Closing summary: British energy bills rise and P&O Ferries faces criminal investigation
British consumers’ minds have been focused on energy prices on a “Bleak Friday” on which the long-trailed energy price cap increase has taken effect and a series of other bills have increased.
Such is the pressure on UK households that Frances O’Grady, head of the Trades Union Congress, has called for an “emergency budget” from the chancellor to address the cost-of-living crisis, after Rishi Sunak’s spring statement provoked cross-party dismay for its perceived lack of action.
Customers seeking to secure cheaper energy bills had been advised to submit meter readings online before Friday’s 54% increase to the cap on the average annual bill rises to £1,971.
The websites of energy providers are struggling to cope with a deluge of traffic on “bleak Friday”, as the largest increase in gas and electricity prices in living memory takes effect on the same day as a string of scheduled rises to taxes and household services.
The other big UK business news of the day is on P&O Ferries, which faces the prospect of criminal and civil investigations by the Insolvency Service after sacking nearly 800 staff without consultation.
The government had previously backtracked on taking action itself, despite huge cross-party pressure for some form of redress against the company, whose chief executive Peter Hebblethwaite admitted in the House of Commons last week that he deliberately chose not to consult workers.
Mick Lynch, general secretary of the RMT, a union representing ferry and other transport workers, said:
There are clear grounds to detain P&O’s ship whilst criminal and civil investigations are completed. Justice must be delivered for our members in the face of continued corporate hostility.
It has been a fairly gentle day on financial markets, albeit with some volatility around oil prices which are bobbing around the $100-$105 per barrel mark, depending on your flavour.
Analysts are of course focused on the consequences of Russia’s invasion of Ukraine, but also the response of nations such as the US, which is planning to release millions of barrels of oil to lesson price pressures at the pump.
The S&P 500 edged up by 0.3% after US non-farm payrolls missed economists’ expectations but still signalled pretty strong momentum in the US economy.
The gain was lower than expected but was also the 11th consecutive month of gains above 400,000, the longest such stretch of growth on record. The unemployment rate fell from 3.8% to 3.6%, its lowest level since the pandemic struck the US.
You can continue to follow our live coverage from the war in Ukraine and more on the Guardian website.
In Ukraine, an explosion rocks an oil depot in Russia; battles being fought near Kyiv, says mayor:
In the UK, P&O Ferries facing criminal investigation after sacking 800 workers:
In the US, Florida governor threatens to retaliate against Disney over ‘don’t say gay’ law:
And in sport, the draw for men’s football World Cup finals is due to begin in Doha at 5pm BST:
Thank you as ever for joining us today in our live coverage of business, economics and financial markets. Please do join Graeme Wearden on Monday for more. JJ
The Insolvency Service has published a short statement on its website confirming the investigations into P&O Ferries:
Following its enquiries, the Insolvency Service has commenced formal criminal and civil investigations into the circumstances surrounding the recent redundancies made by P&O Ferries.
As these are ongoing investigations, no further comment or information can be provided at this time.
Criminal investigation opened against P&O Ferries
The UK’s Insolvency Service has started a formal criminal investigation into P&O Ferries after the company’s management deliberately sacked almost 800 workers with no consultation.
Business secretary Kwasi Kwarteng on Friday published a letter from the agency, which regulates UK company directors, which confirmed both criminal and civil investigations had been opened.
The letter said the Insolvency Service could not comment further while the investigations were open.
Following my letter to the Insolvency Service last week, formal criminal and civil investigations into P&O Ferries have now commenced.
— Kwasi Kwarteng (@KwasiKwarteng) April 1, 2022
Transport Secretary @GrantShapps and I will continue to follow this matter closely as the investigations progress. pic.twitter.com/CdtInufaIS
The US jobs gain was the 11th consecutive month of gains above 400,000, the longest such stretch of growth on record.
The unemployment rate fell from 3.8% to 3.6%. The largest gains were in leisure and hospitality which added 112,000 new jobs in March.
The US is experiencing record levels of job openings and the number of people quitting their jobs in search of new work is also at a record high. The worker shortage is pushing up wages.
Over the past 12 months, average hourly earnings have increased by 5.6%.
More details to follow soon here:
Justin Wolfers, an economist at the University of Michigan, said there was little sign of a slowing US economy in the jobs data.
Pretty darn healthy payrolls report: Jobs +431k in March, and unemployment is down to 3.6%.
— Justin Wolfers (@JustinWolfers) April 1, 2022
Add in strong revisions adding +95k over the previous two months, and the recovery is really motoring along.
And while the number may have been lower than expected, it comes off the back of a very strong run.
US payrolls growth slowed in March, after February's surge, but the labor market's expansion continued at a solid pace last month. Headwinds may be building for the economy, but there are minimal signs of trouble for now via job creation: pic.twitter.com/dKVIRmtkAM
— James Picerno (@jpicerno) April 1, 2022
The US economy has now recovered more than 90% of the 22 million jobs lost at the peak of the pandemic.
— Steve Herman (@W7VOA) April 1, 2022
It’s important to add that Wall Street futures have not really budged, with only a slight retreat from the gains made before the announcement.
Futures for the S&P 500, the US benchmark, are still suggesting Wall Street will gain 0.4% when they open in 40 minutes’ time.
Neil Birrell, chief investment officer at Premier Miton Investors, is taking a “glass half full” view of the data. He said:
With some sentiment indicators in the US pointing in the wrong direction, the jobs data also came in weaker than expected, but not as bad as many would have feared given the backdrop.
Job vacancies are still being filled and wage growth remains robust, suggesting that the economy is in good shape. That is the case for now; the key will be the impact on the jobs market and broad economy as rates jump higher and growth slows. But this number probably inks in a 0.5% rate hike at the Fed’s next meeting.
Some of the early reactions to the jobs data have focused on the missed forecast on non-farm payrolls - suggesting that might mean a weakening economy.
That could cause problems for the US Federal Reserve’s plans to raise interest rates, a move that would be more difficult if growth is slowing.
Richard Flynn, managing director at Charles Schwab UK, said:
Today’s jobs report is below expectations and may concern investors. Whilst the US economy exited the acute phase of the pandemic with incredibly strong growth, which persisted until late last year, the Russian invasion of Ukraine has overturned short-term assumptions about the direction of the US economy. High and rising inflation may dampen households’ spending power, slowing economic growth.
Investors had hoped that a healthy labour market could offer some tailwinds against the headwinds of inflation and tightening monetary policy. Yet, today’s figures may be interpreted as an indication of a weakening economy. It is likely that recent bouts of equity market volatility will persist. The disciplines of diversification and periodic rebalancing can help investors to navigate this period of heightened volatility.”
Naeem Aslam, chief market analyst at AvaTrade, a spreadbetting platform, said:
The US data has once given a clear signal that the Fed does need to think carefully about their monetary policy stance as the economy isn’t standing on extremely solid footing. Stock futures have moved lower on the back of the data but gold prices haven’t moved higher because traders believe that another interest rate hike of 25 basis points is still on cards.
US unemployment falls to 3.6%, a new post-pandemic low
The US unemployment rate also fell to 3.6% to hit a new post-pandemic low, despite the slower pace of job creation.
A falling unemployment rate could give the US Federal Reserve, the central bank, more leeway to raise interest rates as it seeks to target rising inflationary pressures in the US and abroad.
We will have reaction to the US jobs data as it comes through.
US economy created fewer jobs than expected in March - non-farm payrolls
The US economy created 431,000 jobs in March, less than economists had expected, official figures show.
Economists had on average expected the closely followed non-farm payrolls data to hit 490,000 jobs, down from 678,000 in February. However, the US Bureau of Labor Statistics also revised up the February job creation number to 750,000.
Buckle up. The US jobs report for March is now incoming: perhaps the key data release for seeing where the world’s largest economy is heading.
The previous reading for US non-farm payrolls was 678,000 new jobs added. The consensus among economists is for a drop to 490,000 new jobs in March.
As the UK trading day reaches lunchtime, here are a couple of servings of hearty business news.
First of all, Pizza Express waiting staff have won back a bigger slice of their tips after a year-long campaign against a change that handed more to kitchen staff, writes Sarah Butler.
The restaurant workers were forced to take action after their share of tips and service charges paid on credit and debit cards was cut from 70% to 50% last year at a time when pay was already under pressure from social-distancing measures that limited the number of diners.
And at the top end of the market, the restaurateurs behind the famous Wolseley restaurant in London have been kicked out of the fine dining group they founded in 1981, Rupert Neate writes.
Jeremy King, who with his business partner Chris Corbin launched and ran many of London’s top restaurants including Wolseley next to the Ritz on Piccadilly, Delaunay on the Strand and Le Caprice in Mayfair, announced on Friday he had lost a battle to buy his venture, Corbin & King, out of administration.
The bidding war was won by American-born Thai billionaire William Heinecke’s Minor International, which is understood to have paid more than £60m in an auction that took place early on Friday morning. Minor had previously owned 74% of Corbin & King, and had forced the company into administration.
An interesting development in a saga involving the sale of a small Welsh semiconductor manufacturer to a Chinese-owned company: news site Politico has reported that the government is set to approve the takeover after it found no national security concerns.
The sale of Newport Wafer Fab was initially passed by the government, until Prime Minister Boris Johnson intervened last July to ask his national security adviser to review it. It came at a time when the government was under pressure to toughen its stance towards China.
Politico reports:
Ministers have decided not to intervene in the takeover of Newport Wafer Fab, which makes semiconductors, following a review by the government’s national security adviser, Stephen Lovegrove.
More than six months after he was asked to examine the sale, Lovegrove concluded there were not enough security concerns to block it, according to two government officials.
However, a government source said: “No decisions have been made. Nothing has been ‘approved’.”
The business secretary still has the power to intervene in the transaction under the National Security and Investment Act, the source added.
EXC: The government has quietly approved the sale of Newport Wafer Fab, the UK's biggest microchip factory, to a Chinese owned company
— Eleni Courea (@EleniCourea) April 1, 2022
Boris Johnson had asked his national security adviser Stephen Lovegrove to look again at the deal last summerhttps://t.co/D0yFJ8DN4V
Away from UK energy, Evraz, the steelmaker part-owned by sanctioned Russia-linked oligarch Roman Abramovich, has abandoned a plan to demerge its coal assets because of sanctions on Russia.
Evraz has not been sanctioned itself, but trading in its shares have been suspended on the London Stock Exchange after it was accused by the UK government of “potentially supplying steel to the Russian military which may have been used in the production of tanks”.
Evraz strenuously denied the allegation, made in the sanctions designation for Abramovich, and the UK did not offer its evidence for the claim.
Before Russia’s invasion of Ukraine Evraz had planned to demerge its coal assets consolidated under a new company, PJSC Raspadskaya. It suspended that plan and has now abandoned it.
In a statement to the stock market on Friday, Evraz said:
In light of the unprecedented sanctions against Russia and Russian special economic measures in response to sanctions, which were outside of control of the company, execution of the transaction became technically impossible and the decision has been taken not to proceed with the demerger.
It is also worth noting from Cornwall Insights’s graph that they forecast the October price cap increase will be the peak, with the cap expected to fall back for the summer 2023 and winter 2023 periods.
However, that will be cold comfort if you see that the forecast prices will still be higher than today’s increased cap: it expects a cap of £2,040.55 for summer 2023 and remaining at about £2,000 for the next winter of 2023.
It suggests that without some form of government action prices will remain at levels already deemed unaffordable by many experts.
Energy price cap to rise to almost £2,600 in autumn, say analysts
Today is the first day of the new energy price cap, which means the average dual fuel energy tariff has risen by more than 54% to £1,971.
Energy analysts at Cornwall Insight predicted that one to within 3% and today they’ve put out a forecast for the winter price cap, due to be announced in October.
The good news is that, while some have predicted bills could go to £3,000, Cornwall reckon it’ll be somewhat lower than that, at £2,599.92.
The bad news is that this still represents a doubling of energy bills within the space of a year, due to sky-high gas prices, a trend prolonged by the war in Ukraine.
Dr Craig Lowrey, principal consultant at Cornwall Insight, says the government may need to do more to support households faced with a choice between heating or eating:
While the government’s £350 worth of support will provide some respite to consumers this time around - albeit not far enough - with the cap almost guaranteed to rise again, the government will need to look at expanding the scale and scope of this support after October at the very least.
A reminder from personal finance journalist Paul Lewis on how the poorest households are often hit the hardest: some will be charged money even if they use no electricity or gas whatsoever.
Customers using prepayment meters are often among the most vulnerable, and they are also facing a bigger price cap hike in cash terms than people on standard variable monthly tariffs. Their price cap is increasing by £708, from £1,309 to £2,017.
Yet even if they are disconnected and cannot cook or heat their homes, weekly standing charges will remain.
From today people on prepayment meters who run out of money and disconnect themselves from electricity or gas will find their electric meter will still be ticking up at £3.53 a week standing charge and the gas meter at £2.62 – £6.15 a week to be without heat, light, or cooking.
— Paul Lewis (@paullewismoney) April 1, 2022
In the UK the Trades Union Congress (TUC), a union body, has called for an “emergency budget to help working families who are at “breaking point” because of the cost-of-living crisis.
The TUC has estimated that energy bills will rise at least 10 times faster than wages this year, the Press Association reports.
The union body said measures announced in the Chancellor’s spring statement last week were “woefully inadequate”, warning of the worst living standards crisis in generations. It wants chancellor Rishi Sunak to increase the minimum wage to at least £10 an hour, new grants paid for by a windfall tax on energy and oil company profits, and an increase in universal credit.
Frances O’Grady, the TUC’s general secretary, said:
People shouldn’t be struggling to cover the basics, but millions of families have been pushed to breaking point by spiralling bills and soaring inflation.
This is a living standards emergency. Rishi Sunak must come back to Parliament and present an emergency budget. We need a proper package of economic support for families.
Britain faces the worst living standards crisis in generations. We need an emergency budget to bring down energy bills and to boost pay, universal credit and pensions.
Energy price surge pushes Eurozone inflation to new record high
Soaring energy prices have pushed inflation in the Eurozone to 7.5%, the highest since the single currency was created, according to a first estimate by Eurostat, the EU’s statistical office.
That was a rapid increase from the 5.9% in February, and much higher than the 6.6% expected by economists.
It is the same story across Europe as in the UK: rising energy prices are hitting consumers hardest.
Eurostat said:
Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in March (44.7%, compared with 32.0% in February), followed by food, alcohol & tobacco (5.0%, compared with 4.2% in February), non-energy industrial goods (3.4%, compared with 3.1% in February) and services (2.7%, compared with 2.5% in February).
An important one to watch (which could eventually have knock-on effects on UK consumers as well): gas supplies from Russia to Europe appear to be running smoothly, for now, despite Vladimir Putin’s threat to cut them off.
Reuters reports that Russian state-owned energy giant Gazprom said on Friday it was continuing to supply natural gas to Europe via Ukraine in line with requests from European consumers.
The company said requests stood at 108.4 million cubic metres (mcm) for April 1, down from 109.5 mcm a day earlier.
Russia’s President Putin had on Thursday threatened to turn off the taps unless customers pay in roubles, a move that would help to strengthen the currency and weaken the effect of sanctions that have hit Russia’s financial system hard.
Threatening Europe’s energy supply is one of Putin’s biggest levers in the broader confrontation with the Nato allies, although using it would probably mark the final stage of the country’s economic isolation from the world’s richest countries. Germany has already warned industry that it could ration gas as it prepares to be cut off.
Oil prices drop further following Biden reserve release announcement
Oil prices are in retreat so far on Friday: West Texas Intermediate futures prices have dropped back below $99 for the first time in two weeks, after President Joe Biden said the US would carry out the largest release ever from its strategic petroleum reserve.
The US will release 1m barrels of oil per day for six months, starting in May.
The price of a barrel of WTI, the North American benchmark, for May delivery has dropped by $1.30 on Friday, or... 1.3%.
Futures prices of the North Sea benchmark, Brent Crude, for June delivery are down by 1% today, leaving them at $103.73. The price dropped by 5.6% on Thursday.
The Biden administration is reportedly considering extending the release for as long as six months, with a potential limit of 180m barrels drawn from the current national reserve of 568m barrels.
You can read more info here:
Energy companies have not managed to cope with millions of concerned households: many websites went down on Thursday as people tried to take meter readings to ensure they don’t overpay for energy.
There is still time for many customers, according to consumer expert Martin Lewis.
Can't submit your meter reading? just take a photo of it, you've usually up to a week to get it to them. #MeterReadingDay
— Martin Lewis (@MartinSLewis) March 31, 2022
But then again, some companies still seem to be under pressure. For instance, the meter reading page of British Gas (owned by Centrica), one of Britain’s biggest suppliers, displayed an error message on Friday morning.
Updated
A reminder of what is taking effect from today: the price cap is the highest that the average variable tariff fuel bill can rise - so it is essentially capping the rates energy providers can charge.
The energy price cap for those on default tariffs who pay by direct debit is rising by £693 from £1,277 to £1,971 from 1 April. That’s a 54% increase - but it is not the maximum that households will pay if they use more energy.
Prepayment customers will see a bigger jump, with their price cap going up by £708, from £1,309 to £2,017.
Europe’s stock markets are open, but there is not much movement on this spring Friday morning.
The FTSE 100 is flat, up by 0.03% and the mid-cap FTSE 250 is up by 0.33%.
Germany’s Dax benchmark is up by 0.1%, France’s Cac 40 has gained 0.13%, as has Europe’s broader Stoxx 600 index.
Energy price cap increase to leave 5m households in fuel stress
Good morning, and welcome to our live rolling coverage of business, economics and financial markets.
Millions of households across Great Britain will pay more for their gas and electricity bills from today as the biggest ever increase in energy bills takes effect.
Ofgem’s price cap has risen by 54% to reflect higher wholesale energy costs that are now being passed onto consumers, adding to a growing cost-of-living crisis.
The Resolution Foundation, a thinktank, said the number of English households in fuel stress would double overnight from 2.5m to 5m.
Energy price pressures are only likely to get worse because of Russia’s invasion of Ukraine and threats to Europe’s gas supply. Russia is a major supplier to countries such as Germany and President Vladimir Putin on Thursday said European customers would need to pay for gas in roubles, although the details of the order appear to let buyers continue to use euros or dollars, for now.
Jonathan Marshall, the Resolution Foundation’s senior economist, said:
Another increase in energy bills this autumn hastens the need for more immediate support, as well as a clear, long-term strategy for improving home insulation, ramping up renewable and nuclear electricity generation, and reforming energy markets so that families’ energy bills are less dependent on global gas prices.
Citizens Advice said around five million people would be unable to pay their energy bills from April, even accounting for the support the Government has already announced, the Press Association reports.
It warned this number would almost triple to one in four people in the UK - more than 14m - if the price cap rises again in October based on current predictions.
Energy prices are not the only thing that are rising: a poll by the British Chambers of Commerce has found that more UK businesses are preparing to raise prices than at any time since the 1980, likely further stoking inflationary pressure.
When firms were asked by the BCC what pressures they were facing to raise prices, 92% of manufacturers cited raw materials, while 56% pointed to energy and transport costs among other overheads.
It is all adding to the pressure on the government, which faced a slew of negative headlines following chancellor Rishi Sunak’s spring statement. The statement was perceived as doing little to tackle the biggest expected fall in living standards since the 1950s.
The agenda
- 10am BST: Eurozone inflation (March; previous: 5.9%; consensus: 6.6%)
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1:30pm BST: US non-farm payrolls (March; prev: 678,000; consensus: 490,000)
