Closing summary
Time for a recap
Concerns over the global economic recovery have continued to mount, after China’s economic activity plummeted, and eurozone growth forecasts were cut.
China’s retail sales tumbled by over 11% in April, while industrial production contracted by 2.9% -- both the worst readings since the early months of the pandemic in 2020.
Unemployment rose, while property sales saw their biggest slump since August 2006.
Analysts warned that China’s economy could shrink this quarter, as Covid-19 lockdowns continued to hit consumer spending and factory output.
The EC has slashed its forecasts for European growth, as the Ukraine war disrupts supply chain and drive up energy commodity costs. It now expects the eurozone to only expand by 2.7% this year, from 4.0% previously.
Portugal is expected to record the fastest growth in the EU this year, at 5.8%, followed by Ireland with 5.4%. The weakest growth is seen in Estonia, with just 1%, followed by Germany and Finland with 1.6% each.
Growth forecast for 2022 (%):
— European Commission 🇪🇺 (@EU_Commission) May 16, 2022
🇵🇹 5.8
🇮🇪 5.4
🇲🇹 4.2
🇪🇸 4.0
🇦🇹 3.9
🇸🇮 3.7
🇵🇱 3.7
🇭🇺 3.6
🇬🇷 3.5
🇭🇷 3.4
🇳🇱 3.3
🇫🇷 3.1
🇪🇺 2.7
🇷🇴 2.6
🇩🇰 2.6
🇮🇹 2.4
🇱🇺 2.2
🇸🇪 2.3
🇸🇰 2.3
🇨🇾 2.3
🇧🇬 2.1
🇱🇻 2.0
🇧🇪 2.0
🇨🇿 1.9
🇱🇹 1.7
🇩🇪 1.6
🇫🇮 1.6
🇪🇪 1.0
Spring #ECForecast ↓
Inflation is expected to average 6.1% this year, three times the ECB’s target, having hit record highs of 7.5% last month. That will mean a serious cost of living squeeze for European households, as we’re also seeing in the UK.
EC vice-president Valdis Dombrovskis said the Ukraine war was hurting economic growth:
There is no doubt that the EU economy is going through a challenging period due to Russia’s war against Ukraine, and we have downgraded our forecast accordingly.
The overwhelming negative factor is the surge in energy prices, driving inflation to record highs and putting a strain on European businesses and households. While growth will continue this year and next, it will be much more subdued than previously expected. Uncertainty and risks to the outlook will remain high as long as Russia’s aggression continue
In the UK, the diesel price hit a new record high over £1.80, and fuel prices could keep rising if the EU ban on Russian oil goes ahead.
Greenpeace said its protesters have occupied a jetty where a tanker carrying a 33,000-tonne shipment of Russian diesel was due to berth, forcing it to turn around in the Thames, in an attempt to stop fossil fuel sales funding the Ukraine invasion.
BREAKING: We’ve just STOPPED a Russian Oil Tanker! 📣🚨
— Greenpeace UK (@GreenpeaceUK) May 16, 2022
Last night Greenpeace activists stopped a tanker carrying 33,000 tons of Russian diesel from docking in Essex.
If the UK govt won’t say no to funding Putin’s war on Ukraine, then we’ll do it for them.#OilFuelsWar pic.twitter.com/Y8WTA13Tql
Why are we stopping this ship from docking?
— Greenpeace UK (@GreenpeaceUK) May 16, 2022
Fossil fuels are funding Putin’s war in Ukraine. This ship alone contains tens of millions of £’s of Russian diesel.
The UK needs to get off Russian gas and switch to renewables for good. Learn more. 👇https://t.co/q5p6kqVCgG
McDonald’s started the process of selling its business in Russia after 30 years of operating its restaurants in the country, following Moscow’s invasion of Ukraine.
The fast food operator said the humanitarian crisis caused by Russia’s invasion and the unpredictable operating environment meant continuing operating in Russia was untenable as it was no longer “consistent with McDonald’s values”.
Ofgem has outlined plans to change the UK’s energy price cap every three months -- leading analyst to warn that bills could jump in both this October and next January.
In other news...
A group of 58 leading economists and politicians, including the former business minister Vince Cable, has written to the chancellor to say that scaling back City regulation will put the UK at risk of another financial crash.
London mayor Sadiq Khan has said the capital is “desperate” for commuters to return and needs to keep investing to lure them back, as he reopened the Northern line via Bank station, a key connection into the City.
Administrators for the collapsed rent-to-own firm BrightHouse, which specialised in loans for big-ticket items such as fridges and sofas, have warned they will not have enough money to compensate thousands of customers who were left with unaffordable debts.
Greggs has revealed its sales in large cities and locations near offices are lagging behind those elsewhere in the country amid the shift to working from home.
Ryanair warned of a “fragile” recovery in airline passenger numbers after Russia’s invasion of Ukraine and the Omicron coronavirus variant pushed it to a €355m loss for the financial year.
Lifestyle brand Made.com has slashed its sales forecasts and issued a profits warning, warning that the market is much weaker than forecast.
Stocks have dipped on Wall Street, as recession fears continue to weigh on markets. But in London, the FTSE 100 has shrugged off earlier losses to be up 36 points, or 0.5%, at 7455 in late trading.
And the Bank of England governor Andrew Bailey has told MPs that the UK economy has experienced an “almost unprecedented” run of shocks, with the Ukraine war coming on top of Covid
We can’t predict things like wars ... that’s not really in our remit.
Andrew Bailey testifies to MPs
Andrew Bailey, governor of the Bank of England, has started to give evidence to the Commons Treasury committee about the risk of a recession.
He’s appearing amid growing criticism from government benches about the UK’s soaring inflation rate (which hit 7% in March, even before energy bills soared in April).
Bailey has begun by telling MPs that he’s not at all happy that inflation is overshooting the Bank’s 2% targets, and that most of the overshoot is due to energy and tradeable goods prices.
He argues that the Bank couldn’t reasonably have done anything differently regarding monetary policy (critics say it should have raised interest rates sooner....)
#BOE's Bailey not a happy bunny over inflation outlook:
— Forex Analytix (@forexanalytix) May 16, 2022
This is a bad situation to be in.
Blames 80% of inflation overshoot on energy and goods.
Doesn't think that could have reasonably done anything differently with mon pol.$GBP
Our Politics Live blog will be tracking the main developments:
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