Gas price crisis threatens to derail European recovery

Updates on the economic impact of the coronavirus

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Good evening from London and welcome to the first edition of The Road to Recovery, our revamped newsletter on how the pandemic is reshaping the global economy and business world. We hope you enjoy the changes we’ve made.

We begin our journey with an issue that threatens to hold back economic progress across Europe: the unprecedented surge in gas prices that is wreaking havoc on energy markets and fueling inflation fears across the continent.

Prices rose as inventories fell due to a number of factors including a prolonged cold winter, declining supplies from Russia and gas fields being out of order for maintenance.

European governments are stepping up actions to help struggling households and energy companies ahead of a Wednesday meeting of EU ministers – who fear the crisis will also hurt their green energy plans.

Across the Channel, British Prime Minister Boris Johnson blamed the problems on the recovery of the global economy, likening the situation to a nation rushing to “put the kettle at the end of a television program”. His government is considering state-guaranteed emergency loans to save small vendors, as the industry has warned that only 10 out of 55 vendors could last until Christmas. Meanwhile, the biggest companies have called for a “bad bank” to house customers that suppliers couldn’t take without losing money.

The crisis is expected to drive inflation up across Europe, acting “as an effective tax hike for households.” . . reduce their discretionary spending and slow down the recovery in Europe, largely driven by the rebound in consumer spending, ”according to an analyst.

The drama has spread far beyond the energy sector, especially food production. The UK meat industry faces a severe shortage of carbon dioxide – used to stun slaughter animals as well as in packaging and refrigeration – after soaring gas prices halt production of two large fertilizer factories. CO2 is a by-product of fertilizer manufacturing and around 60 percent of the UK’s CO2 supplies come from the two closed factories.

Ranjit Boparan, head of 2 Sisters Food Group, whose businesses include turkey processor Bernard Matthews, urged the government to act quickly. Without a CO2 supply, “Christmas will be canceled,” he said. As our column Lex points out, Turkey’s nervousness may seem a bit dramatic, but highlights a serious point: the fragility of modern supply chains.

What would you like to see in the next issues of Road to Recovery? Please send us your comments and feedback to [email protected]

Latest news

  • Vaccinated passengers from UK and EU will be able to travel to the US from November, ending the 18-month ban imposed by former US President Donald Trump

  • US homebuilder confidence edged up in September, the first increase in five months, boosted by lower lumber prices and strong demand

  • The UK has started vaccinating 12-15 year olds. Approximately 3 million children will be eligible for their first dose of BioNTech / Pfizer vaccine in the coming weeks

For the latest updates on coronaviruses, visit our live blog

Good to know: the economy

It’s a big week for central bankers, with monetary policy updates expected in the United States, Japan, the United Kingdom and Norway, which could become the first of the group of major G10 currencies to raise interest rates from the start on Thursday. of the pandemic.

Global investors are especially looking for clues US Federal Reserve on when it could start scaling back its pandemic contingency measures when it makes its announcement on Wednesday. President Joe Biden, meanwhile, faces a period of crisis as Congress returns to work and negotiations intensify over his $ 5 billion spending plans, as our Big Read explains.

The latest European news

General election in Germany Sunday marks the end of Angela Merkel’s 16 years as Chancellor and could see her center-right CDU / CSU bloc beaten by the center-left Social Democrats (SPD). Here’s our guide to the Merkel era in charts and here’s our live poll tracker for the latest information on party state and voter preferences for the coalition. Sign up for our excellent Europe Express newsletter which will keep you up to date with everything you need to know (Premium subscription required).

The last world

Results of General Election of Canada are due tonight with polls showing Justin Trudeau’s Liberals could once again emerge as the biggest minority party. The prime minister hoped his party’s handling of the pandemic and the success of the vaccination campaign would help him win a majority.

The view that “no one is safe until everyone is safe” was reiterated by UN chief António Guterres, who warned that unless vaccines against the coronavirus were no longer distributed evenly across the world, there was a real risk of vaccine-resistant variants emerging.

Former British Prime Minister Gordon brown, who has been appointed global health financing ambassador for the World Health Organization, said 100 million surplus vaccines in the United States and Europe could be wasted by Christmas unless they are redistributed to the poorest countries. President Carlos Alvarado of Costa Rica warned of unrest in the developing world without more Covid aid.

Iran overturned the ban on importing foreign vaccines as its new hard-line president steps up vaccination efforts in a country hit hard by the pandemic.

Namely: company

Forget speculation about the Fed’s policy measures and the spread of the Delta variant of the coronavirus: the new concern of global investors is the contagion of the ongoing crisis in China Evergrande, the most indebted real estate developer in the world. Here is our explanation of what went wrong.

The bosses at UK FTSE 250 companies were hit by pay cuts of nearly a fifth in the last fiscal year, with investor pressure leading to cut bonuses and a wage freeze during the pandemic. Excessive business rate Meanwhile, large-scale retail chains are finding it harder to compete on staff salaries and overcome labor shortages, according to the chief of Azzurri, the catering group that owns Zizzi and ASK. Italian.

No jab, no work: French health and social service workers face being suspended from their jobs without pay since the deadline to be vaccinated was passed on September 15. The proportion of people vaccinated in France has now overtaken the United States, Israel and the United Kingdom, with 74% of the population. have received at least one dose, according to Financial Times data. Other European economies are also on the verge of overtaking the UK.

And if you’re interested in what political leaders and key CEOs think about the future of financial services after the pandemic, register here for free for tomorrow’s FT event. Future of Europe.

The world of work

Given the huge changes in the workplace over the past few years, it may come as a surprise that most Britons are too happy in their work as they were over 30 years ago, according to a new poll from The Resolution Foundation. A notable exception is that of low wages, which report much more stress and less autonomy in their professional life.

The show must continue! Management editor Andrew Hill learns lessons from how theaters are coming back to life and how other companies are trying to get their shows back on the road.

Wall Street bosses are making frantic efforts to curb the exodus of exhausted juniors during pandemic trading frenzy by automating some of their “A big job”. The FT’s point of view? Be careful what you want: at least grunts, rather than robots, are given this job. For the moment.

Covid cases and vaccinations

Total global cases: 228.5m

Total doses administered: 5.9 billion

Get the latest global image with our vaccine tracker

And finally . . .

“The visionary new cities of the Modernists a century ago have not materialized; the lesson should be that if we are to make a difference, we must adapt our existing built environment. Architecture correspondent Edwin Heathcote examines how we can reshape our urban spaces and make cities more sustainable.

Drawing of the future city landscape
© Davi Augusto

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