Closing post
Time to wrap up. Here are today’s stories, first on the shock sackings at P&O Ferries:
Today’s UK interest rate rise:
The UK’s economic challenges:
The consequences of the Russia-Ukraine war:
And in other news:
Goodnight. GW
Updated
There are hopes tonight that Russia might avoid a default on the $117m interest payments that were due yesterday.
Two market sources have told Reuters that some creditors have received payment, in dollars, on those Russian bond coupons.
There had been concerns that Moscow wouldn’t have been able, or willing, to tap its foreign exchanges reserves due to the sanctions imposed by the West.
Reuters has the details:
Russia said earlier it had sent funds to cover $117 million in coupon payments on two dollar-denominated sovereign bonds.
The payments, due on March 16 but with a 30-day grace period, were seen as the first test of whether Moscow will meet its debt obligations after Western sanctions hobbled its financial dealings.
“The coupon was paid, against my expectations, and in dollars,” one person said. Another person said the money had been received by a client who was a bondholder.
Some other creditors said they had yet to receive their funds but were optimistic they were on the way, noting they had received payments on hard currency bonds from a raft of state-run and private Russian companies in recent days.
Earlier, another source told Reuters that JPMorgan, Russia’s correspondent bank, had processed the cash sent by the government and credited it to the paying agent Citi. It would be checked and then distributed to various bondholders, the source said.
Russia says it has made payments due on two bonds, but some creditors say the funds haven't been received, leaving it unclear whether the country faces its first default on international debt in more than a century https://t.co/JC7Beb2qCu pic.twitter.com/Ziox84BeFm
— Reuters (@Reuters) March 17, 2022
FTSE 100 closes higher
In the City, the FTSE 100 index has ended the day 1.3% higher, outpacing other European exchanges.
Mining companies and oil giants were in the risers, as commodity prices and crude oil rebound. Multinationals such as Smurfit Kappa (+3.8%), Halma (+3.4%) and Diageo (+2.8%) were also in demand.
But Ocado slumped 8% after reporting a drop in sales and lowering its full-year forecasts, as customers returned to pre-pandemic shopping habits.
Travel stocks and banks also finished lower.
Other European markets were mixed, with Germany’s DAX index losing 0.36% and France’s CAC 0.36% higher.
‘I’m ashamed to be British’: P&O Ferries customers vent fury
Furious P&O Ferries customers have rounded on the company for leaving them stranded at short notice and for its “abysmal” treatment of 800 staff, whose abrupt sacking on Thursday morning triggered chaos at ports across the country.
P&O initially told passengers that services were unable to run “for the next few hours”, affecting the Dover-Calais crossing and the routes from Hull to Rotterdam, Liverpool to Dublin and Cairnryan in Scotland to Larne.
But as furious workers responded to their dismissal by staging sit-ins on board P&O boats, the company announced that many services would not run “for the next few days”.
Peter Theakston, 53, had been visiting his ill mother in Yorkshire and was due to return to The Hague, the Netherlands, at 8pm on Thursday night, on a £200 foot passenger ticket. He said the company had not been in touch to explain what was happening or offer any advice and was not picking up the phone.
“I’m pissed off,” he told the Guardian on Thursday afternoon.
“There’s no news at all about the sailings. They’re updating everything else but not Hull-Rotterdam and they’re still taking bookings even though they say they’re not sailing.
TUC General Secretary Frances O’Grady has also said that today’s layoffs are unlawful:
“No one should be laid off with zero notice and no consultation, let alone a whole workforce. P&O’s secret plan to sack their workers is reprehensible and unlawful.
“When an employer lays off more than 100 staff at once they must consult workers and unions in advance. And they are required to notify the Secretary of State in writing in advance too. The government must urgently explain what they knew and when.
“If P&O breached the law they must suffer severe consequences – with ministers increasing the legal penalties if necessary. If one employer gets away with this, every worker is at risk.”
The fast-track grocery delivery firm Getir is now valued at $11.8bn (£9bn) after its latest funding round.
The Turkish company’s valuation jumped after raising $768m of new investment for its ultra-quick delivery services that can bring items to customers in minutes.
At £9bn, Getit would slot straight into the FTSE 100 index above blue-chip names such as Rolls-Royce, Sainsbury’s or British Airways parent IAG.
Sarah Riding, retail and supply chain partner at the law firm Gowling WLG, says Getir can use this funding to increase its footprint in several ways:
Expanding delivery services beyond groceries to compete with the likes of Just Eat, trialling physical stores as a way of enhancing their own brand status and even overseas expansion are just a few of the options that lie ahead.
Shirtmaker TM Lewin calls in administrators
Shirtmaker TM Lewin has called in administrators for the second time in less than two years, the latest victim of the shift to working from home.
The business, which operated 150 shops before the pandemic, has operated solely online business since first calling in administrators in June 2020.
Administrators are looking for a buyer for the business but 50 jobs are at risk.
Pippa Stephens, retail analyst at GlobalData Retail, says the move away from office dress codes in the pandemic has hurt TM Lewin:
The combination of increased home-working and more casual office dress codes has been detrimental to TM Lewin since the pandemic, which has been unable to turn itself around even after closing all of its stores back in 2020. https://t.co/ncbmrtaBLa
— Pippa Stephens (@pippa_gdretail) March 17, 2022
Updated
Transport minister: P&O Ferries is suspending services for a week to 10 days
Robert Courts, the transport minister, is making a Commons statement now about the P&O sackings.
He says the way staff were informed they were losing their jobs was “completely unacceptable”.
Courts says P&O Ferries is suspending services for a week to 10 days while they locate new crew.
He says four routes will be affected: Dover to Calais, Larne to Cairnryan, Dublin to Liverpool and Hull to Rotterdam.
He says this is primarily a commercial decision. There will be some disruption, he says, but people will still be able to travel to and from the UK.
He says he does not expect the supply of goods and services to the UK to be affected.
Transport Minister Robert Courts confirms P&O Ferries services will be suspended for a "week to ten days" whilst they locate new crew.
— Sky News (@SkyNews) March 17, 2022
The affected journeys will be: Dover to Calais, Larne to Cairnryan, Dublin to Liverpool and Hull to Rotterdam.https://t.co/RHHHJdNgO7 pic.twitter.com/K7VND5wBq3
Louise Haigh, the shadow transport secretary, says what happened to the workers who were sacked was a “national scandal”.
There are images circulating of what we are told are handcuff trained security, some wearing balaclavas marching British crew off their ships.
This is not a corporate restructure, it is not the way to go about business. It is beneath contempt – the action of thugs.
It is quite simply a scandal that this overseas-owned company – which received millions and millions of pounds of taxpayers money in the pandemic, without consultation and without notice, have upended the lives of 800 British workers overnight.
At the afternoon lobby briefing Downing Street condemned the way P&O Ferries sacked its 800 crew today.
The PM’s spokesperson said:
The way these workers were informed was completely unacceptable. Clearly the way that this was communicated to staff was not right and we have made that clear.
Our sympathies are with these hardworking employees affected during this challenging time who have given years of service to P&O.
Andrew Sparrow’s Politics Liveblog has all the details:
Updated
Is P&O Ferries’ shock decision to fire 800 staff with immediate effect legal?
Tom Long, partner at law firm Shakespeare Martineau, says the move “appears to contravene the requirements needed for a normal mass redundancy”, and could potentially lead to litigation, such as unfair dismissal claims.
Long explains:
“Where an employer plans to make 20 or more redundancies, there is a requirement for a period of consultation with employee representatives, such as a trade union. That period is 45 days, where 100 or more redundancies are planned in any one location. As such, P&O would be expected to undergo this process before making any mass dismissals. It’s not evident whether this has happened, although it would appear not.
“If employees are made redundant they can bring a claim of unfair dismissal in the employment tribunal, with the maximum compensation being up to a year’s salary in most cases. If they were not paid their notice or a statutory redundancy payment, claims could also be brought for these payments. If P&O failed to carry out appropriate collective consultation in advance of the dismissals, the trade unions could bring a claim about that failure, with a potential award of up to 90 days’ gross pay per affected employee if the claim succeeded.”
“It appears that P&O will be offering “enhanced severance packages” to staff to compensate them for their dismissals, but whether that offer will be sufficient to prevent significant litigation awaits to be seen.”
In America, the number of people receiving jobless support has hit a 50-year low.
The number of people receiving unemployment benefits, or continuing claims, dropped by 71,000 to 1.42m in the week to March 5th. That’s the lowest level since February 1970.
The number of people filing new claims for jobless support also dropped, down 15,000 to 214,000, showing that the US labor market remained robust this month - as the US Federal Reserve started to raise interest rates.
Initial UI claims fell last week to 214,000, hitting pre-pandemic levels. Continuing claims fell to 1.42 million, the lowest since 1970. Improvement in #joblessclaims has slowed as the job market remains tight, but there's little room to fall further as layoffs are at record lows pic.twitter.com/POK9lDm9Px
— Daniel Zhao (@DanielBZhao) March 17, 2022
Jesse Lee, senior advisor for communications to the National Economic Council, tweets:
Unemployment at 3.8%. Initial jobless claims below 2019, claims in general at lowest since 1970. One can debate how you define it, but approaching full employment. Lots of room to address global inflation, which a lot of major economies don’t have. https://t.co/o1pZ3wNjCV
— Jesse Lee (@JesseLee46) March 17, 2022
UK suspends tax co-operation with Russia
The UK is suspending the exchange of tax information with Russia and Belarus, in the latest economic sanctions in response to Moscow’s invasion of Ukraine.
This information is shared as part of global collaboration to prevent non-compliance with tax rules.
Today’s decision to suspend tax information exchange will ensure the UK is not supplying Putin’s regime with information that could lead to an increased tax benefit or yield for Russia, the government says. More here.
To further cripple Putin's illegal war in Ukraine, we are freezing all tax cooperation with Russia and Belarus.
— Rishi Sunak (@RishiSunak) March 17, 2022
This will ensure the UK is not supplying Putin’s regime with information that could lead to increased tax benefits or returns for Russia.https://t.co/NhIhnhxjeB pic.twitter.com/h3sVzntvyH
We would like to hear from people who work for P&O Ferries, and holidaymakers who have been affected by today’s sackings and suspension of sailings. Please get in touch here.
French President Emmanuel Macron said the state will need to take control of some firms in the energy sector, as he oudlined his key reform plans if he wins a second term next month.
Macron said the move would bolster the country’s independence, as part of an overhaul of energy markets, saying (via Reuters):
“(Nuclear) is the only mix that allows us to reduce our carbon emissions in an efficient, rapid and sovereign way.”
“The State will have to regain control of several aspects of the energy sector. On the one hand, regulation. The rules governing prices at the European level, in particular our electricity prices, must be reformed. (And) we will have to take back the capital control of several industrial players.”
Macron also said he wants to increase the legal retirement age gradually, up to 65 [it is currently 62].
He also backed increased defence spending - a crucial issue since the invasion of Ukraine.
“We will hit our defense spending objective of 50 billion euros annually by 2025.
“It must be complemented by a greater commitment at a European level. The choices made by several of our neighbours in recent months are a good thing that strengthen us.”
Germany, for example, is sharply increasing its spending on defence to more than 2% of its economic output, and creating a €100bn (£85bn) fund to boost the strength of the country’s armed forces.
Police have intervened after P&O workers blocked a road leading to the Port of Dover, PA Media reports.
Dozens of employees who lost their jobs on Thursday stood on the road holding banners and flags saying “Stop the P&O jobs carve up”.
It came after buses carrying agency workers hired to replace them appeared to arrive at the Kent port.
A lorry driver trying to enter the port began shouting and beeping at those in the road, before being told “We’re not moving”.
Another driver, Richard Gamby, said:
“I understand what they’re doing but I want to get home - I’ve been up since four.”
Police officers then attended the scene close to the Rail, Maritime and Transport (RMT) union office in Dover.
One of the protesters, who had worked for the company for decades, told the PA news agency:
“I refuse to move from this road. All this service for nothing.
“The police will have to take me away.”
Demonstrators then began chanting “Support local jobs” before moving to another road.
The UK should get ready for an inflation rate of 10% later this year, for the first time since the earlys 1990s, my colleague Nils Pratley writes:
That outlook is now endorsed as roughly credible by the Bank of England, the same people who thought as recently as last month that the peak would arrive soon and be 7.25%.
Russia’s invasion of Ukraine, a fresh round of soaring energy prices, and more supply chain disruption have up-ended month-old assumptions that already looked wobbly. Thus we are in a land where inflation could end up being “several percentage points higher” than the Bank expected only last month.
In the circumstances, the mini-surprise is that nobody on the Bank’s nine-strong panel wanted heavier action than a quarter-point rise in interest rates to 0.75%. Indeed, the deputy governor, Jon Cunliffe, preferred to stick at 0.5%. This was a very cautious version of an interest rate hike....
But with growth likely to slow in 2023, the risk of a wage spiral currently looks modest, Nils points out. Here’s his full analysis:
Updated
Savers have seen little benefit from the Bank of England’s earlier interest rate rises, in December and February, according to Investec.
They have analysed easy access savings accounts , and found that rates have barely moved in the last year. The average is paying just 0.07% more on average than in February 2021, even though Bank Rate had risen from 0.1% to 0.5%, before today’s rise.
The worst quartile of accounts have barely moved at all - with average rates creeping from 0.01% to 0.02%.
The Bank of England has now raised UK interest rates at three meetings in a row - for the first time since 2004.
David Page, Head of Macro Research at AXA Investment Managers, predicts further hikes in May and June, taking rates to 1.25%. But then, the Bank could leave rates on hold, and consider easing policy in 2023.
- The MPC voted 8-1 for the rise, with one member, Cunliffe voting to leave rates unchanged – a significant swing from last month when four members voted for a 50bps hike.
- The Committee guided that “further modest tightening … might be appropriate in the coming months” – a change from last month’s assessment that this was “likely”.
- Minutes suggested that the BoE envisioned February’s outlook – a slowdown in activity and a rise in unemployment – to be exacerbated by current conditions.
- The MPC appeared more focused on the scope for a marked slowdown in activity over the coming years, than on concerns over inflation expectations, which it considered “well anchored”.
Nicola Sturgeon, First Minister of Scotland, says the Scottish government will be seeking urgent talks over the job cuts at P&O:
I’m deeply concerned at P&O announcement - due to the importance to Scotland of the Cairnryan/Larne route obviously, but also the impact on 100s of workers. Fire & rehire is an appalling practice & offends the basic principle of fair work. @scotgov will be seeking urgent talks
— Nicola Sturgeon (@NicolaSturgeon) March 17, 2022
Christine Lagarde, the head of the European Central Bank, also warned today that the Ukraine war is driving up inflation and creating more commodity shortages.
Lagarde told an ECB conference in Frankfurt that its Governing Council stands by the people of Ukraine, who have been “subjected to this horrific act of aggression” by Russia, and will implement the sanctions decided on by the EU,
Lagarde also explained that Europeans face higher inflation and slower economic growth in the coming months:
Energy prices are expected to stay higher for longer, with gas prices up by 73% since the start of the year and oil prices up by 44%. The pressure on food inflation is likely to increase. Russia and Ukraine account for nearly 30% of global wheat exports and wheat prices are up by more than 30% since the start of the year.
Belarus and Russia produce around a third of the world’s potash, a key ingredient, alongside natural gas, in producing fertiliser – which was already in short supply.
Manufacturing bottlenecks will also last for longer, she warned, which will keep durable goods prices high, meaning more inflation.
For example, Russia is the world’s top exporter of palladium, which is a key input for producing catalytic converters and is hard to substitute with other suppliers.
Ukraine produces around 70% of the world’s neon gas, which is critical for the laser lithography process used in semiconductor manufacturing. The euro area is highly dependent on Russia for cobalt and vanadium, which are key for the 3D printing, drone and robotics industries.
Updated
Hull’s Labour MP, Karl Turner, who called P&O’s sackings “utterly deplorable predatory practice taking full advantage of the gap in the legislation”, has tweeted more details:
New foreign crew waiting to board the Pride of Hull on King George Dock. @RMTunion sitting in onboard the vessel. They will not be boarding her. We understands that both current officers and ratings are to be sacked. pic.twitter.com/JqJOWNxgDA
— Karl Turner MP (@KarlTurnerMP) March 17, 2022
BREAKING: I’m hearing that the captain of the Pride of Hull will refuse to allow the police to board the vessel if @POferries ask them to do so. #POFerries. The official sit in of the ship is supported by both @nautilusint members (officers) and @RMTunion members.
— Karl Turner MP (@KarlTurnerMP) March 17, 2022
The Officers union Nautilus also sadly confirms their members British officers are also “sacked” with immediate effect. #POFerriesSackingBritishWorkers pic.twitter.com/CcJkzZVgix
— Karl Turner MP (@KarlTurnerMP) March 17, 2022
A spokesperson for P&O Ferries said it had to take a “very difficult but necessary decision” to “secure the future viability of our business which employs an additional 2,200 people, and supports billions in trade in and out of the UK”.
They added:
“However, in its current state, P&O Ferries is not a viable business. We have made a £100m loss year on year, which has been covered by our parent DP World. This is not sustainable. Our survival is dependent on making swift and significant changes now.”
Labour’s shadow transport secretary, Louise Haigh, called on the government to act, saying: “Unscrupulous employers cannot be given free rein to sack their workforce in secure jobs and replace with agency staff.
“The Conservative government must not give the green light to this appalling practice, and must act to secure the livelihoods of these workers.”
P&O Ferries sacks all 800 crew members across entire fleet
The leading UK ferry operator P&O Ferries has sacked its crew across its entire fleet after stopping all its sailings on Thursday.
Unions called it a “scandalous betrayal”, and said about 800 jobs at all grades had been axed with no notice, with P&O planning to use cheap agency staff to operate its ships.
The operator, owned by the Dubai-based DP World, earlier told crew to return to port and await a “major announcement” in a sudden move likely to cause serious disruption to travel for passengers and freight.
Unions predicted a potential standoff could develop, having instructed crew not to leave vessels, while coaches of replacement crew and security staff are already in place at Dover and Hull.
Ferry services are now understood to be unlikely to resume for several days.
Here’s the full story:
Updated
Full story: Bank of England raises interest rates to 0.75% as inflation soars
The Bank of England has responded to the likelihood that the war in Ukraine will push inflation to around 10% this year by raising interest rates back to the pre-pandemic level of 0.75%.
Threadneedle Street’s monetary policy committee (MPC) voted 8-1 to increase borrowing costs by 0.25 percentage points – the first time the Bank has raised rates at three successive meetings in more than two decades.
The Bank said Russia’s invasion had forced it to rethink its forecast for the peak of inflation this year and it was now expected to be “several percentage points” higher than the 7.25% it had previously forecast.
BoE: Energy price cap could rise 35% in October
More gloom. Many UK energy bills could jump by a third in the autumn, the Bank of England warns.
The BoE says that if the recent rise in energy futures prices is maintained, Ofgem’s price cap could rise by another 35% when it is adjusted in October.
The price cap is already rising 54% next month to £1,971 per year. Another 35% would lift it to around £2,600, making it even harder for struggling families to heat their homes next winter.
The MPC says:
Wholesale gas prices had been exceptionally volatile and the six-month observation window relevant for Ofgem’s October utility price cap calculation, which would run from February to the end of July, had only recently opened.
If sustained, the latest rise in gas and electricity futures prices would mean that price caps, when reset in October 2022, could be around 35% higher, which would be around 20% higher than had been expected in the February Report.
The Bank’s also points out that there’s only so much it can do to tackle the inflationary pressures hitting the UK:
The economy had recently been subject to a succession of very large shocks. Russia’s invasion of Ukraine was another such shock.
In particular, should recent movements prove persistent, the very elevated levels of global energy and tradable goods prices, of which the United Kingdom was a net importer, would necessarily weigh further on UK real aggregate income and spending. This was something monetary policy was unable to prevent.
The role of monetary policy was to ensure that, as this real economic adjustment occurred, it did so consistent with achieving the 2% CPI inflation target sustainably in the medium term, while minimising undesirable volatility in output.
That’s a timely warning of the limits of monetary policy, with the Chancellor drawing up next week’s spring statement.
Economists across the political spectrum are urging Rishi Sunak to increase benefits and the state pension...
.. while his freezes on income tax thresholds are set to rake in billions of pounds more from workers than expected.
The UK economic outlook has darkened since the Monetary Policy Committee’s last meeting in February, today’s minutes show.
The BoE fears that that growth, and employment, will be weaker than expected a month ago, with inflation taking an even larger bite out of household incomes.
Turning to economic activity, UK GDP in January was stronger than expected in the February Report. Business confidence has held up and labour market activity data have remained robust.
Consumer confidence has, however, fallen in response to the squeeze on real household disposable incomes. That impact on real aggregate income is now likely to be materially larger than implied by the projections in the February Report, consistent with a weaker outlook for growth and employment, all else equal.
Having raised interest rates today, the Bank of England sounds less certain about future increases to tame inflation.
The Monetary Policy Commitee say it expects some ‘further modest tightening’ in monetary policy.
But there are risks to both sides of that judgement, it flags, depending how the prospects for inflation develop.
It says:
The MPC will review developments in the light of incoming data and their implications for medium-term inflation, including the economic implications of recent geopolitical events, as part of its forthcoming forecast round ahead of the May 2022 Monetary Policy Report.
That has knocked that pound down around half a cent, to below $1.31.
Policy divergence! The Bank of England raised rates but unlike the Federal Reserve, the central bank explicitly opened the door to a slower pace of normalization citing that further tightening 'might be' appropriate.
— jeroen blokland (@jsblokland) March 17, 2022
Guess who's next. pic.twitter.com/u2eXnVG4HC
Bank: Inflation could head over 8% this year
UK inflation could rise over 8% this year, the Bank of England has warned, in a clear sign that the cost of living squeeze is going to worsen.
The Bank warns that:
Inflation is expected to increase further in coming months, to around 8% in 2022 Q2, and perhaps even higher later this year.
Inflation jumped to a three-decade high of 5.5% in January, and real regular wages (after inflation) are falling at the fastest rate since 2014.
The Bank had previously forecast inflation would rise over 7% in spring, and then start to fall back towards its 2% target.
Today, the Bank points to the surge in global energy prices, and rising goods prices:
The projected overshoot of inflation relative to the 2% target to an increasing extent reflects global energy prices, with some further material contribution from tradable goods prices.
Service price inflation has also picked up, although to a lesser extent than other components, with core services prices returning to their pre-Covid trend. Underlying nominal earnings growth is estimated to have remained above pre-pandemic rates, and is still expected to strengthen over the coming year.
Governor Andrew Bailey, deputy governors Ben Broadbent and Dave Ramsden, chief economist Huw Pill, and external members Jonathan Haskel, Catherine L Mann, Michael Saunders and Silvana Tenreyro all voted to raise UK rates to 0.75%.
The minutes of the meeting show that they wanted to tighten monetary policy to prevent inflationary expectations becoming ‘embedded’, citing rising prices and nominal wage growth (before inflation).
Given the current tightness of the labour market, continuing signs of robust domestic cost and price pressures, and the risk that those pressures would persist, most members of the Committee judged that a 0.25 percentage point increase in Bank Rate was warranted at this meeting.
UK activity had been somewhat stronger than had been expected at the time of the February Report and there had been indications that the current tightening in the labour market might not reverse direction as quickly as had been expected.
The effects of Russia’s invasion of Ukraine would likely accentuate both the peak in inflation and the adverse impact on activity by intensifying the squeeze on household incomes.
Monetary policy should be tightened at this meeting in order to reduce the risk that recent trends in nominal pay growth, domestic pricing, and inflation expectations strengthened and became embedded, and thereby to help to ensure inflation was at target sustainably in the medium term.
The decision to raise rates was not unanimous, with Deputy governor Jon Cunliffe voted to leave Bank Rate at 0.5%.
The minutes show that Cunliffe placed “great weight, at this point”, on the very material negative impacts of higher commodity prices on real household incomes and activity.
The minutes add:
These appeared to have been exacerbated by Russia’s invasion of Ukraine.
The invasion could also increase uncertainty and decrease consumer and business confidence. Such impacts on activity and employment would push against domestic inflationary pressures.
Bank of England condemns Russia’s unprovoked invasion of Ukraine
The Bank of England had condemned Russia’s invasion of Ukraine, and the suffering caused by the war.
In the minutes of Bank’s Monetary Policy Committee meeting, announcing today’s rate rise, it says:
The Bank of England condemns Russia’s unprovoked invasion and the suffering inflicted on Ukraine.
The Bank is working closely with the UK Government to support its response in coordination with international authorities. The Bank’s Monetary Policy Committee (MPC) supports this condemnation and welcomes these actions.
Bank of England lifts interest rates to 0.75%
Newsflash: The Bank of England has lifted UK interest rates to 0.75%, back to their levels before the pandemic.
That’s an increase from 0.5%, as it tries to cool inflation with prices rising at the fastest rate in around 30 years.
The Monetary Policy Committee voted by a majority of 8-1 to increase #BankRate to 0.75%. https://t.co/RKxtjPGONr pic.twitter.com/raETKSADZ5
— Bank of England (@bankofengland) March 17, 2022
Updated
Story: Job loss fears as P&O Ferries halts sailings before ‘major announcement’
The leading UK ferry operator P&O Ferries stopped all its sailings today and told crew to return to port and await a “major announcement”, my colleague Gwyn Topham reports.
The sudden move has alarmed union leaders, who fear jobs may be axed by its Dubai-based owner DP World, and caused serious disruption to travel for passengers and freight.
In a note to its staff – posted on social media by Hull’s Labour MP Karl Turner – P&O said it would “be making a major announcement today which, with the support of our shareholder DP World, will secure the long-term viability of P&O Ferries”.
It continued:
“To facilitate this announcement all our vessels have been asked to discharge their passengers and cargo and standby for further instructions.
This means we’re expecting all our ports to experience serious disruption today.”
Turner said the suspension of sailings was “troubling for crews and their families”.
ITV News: all P&O Ferries sailing staff made redundant with immediate effect
There are reports that all P&O Ferries sailing staff have been made redundant with immediate effect, ahead of today’s announcement from the company.
ITV News understands that all P&O Ferries staff have been made redundant with immediate effect.
The company is set to use an agency to keep their ferries running and current staff will be able to apply to the agency for work.
The move comes ahead of an expected announcement today, Thursday 17 March.
P&O Ferries suspended all services earlier.
NEW: Understand that all sailing staff at P&O Ferries have been made redundant with immediate effect.
— Shehab Khan ITV (@ShehabKhan) March 17, 2022
The company will use an agency to keep their ferries running and current staff will be able to apply to the agency for work.
Ben Clatworthy, Transport Correspondent at The Times, has also tweeted this:
NEW: Understand that all sailing staff at P&O Ferries have been made redundant with immediate effect.
— Shehab Khan ITV (@ShehabKhan) March 17, 2022
The company will use an agency to keep their ferries running and current staff will be able to apply to the agency for work.
Updated
Members of the Northern Ireland Stormont Assembly whose constituency incorporates the port of Larne have voiced worries about the potential implications for the route to Cairnryan.
East Antrim MLA John Stewart, who has relatives who work at the port, said staff were uncertain about what would be announced.
“The information is being nothing more than drip-fed to them,” the Ulster Unionist MLA told BBC Radio Ulster, calling it a “worrying” development.
“For the staff, for Larne port itself, particularly for the local effect here, and also for businesses and passengers that regularly use that service, it’s an invaluable local service over to Cairnryan and I think this news will be deeply worrying for all of them, especially in the absence of any concrete information as to what the long-term strategy is going to be.”
Three P&O ferries, the Spirit of Britain, Pride of Canterbury and Pride of Kent, are moored up in the cruise terminal at the Port of Dover, these photos from PA show:
Richard Meade, the editor of shipping journal Lloyd’s List, tweets:
The @POferries situation is unclear. DP World insists it's not announcing liquidation. Unions already demanding protection of UK seafarer jobs amid speculation that hundreds of UK seafarers are to be sacked and replaced with foreign labour [Thread]
— Richard Meade (@Lloydslisted) March 17, 2022
Appears at least two of its ships have been moved over to the cruise terminal on the western dock, away from the ferry terminal, about two hours ago.
— Richard Meade (@Lloydslisted) March 17, 2022
Three now... Spirit of Britain, Pride of Canterbury and Pride of Kent all alongside. pic.twitter.com/NbVmFNbIcV
— James Baker (@JamesBakerCI) March 17, 2022
Transport Secretary concerned by P&O Ferries news
Transport Secretary Grant Shapps said his officials will be having “urgent discussions” with P&O Ferries as he expressed concern at the suspension of sailings.
PA Media has the details.
Shadow transport minister Mike Kane told the House of Commons:
“Worrying news has just broken that P&O Ferries have been called to port as DP World, their owners, seek the long-term viability of this ferry company.
“Major disruption is expected. Can the Secretary of State update the House on any discussions he’s had with DP World, P&O Ferries of any potential redundancies, and any redundancies that may happen we don’t want those crews replaced by foreign cheap labour.”
Mr Shapps replied:
“I am concerned with this news which is breaking on P&O Ferries. I understand they have temporarily paused their operations and that’s causing disruption at the short straits - Calais-Dover - as well as some other ports.
“I’m working with the Kent Resilience Forum and I’ve just instructed them to become intricately involved and other partners in this, and we’ll be taking steps later today - including ensuring that my officials will be having urgent discussions with P&O about the situation, particularly of concern for their workers.”
Commons Speaker Sir Lindsay Hoyle said he would allow an “emergency statement” from the Government on Thursday if needed.
Updated
RMT tells members to stay on board P&O Ferries
The RMT union has told its members on P&O Ferries’ boats to remain on board, following the shock suspension of sailings this morning.
RMT general secretary Mick Lynch said:
“We are deeply disturbed by growing speculation that the company are today planning to sack hundreds of UK seafarers and replace them with foreign labour.
“We have instructed our members to remain onboard and are demanding our members across P&O’s UK operations are protected, and that the Secretary of State intervenes to save UK seafarers from the dole queue.”
P&O operates four routes: Dover to Calais; Hull to Rotterdam; Liverpool to Dublin; and Cairnryan, Scotland to Larne, Northern Ireland.
Future of P&O - @RMTunion demands protection of UK seafarer jobs amid speculation that hundreds of UK seafarers are to be sacked and replaced with foreign labourhttps://t.co/et8BRoOJC4 pic.twitter.com/8zUhTp7pYY
— RMT (@RMTunion) March 17, 2022
OECD warns Ukraine war could knock 1% off global growth
The Ukraine war could knock more than a percentage point off global growth this year and add two and a half percentage points to inflation, the OECD has warned.
In a new report, the Paris-based Organisation for Economic Cooperation and Development said conflict would mean weaker economic growth and higher inflation.
The war Russia is waging in Ukraine is a humanitarian disaster. Beyond this, the economic damage is already being felt worldwide and risks becoming increasingly severe and long-lasting.
It points out that while Russia and Ukraine contribute relatively small amounts to global output, they were big producers and exporters of key food items, minerals and energy.
“The war has already resulted in sizeable economic and financial shocks, particularly in commodity markets, with the prices of oil, gas and wheat soaring.”
Wondering why the price of so many raw materials are going through the roof?@OECD chart showing just how reliant the rest of the world is on Russian/Ukrainian exports of certain goods: More than a fifth of the world’s Wheat, Palladium, fertiliser (in this case potash) exports pic.twitter.com/R2OBsFwILN
— Ed Conway (@EdConwaySky) March 17, 2022
The OECD also warned that energy and food price rises are hitting the poor the hardest, and suggested governments could use windfall taxes to finance support.
The OECD said governments should:
- help and protect refugees, providing emergency humanitarian assistance, accommodation, medical care and schooling
- Ease the impact of prices rises on consumers, with Targeted, temporary and means-tested support is needed to help the vulnerable.
- Diversify energy supplies and invest in energy security, by reducing dependence on fossil fuels, maximising the use of existing low-emissions sources, including bioenergy and nuclear, and investing more in green energy.
The Kremlin said today that any debt default would be “entirely artificial” because it has the funds to service its foreign bonds, as investors watch to see whether yesterday’s $117m interest payment was met.
Kremlin spokesman Dmitry Peskov said (via Reuters):
“The fact is that from the very beginning we have said that Russia has all the necessary funds and potential to prevent a default - there can be no defaults,”
“Any default that could arise would have an entirely artificial character.
Seperately, Russia’s finance ministry said today its order to pay the $117m interest payment had been fulfilled, and it will update the market separately on whether the payment was deposited into the account of payment agent Citibank.
Wednesday’s payments will test Moscow’s ability, and willingness, to keep servicing its external debt, as Western sanction have frozen much of its foreign exchange reserves.
Updated
P&O Ferries suspends sailings ahead of 'major announcement'
P&O Ferries has suspended sailings ahead of a “major announcement”, which will cause disruption on routes including Dover-Calais.
A statement which appears to be from the ferry operator posted on Twitter by Hull Labour MP Karl Turner said P&O’s vessels have been asked to discharge their passengers and cargo and standby for further instructions.
The announcement will “secure the long-term viability of P&O Ferries”, it explained.
The statement added:
“To facilitate this announcement all our vessels have been asked to discharge their passengers and cargo and standby for further instructions.
“This means we’re expecting all our ports to experience serious disruption today.”
.@POferries have apparently instructed their crews both ratings and officers to tie up vessel’s as they are making a ‘major’ announcement today. This is troubling for crews and their families. I am in contact with ratings and officer unions regarding this. pic.twitter.com/W2Kh5WNval
— Karl Turner MP (@KarlTurnerMP) March 17, 2022
P&O Ferries wrote on Twitter:
“Regretfully, P&O Ferries services are unable to run for the next few hours.
“Our port teams will guide you and travel will be arranged via an alternative operator.
“We apologise for the inconvenience this will have on your journey plans.”
#PODover 11:15 - Regretfully, P&O Ferries services are unable to run for the next few hours. Please arrive at the port as booked and we will arrange to get you away on an alternative carrier as quickly as possible. Once at the port please make your way to the DFDS check-in booths
— P&O Ferries Updates (@POferriesupdate) March 17, 2022
"P&O Ferries is not going into liquidation," the company tells me.
— Simon Calder (@SimonCalder) March 17, 2022
"We have asked all ships to come alongside, in preparation for a company announcement. Until then, services from P&O will not run and we are advising travellers of alternative arrangements”https://t.co/x2YdCQ5C2Y
Britain’s GlaxoSmithKline says it will prioritise the supply of essential medicines in Russia.
It will also not add patients to existing clinical trials or launch new trials, but isn’t quitting Russia completely.
In an update on Ukraine, GSK says:
- We have already stopped advertising our products and will now move to stop promotion-related activities in Russia.
- We will move to prioritising supply of products that are essential for people’s health while we can (and in compliance with sanctions).
- We are not starting any new clinical trials and will not enrol new patients into existing clinical trials.
- Any profits we make from our operations in Russia will be used in support of humanitarian relief efforts.
- We will continue to keep our approach under active review, given circumstances continue to change rapidly.
European markets are mixed in early trading, as yesterday’s rally threatens to fizzle out.
The FTSE 100 is flat, with Ocado (-8%), M&G (-5%) and NatWest (-3.5%) leading the fallers, and betting group Entain (+2.9%) and technology investor Scottish Mortgage (+2%) the top risers.
France’s CAC is 0.15% higher, while Germany’s DAX is 0.25% lower.
Food delivery group Deliveroo has warned that inflationary pressures are rising, after reporting widening losses for last year.
Deliveroo has reported a pre-tax loss of £298m for 2021, up from £213m in 2020, due to increased spending on advertising and technology.
Sales growth is expected to slow this year, with consumers being hit by rising inflation, the impact of the war in Ukraine, and interest rate rises.
Deliveroo expects gross transational values (the amount paid by customers) to rise by 15-25% in 2022, down from 70% growth in 2021.
It says:
Consumer price indices are expected to be high for some period of time.
Inflationary pressures have been building in recent months; this has been exacerbated by the grave crisis in Ukraine, and the broader geopolitical and economic impacts of this crisis are only just beginning to be felt.
Coupled with interest rate rises, consumers will be operating under a different spending environment in the quarters ahead. How this impacts consumer staples and discretionary categories, and where delivery of restaurant food and groceries fits into that environment, is not clear yet.
Shares have jumped 8% this morning, with Deliveroo laying out plans to reach long-term profitability.
But at 125p, they’re way below the 390p at which they floated nearly a year ago.
Ocado raises prices as costs soar, and cuts sales guidance
Online grocery business Ocado has lifted its prices after being hit by surging costs, and downgraded its growth forecasts as inflation squeezes household budgets.
In a sign of inflationary pressures, Ocado Retail told shareholders that the grocery sector has seen “significant increases” in the costs of raw materials and products in the last quarter, alongside energy, utilities and dry ice.
In response, it has lifted some retail prices where costs couldn’t be mitigated ‘in line with the rest of the market’.
Rising costs, delivered to your door. Ocado reports “significant increases in raw materials and product cost prices, energy, utilities, and dry ice” as food inflation runs to 4.3% in Feb. Says its@passed on price rises where costs couldn’t be mitigated
— Paul Kelso (@pkelso) March 17, 2022
Looking ahead, Ocado warned that it is hard to predict the scale of food price inflation over the course of this year, with the Ukraine war increasing the uncertainty.
Sales fell 5.7% during the last quarter to 27th February, compared with a year earlier when the UK was in lockdown. Although customer orders grew by 11.6%, the average basket size fell 15% (to £124).
Ocado Retail (a joint venture with M&S) has also cut its sales outlook as customers return to pre-pandemic spending patterns and lockdown restrictions end.
It now expects revenue growth in 2022 “closer to 10%,”, down from a prior forecast of growth in the “mid-teens.”
Ocado says:
These uncertainties over inflation, which have increased significantly in recent weeks due to the war in Ukraine, the overall level of market demand, and the continued return to pre-Covid shopping patterns, mean that while easier comparatives, strong customer demand, and further growth in capacity, should see revenue growth end the year in the high-teens, the full-year growth rate may be closer to 10%.
Shares in Ocado have dropped 7.5% in early trading, the bottom of the FTSE 100 leaderboard.
Updated
Chinese property shares soared for a second day thanks to a decision by Beijing’s leadership to throw the country’s struggling real estate sector a lifeline amid growing pressures at home and abroad.
Despite a downgrade for China’s third-biggest property developer Sunac on Thursday, stocks in the sector lifted again in Hong Kong and the mainland thanks to an announcement by vice premier Liu He, China’s economic tsar, on Wednesday that the government needed to reduce risks in the industry
In a sign of the heightened concern inside China’s Communist party leadership about the property sector and the economy in general – best illustrated by the near-collapse of the giant developer Evergrande – Liu urged the roll-out of market-friendly policies to support the economy.
Interesting moves in China property today. Stocks up again on govt stimulus talk - but huge debt problems not going away, eg No 3 firm #Sunac downgraded by @SPGlobalRatings Liquidity 'weak' and running out of cash #Evergrande https://t.co/Wa2sjuRXUe
— Martin Farrer (@MartinFarrer) March 17, 2022
#China property stocks skyrocketed morning after Chinese gov indicated it will not expand a trial on property taxes this year amid a housing market slump.#Sunac jumped as much as 40% in morning trade.#hsi pic.twitter.com/SfKTutolYZ
— ChinaPropertyFocus (@ChinaPropFocus) March 17, 2022
Chinese authorities ignited cautious hopes among analysts for more concrete policy steps to boost various struggling sectors, after top leaders pledged to “introduce policies that benefit markets" https://t.co/I95ndB3jn2
— Bloomberg (@business) March 17, 2022
Asia-Pacific markets have rallied for the second day running after China pledged to roll out new support measure to steady economy growth and bolster its capital markets.
Shares rose again after reports on Wednesday that China’s vice-premier Liu He told a State Council committee that the government should “actively introduce policies that benefit markets.”
Hopes of new measures to strengthen growth have lifted China’s CSI 300 index by 2% today.
Hong Kong’s Hang Seng has risen 7%, having slumped to six-year lows earlier this week on fears over rising Covid-19 cases and a US crackdown on China’s tech firms.
⚠️BREAKING:
— Investing.com (@Investingcom) March 17, 2022
*HONG KONG'S HANG SENG TECH INDEX JUMPS ANOTHER 6%, EXTENDING REBOUND AFTER RECENT SELLOFF
🇭🇰🇨🇳 pic.twitter.com/0L8lJDKuMn
The Bank’s nine-strong Monetary Policy Committee may be split over today’s decision, as they try to balance up the threats of rising inflation and slowing growth.
Dovish members might be more reluctant to vote to lift rates from 0.5% to 0.75%, while hawks around the table could push for a larger rise.
In February, four of the nine MPC members voted for a 50 basis point tightening, but were narrowly outvoted by five who plumped for 25bp.
Our economics editor Larry Elliott writes that the MPC could easily split three ways when it comes to the vote, given the factors pulling on the economy:
There is nothing the Bank of England can do to affect the global price of energy or food, but some members of the MPC are jittery about higher prices generating pressure for higher wages. The fear is that in a tight labour market, a wage-price spiral will set in.
Others on the committee are more concerned about the economy hitting the wall in the second half of 2022. Their fear is that over-aggressive interest rate increases will help push the economy into recession.
Before the Russian invasion of Ukraine, there had been speculation the Bank might get more aggressive with a half-point rise this month. That now looks less probable, although it cannot be entirely ruled out.
Nor can the suck-it-and-see approach, although leaving rates unchanged would also be a surprise given that the Bank was expecting inflation to rise above 7% next month even before Vladimir Putin complicated matters.
Updated
Forty four of 49 economists polled by Reuters predicted the BoE would raise interest rates today, with just five forecasting policymakers would sit tight.
Introduction: Bank of England rate rise expected
Good morning.
The Bank of England is expected to raise interest rates back to its pre-pandemic levels today as it tries to dampen the UK’s inflationary surge.
The City widely anticipates the BoE will hike borrowing costs for the third meeting in a row, up to 0.75% at noon today, the highest since March 2020, despite the economic uncertainty created by Russia’s invasion of Ukraine.
With inflation hitting 5.5% in January, and likely to rise over 7% in April, the UK central bank is keen to inflation expectations in check by tightening policy.
It is fretting that a wage-price spiral could develop as squeezed families seek help in the face of the worst cost-of-living squeeze in decades -- there was understandable anger last month when BoE governor Andrew Bailey suggested workers shouldn’t ask for a big pay rise.
The surge in oil and commodity prices following the Ukraine war has added to the inflationary pressure, and also darkened the UK’s economic outlook. It may not be a comfortable decision for the Bank, even though a hike looks likely.
As RBC Capital Markets explains:
The impact of the Russia-Ukraine war means that inflationary risks are very firmly tilted to the upside, and higher inflation is likely to persist for longer than previously thought with the hit to real incomes from that weighing on demand.
At some point, the MPC will be forced to consider the trade-off between responding to higher supply-side-driven inflation and dealing with slower growth.
Last night the Federal Reserve raised US interest rates for the first time since cutting them to record lows in 2020.
The Fed also signalled it was determined to get a grip on rising prices across the Atlantic, where US consumer prices have soared by 7.9% in the last year.
Fed officials now expect up to six more hikes before the end of this year, with Fed chair Jerome Powell telling reporters:
I’m old enough to remember what very high inflation was like,” he said. “We’re strongly committed as a committee to not allowing this higher inflation to become entrenched.”
The Fed's new dot plot shows officials expect to raise the fed funds rate six more times this year, based on median projections https://t.co/6tuvLHhCV7 pic.twitter.com/FBBXxtQ5uS
— Bloomberg Economics (@economics) March 16, 2022
A rapid hike in borrowing costs could slow the US economy, further hampering a global economy weakened by surging energy costs, the Ukraine war and the pandemic.
But Wall Street closed higher, after Powell said the US economy was “very strong” and could handle higher interest rates. The S&P 500 jumped over 2%.
Jim Reid of Deutsche Bank says:
Although I think the risks of a US recession by late 2023 / early 2024 are increasingly elevated I’m not convinced that the risks are particularly high in 2022.
The start of the hiking cycle isn’t historically the problem point for the economy or for that matter equities.
Also coming up today
Investors are watching to see if Russia managed to pay a $117m debt repayment on Wednesday. If it failed, the clock will start ticking on 30-day grace period towards its first default since the late 1990s.
Russia’s finance minister Anton Siluanov said yesterday that Moscow tried to make the interest payments on two dollar-denominated government bonds, and that it was up to the United States whether that payment order was accepted, given the sanctions on Russia’s economy.
If the dollar payment couldn’t go through, Russia could try paying in roubles - which rating agencies say would be a default....
European stock markets are set to rise, adding to yesterday’s gains as shares rebound from their slump earlier this month.
European Opening Calls:#FTSE 7299 +0.10%#DAX 14479 +0.27%#CAC 6606 +0.26%#AEX 708 +0.59%#MIB 24291 +0.02%#IBEX 8411 +0.37%#OMX 2181 +0.63%#SMI 11882 -0.16%#STOXX 3904 +0.37%#IGOpeningCall
— IGSquawk (@IGSquawk) March 17, 2022
The agenda
- 9.30am GMT: ECB president Christine Lagarde speaks at ‘The ECB and Its Watchers XXII’ press conference
- 10am GMT: Eurozone inflation for February (final reading)
- Noon: Bank of England interest rate decision
- 12.30pm GMT: US weekly jobless figures
Updated
