signature food, museums, picturesque vistas and attractions, stringent mask rules and curfews reminded visitors this would not be an unfettered escape. The opening weekend for Britons offered a preview of what a broader return to international travel may look like for others, including vaccinated Americans when they are welcomed to Europe this summer: A mixture of joy, relief, and at times awkward interactions as cultures converge after a year of disparate pandemic experiences. Tourists soak up the sun in Cascais, a coastal resort town near Portugal’s capital of Lisbon. Before the pandemic, Britons were one of the town’s top tourist markets.Daniel Rodrigues for The New York TimesPortugal has long been among Britain’s favorite tourist destinations, with scenic city escapes in Lisbon and Porto, and beachside restaurants and hotels catering to British tourists in the coastal resort town of Cascais and the Algarve, known for its alluring beaches, all within a three-hour flight. More than 2.1 million people visited from Britain in 2019, the most from any country except Spain, according to Turismo de Portugal, the national tourist board.Now, Portugal is one of Britain’s only tourist destinations. Earlier in May, Britain included Portugal on its “green list” of 12 countries and territories that residents could travel to from May 17 without quarantining for up to 10 days upon return. Most other green-listed places are either not accepting tourists or are not major destinations.A tourist passing the Casa de Santa Maria in Cascais. Britain added Portugal to its “green list,” which allowed its residents to travel there without quarantining from May 17.Daniel Rodrigues for The New York TimesPrices for flights to Portugal spiked after the announcement. But flying now means accepting expensive, and, at times, confusing extra steps, highlighting the tentative nature of international travel’s reopening. Tourists need to fill out multiple forms and submit a negative PCR test taken less than 72 hours before the flight. Before returning to Britain, they must take another test within 72 hours of their flight, and prove they have booked a third test to be taken on their second day back in Britain. The tests add up to hundreds of dollars per person, for many people exceeding the cost of the flight. Some tourists on a British Airways flight from London last Saturday said the extra steps were a pain, but they needed to get out of Britain after a difficult winter. From December to late March, the country experienced one of the world’s strictest and longest nationwide lockdowns, with socializing permitted only through walks in the cold with one other person. Pubs and restaurants didn’t open for outdoor dining until mid-April, and overnight travel within the country wasn’t permitted until last week.“No one else is going, so I’ve been rubbing it in with my friends,” said Anna De Pascalis, 23, before boarding a flight to Lisbon with her mother, Julie De Pascalis. “Everyone’s pretty jealous.” After a winter of rising coronavirus cases, Portugal has been down to a few hundred cases and single-digit deaths per day since late March. But there is a disparity in inoculations against Covid-19: About 36 percent of Portuguese people have received at least one dose of a vaccine, compared to about 57 percent of those from the United Kingdom.Tourists enjoying the view from São Jorge Castle, a popular attraction in Lisbon. A mere trickle of tourists have returned to Portugal so far compared to the hordes before the pandemic.Ana Brigida for The New York TimesSilvia Olivença, the owner of the food tour company Oh! My Cod in Lisbon, said being indoors with unmasked tourists while eating does not worry her, though she’s heard concerns from other Portuguese people that the return of foreigners could threaten Portugal’s low case numbers, despite tourists testing negative before they can fly.“You have people thinking about it, of course,” she said. But, she added: “I think people in general are quite happy to see the tourism come back.”One month ago, she would run maybe one tour per week. Now it’s up to 10 per week, with about 70 percent of her bookings from Britain, she said. In addition to British tourists, Portugal has also welcomed back visitors from the European Union. For Sara Guerreiro, who owns a ceramics shop in the Feira da Ladra flea market in the winding Alfama district, last Saturday was more of a tease of normality. Looking outside her shop, she saw maybe 10 percent of the pre-pandemic foot traffic through the twice-weekly market, which sells miscellaneous items to locals alongside artwork and trinkets to tourists.A tourist photographs the famous 28 tram in Lisbon’s historic heart, Baixa.Ana Brigida for The New York TimesBut she said Lisbon could use a better balance in how many tourists it welcomes, because “how it was before was also too much.” Overall, a mere trickle of tourists have returned to Portugal so far compared to the pre-virus hordes. Those who made the trip were able to enjoy the city as few have: without swarms of other tourists to jostle with. At the ornate Praça do Comércio, a historic square typically packed with visitors, just a few dozen lingered. You could easily take a wide-angle photo outside Belém Tower, a popular landmark, at noon on Sunday with no other people in it. The line for custard tarts at nearby Pastéis de Belém, typically an out-the-door affair, passed in a few brief minutes Sunday morning. At Tasco do Chico, renowned for its live fado music, a spot at the bar was available one minute before Saturday night’s first performance began. Belém Tower, one of the most famous monuments in Lisbon, has few tourists still. Ana Brigida for The New York TimesIn one lively scene reminiscent of pre-pandemic freedom, tourists and locals alike converged Saturday night in Bairro Alto, with bars and restaurants packed with revelers until the 10:30 p.m. curfew. Nicci Howson, 65, said she was surrounded by Portuguese people dancing in Cervejaria do Bairro, a restaurant in that neighborhood, the first time she had danced outside her home in a year.“You could see the elation on people’s faces to just let loose,” she said.At 10:30 p.m., when some Portuguese might just be sitting down to dinner in normal times, the bars closed and sent packs of people dancing and singing tightly together in the narrow streets, until they were shooed away by police on motorcycles about five minutes later. The revelers lingered in the nearby Luís de Camões Square until 11:30 p.m., when officers dispersed the group. But during the day, there were no such crowds to contend with.Mark Boulle, 38, from Oxford, England, said he typically tries to avoid crowds while traveling, so the trip was in that respect a dream. When he took a day trip to Sintra, a nearby town with postcard-ready palaces and castles, on Monday, “for the first half of the day I virtually had the whole place to myself,” he said. But he was dismayed by the widespread use of masks outdoors in Lisbon — a sharp departure from behaviors in Britain, where the government has never suggested wearing masks outside and most people do not. It was a source of tension for both visitors and the Portuguese.British tourists in Lisbon did not have competition for a prime view at the ancient São Jorge Castle. Ana Brigida for The New York TimesUsing masks outdoors is mandatory in Portugal, with violators in some locations, including beaches, facing fines. At the Castelo de São Jorge, an 11th century castle with sweeping views of the city, a security guard roamed the grounds outside, instructing the few tourists there to put masks on while standing far away from others. A bookseller at an open-air market in Baixa grumbled that the tourists ought to comply with local attitudes and customs about masks, instead of bringing their own ideas abroad.But Mr. Boulle said he wanted the sun on his face. As he went to buy his ticket at the Jerónimos Monastery, a popular tourist attraction, he recalled, a security guard stopped him before he could buy his ticket, asking him to put a mask on. Mr. Boulle replied that he has asthma, and he couldn’t wear one because he’d have trouble breathing. “That isn’t true, but I just wanted to see,” he said. “In England you can always say that.” No such luck, as the security guard insisted. Frederico Almeida, the general manager of the Albatroz Hotel in the nearby beach town of Cascais, said he and his staff has had to remind visitors from Britain of the requirements.Despite these issues, he’s happy to see British tourists again. They are the top market for the area, he said, and their return has been swift. The 42-room hotel was at about 20 percent occupancy two weeks ago; now it’s up to about 80 percent. “All of a sudden, in the last two weeks, it’s as if we’ve turned back to normality,” he said. “It’s wonderful.”THE WORLD IS REOPENING. LET’S GO, SAFELY. Follow New York Times Travel on Instagram, Twitter and Facebook. And sign up for our Travel Dispatch newsletter: Each week you’ll receive tips on traveling smarter, stories on hot destinations and access to photos from all over the world. More