![A crude oil tanker arriving at Port of New York and New Jersey last week.](https://media.guim.co.uk/2486f359619631b077b3c8eaa3a9327abe37bbba/0_158_3500_2100/1000.jpg)
Closing post
With Brent crude still sharply lower tonight at around $100/barrel, and US crude below $97, it’s time to wrap up.
Here are today’s main stories.
First, oil has tumbled on hopes of progress in the Russia-Ukraine ceasefire talks, and in the Iran nuclear deal negotiations. Worries that China’s economic recovery will be derailed by the latest Covid outbreak also hit energy, and rattled markets in Asia again.
Opec warned that the Ukraine war could hit demand for oil, as well as raising economic uncertainty and dampening investment.
Petrol and diesel prices hit record highs again yesterday....but the drop in crude prices could push prices at the pumps down soon.
The EU and UK have both imposed fresh sanctions over Russia’s invasion of Ukraine, with imports into Britain such as vodka incurring an extra 35% tariff.
- UK hits Russian goods with new tariffs and bans luxury exports
- German recession looms after record slump in investor morale
The UK’s cost of living squeeze has tightened, with regular pay falling behind inflation at the fastest rate since 2014:
And also...
Goodnight. GW
Updated
European market close: Oil tumble lifts shares off lows
European stock markets have rebounded from their morning lows, cheered by the drop in the oil price.
In London, the FTSE 100 index has closed 18 points lower at 7175, down 0.25% today. Worries about China’s Covid outbreaks hit mining companies, and Asia-Pacific focused Standard Chartered and Prudential.
Plumbing group Ferguson lost 6%, despite reporting a near-32% jump in adjusted sales this morning, after it cuationed that “first half tailwinds” on gross profit margins will probably ease off.
Germany’s DAX lost just 0.1%, while France’s CAC dipped 0.25% -- both recovering from 2% falls this morning.
Michael Hewson of CMC Markets sums up the day:
European markets initially fell back sharply today, taking their cues from a big sell-off in Asia that appeared to be prompted by concerns that China might open itself up to US sanctions if it acquiesced to reported Russian requests for military aid in its war with Ukraine.
Economic concerns over increasing Covid lockdowns have also served to act as a drag.
As the day progressed, we’ve seen a modest stabilisation, with markets pulling off their lows as lower oil prices, and a slightly softer than expected core US PPI number pulled European equities up to finish the day with only modest losses.
📊 Fechamento da Europa:
— MyCAP Investimentos (@mycapinvest) March 15, 2022
🇪🇺 STOXX 600 -0,28%
🇬🇧 FTSE 100 -0,25%
🇮🇹 FTSE MIB 0,31%
🇪🇸 IBEX 35 0,02%
🇵🇹 PSI 20 -0,16%
🇫🇷 CAC 40 -0,23%
🇩🇪 DAX -0,09%
UK event management firm Hyve to exit Russia
British event management firm Hyve Group has announced it has decided to exit Russia.
Hyve, which has organised a range of shows in Russia, says it took the decision as the invasion has continued to escalate.
The London-listed company adds:
Hyve recognises the impact this will have on its colleagues and remains determined to find an outcome which offers assurance and stability for all those affected.
Meanwhile, the Group continues to provide support to its Ukrainian team and their families, including through financial and relocation assistance.
Last Friday, Hyve said that Russian events made up 27% of its revenues in the 2019 financial year (before the pandemic), down from 50% two years earlier.
Hyve Russia has a series of events planned for this year, including security conference Securika Moscow in April (where products and services for ‘ensuring civil security’ are exhibited), and food and drink exhibition, WorldFood Moscow, in September.
Hyve had faced pressure to pull out of Russia, with calls for a boycott of its BETT education show in London unless it acted.
As a values-led organisation, @TeacherDevTrust will not continue to support nor participate in the BETT show if the parent group Hyve continues operating events in Russia. We have contacted them and understand a statement is coming tonight and we will review and respond to it. https://t.co/cdHQRfyDqm
— David Weston 🇺🇦💛💙 (@informed_edu) March 15, 2022
🚨NEW BLOG🚨, and it's not one I enjoyed writing...
— Joshua Perry (@bringmoredata) March 14, 2022
I'm boycotting BETT, and I suggest you should toohttps://t.co/mxeh4GrttR
Updated
Homeware retail chain Wilko has admitted it “got it wrong” for telling staff they could come into work if they tested positive for Covid-19.
Wilko apologised after it was criticised for issuing “reckless” guidance amid a new wave of coronavirus infections and hospitalisations.
The group, which has 414 stores and 16,000 employees across the UK, sent a memo to staff with guidance on its workplace policy after the government’s relaxation of rules as part of its “living with Covid” plan published last month.
“If you test positive for Covid-19 and feel well, you can continue to come to work,” stated the staff memo, which applied from 1 March. It added:
“If you feel too unwell, you can follow the absence policy.”
The rouble has strengthened today, continuing its recent recovery after it collapsed when the Ukraine invasion began.
One US dollar now buys around 105 roubles, compared with a record rouble low of 135 to the dollar earlier this month.
However, as this chart shows, the rouble has still lost a third of its value since the war started:
![The rouble vs the US dollar](https://media.guim.co.uk/cc1d1bd5dc4ba695029b5d0a47969db81b9710d4/0_0_647_391/500.jpg)
Russians are buying more gold to protect their savings after the war in Ukraine caused the rouble to slump, and sales of foreign currencies were banned.
The increased household demand for physical gold has prompted Russia’s central bank to halt its own purchases from banks to ensure there’s enough supply for local buyers, it announced today.
The scrapping of a 20% value-added tax on purchases of metals also spurred transactions, the Bank of Russia said said.
Gold made up around 21% of the Bank of Russia’s $640bn reserves - although around $300bn of those reserves are now out of reach, due to the freeze on its foreign exchanges holdings overseas.
Russians are buying more gold to protect their savings after Vladimir Putin’s invasion of Ukraine sparked a collapse in the ruble https://t.co/x2pD2Cfrly
— Bloomberg Asia (@BloombergAsia) March 15, 2022
![A branch of HSBC bank in Londo.](https://media.guim.co.uk/91b96123d3abb27ffbcdb17706bba0de8af01c11/1451_278_4117_2470/1000.jpg)
UK bank HSBC is to shut a further 69 branches, on top of the 82 it axed last year, claiming the pandemic has accelerated the shift to digital banking.
The 69 branches that are closing are spread across the UK, from Inverness in the Scottish Highlands to Falmouth in Cornwall.
Those being axed include branches in high-profile London locations such as New Bond Street, Moorgate, Angel Islington and Gloucester Road in South Kensington – areas that are likely to have seen a reduction in footfall during the pandemic, when millions of the capital’s employees turned to working from home.
Here’s the full story:
UK steelworkers call for help over surging energy costs
Steel workers from across the country staged a protest outside Parliament today, calling for urgent support for their industry in next week’s Spring Statement.
Workers from steel areas including Rotherham, South Yorkshire, Scunthorpe, Lincolnshire, and Port Talbot in South Wales were joined by MPs and trade union officials to demand urgent action from the Government.
They warned that spiralling energy costs have led to production pauses, threatening job losses and the future of British steelmaking.
Roy Rickhuss, general secretary of the Community union, said:
“Steelworkers call on the Chancellor to act now to get us through this energy crisis and give us a level playing field to compete with EU producers.
“Our steel industry is as important now as it’s ever been, and the pandemic highlighted the dangers of relying on fragile international trading arrangements for essential goods.
“Russia’s invasion of Ukraine brings new uncertainties to the world, and reinforces the need for a strong domestic steel industry at the base of strategic supply chains vital to our national security.
Today steelworkers rallied at Parliament for the future of their industry. Their message to @RishiSunak - ⁰⁰We need action on energy prices, and we need it now. For our jobs, our industry and our country. #WeNeedOurSteel pic.twitter.com/HQRlOxMSZD
— Community Union (@CommunityUnion) March 15, 2022
Trade body UK Steel warned last autumn that energy costs in Britain were much higher than in rivals in Germany, and that overseas steelmakers were laughing at UK rivals:
The slump in the oil price, down over 20% in the last week, is ‘spectacular’, writes Fawad Razaqzada, market analyst with ThinkMarkets:
I think the biggest driver behind the sell-off in oil has been this: investor realisation that Europe is not going to wean off Russian oil supply immediately. Everything else is secondary, including the potential return of Iranian oil supply. Meanwhile, OPEC has highlighted the risk to the oil demand outlook arising from the Ukraine war and surging inflation.
Also weighing on oil prices is something that had sent prices into the negative last year: surging covid cases and lockdowns. This time, in China, the biggest oil importer in the world. Here, Covid cases have spiked sharply, and very sharply in certain regions. Consequently, the government has put tens of millions of people in lockdown. The most important regions are the entire Jilin province and technology hub Shenzhen.
The lockdowns have also weighed heavily on the Chinese yuan. Speaking of which, a report from WSJ says talks over pricing oil in yuan have accelerated as Saudis “have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom.”
![The Brent crude oil price](https://media.guim.co.uk/5cfd924638cd5cdda5c0e7294a681272cff5b105/0_0_1516_857/1000.jpg)
![The New York Stock Exchange in Manhattan, New York City](https://media.guim.co.uk/75f54c564924f3a986a2409114857a7b6a1c4bf9/0_0_3500_2333/1000.jpg)
The US stock market has risen in morning trading, as falling oil prices help to lift the mood on Wall Street.
Nearly every sector is up, with travel stocks, banks and financial services companies, consumer goods and services firms and tech firms rallying.
Airline shares are leading the way, after US carriers raised their sales forecasts despite the recent surge in oil, and the Ukraine war.
AFP explains:
Major US carriers lifted their revenue forecasts Tuesday as a faster-than-expected travel recovery from the latest Covid-19 wave mitigates the drag from higher jet fuel costs.
American Airlines, Delta Air Lines, United Airlines and Southwest Airlines all offered similar appraisals of market conditions in presentations at an investment conference Tuesday.
American now expects first-quarter revenues to be down 17 percent compared with the 2019 period, after previously projecting a drop of as much as 22 percent.
“The improvement in revenue is expected to more than offset the increases in fuel and other expenses in the quarter,” American said in a securities filing.
Delta Air Lines reported “strong spring and summer travel demand” as it lifted its revenue forecast for the first quarter of 2022.
American, United and Delta are all up around 10%, leading the S&P 500 risers.
The Dow Jones industrial average is up 292 points, or 0.9%, at 33,237 points, led by Walt Disney (+3.1%), McDonalds (+2.9%) and American Express (+2.7%).
Russia’s invasion of Ukraine threatens to intensify the surge in global inflation, hurting oil demand and investment, OPEC warned https://t.co/DvbasYyRTO
— Bloomberg Asia (@BloombergAsia) March 15, 2022
Opec: Ukraine war has lifted economic uncertainty, could hit oil demand
Oil cartel Opec has said the Ukraine war has driven up economic uncertainty, and could hit demand for oil.
In its latest monthly report, the Organization of the Petroleum Exporting Countries says the conflict is adding to the downside risks facing the world economy this year.
It warns that “the latest events in Eastern Europe may derail the recovery”, and could hit oil consumption and investment.
Given the uncertainty, Opec hasn’t yet changed its prediction for robust demand growth this year, but is keeping economic forecasts under review.
While the drag of the pandemic was still being felt in major economies in 1Q22, the war in Eastern Europe has led to a level shift in global economic uncertainty.
Opec flags that the conflict has driven up commodity prices, escalating global inflation, and heavily hit trade flows and transportation logistics.
The report also points out that financial conditions have tightened, due to currency moves, falling share prices and an ongoing repricing of debt.
Opec says that “clearly, this will impact economic activities in 2022”, although it’s not clear at this stage what the full consequences of the invasion will be.
Looking ahead, and given the latest developments, which are still only beginning to unfold, it is clear that uncertainty will dominate in the remaining months of 2022: i.e.: uncertainty with regard to the scope and impact of the current geopolitical turmoil, restrictions and restructuring of production and trade flows, uncertainty on to what degree this will impact inflation and oil demand, and how this will serve to accelerate the drive towards energy transition, particularly in Europe.
Given this unprecedented level of uncertainty, Opec is keeping its forecast that global demand will rise by 4.2m barrels per day in 2022 “under assessment” until there is more clarity.
In light of these highly volatile times, the safeguarding of market stability will remain paramount to both oil producing and consuming countries.
Updated
Surging energy prices have meant American producers kept hiking prices at a record annual pace in February.
US producer prices (which measures what firms receive for their goods and services) rose 10.0% last month, matching January’s record reading.
That shows that inflationary pressures are still strong, meaning consumers will continue to face higher prices in coming months.
The Producer Price Index (#PPI) rose 0.8% in February, slightly lower than expectations (+0.9%). The PPI is up 10.0% year-over-year. Higher energy costs fueled the rise in PPI last month. #inflation pic.twitter.com/NHjt4KTtfE
— Cetera Investment Management (@ceteraIM) March 15, 2022
Producer prices rose 0.8% in February alone, slower than January’s 1.2% jump, with goods price up by a record 2.4% in the month.
This was driven by a 14.8% surge in gasoline, as motorists in the US (as in the UK, Europe and elsewhere) were hit by price rises at the pumps.
Core producer price inflation did ease a little -- PPI excluding foods, energy, and trade services rose 6.6% over the last year, and by 0.2% in the month alone.
🇺🇸Producer prices (PPI) +0.8% in Feb
— Gregory Daco (@GregDaco) March 15, 2022
▶️Core +0.2%, slower sequential momentum
🟡Services +0.0%
🟡Goods +2.4% (record gain!)
▶️Energy +8.2% (gasoline)
▶️Food +1.9%
▶️Core +0.7%
🔥Headline PPI #inflation 10% (flat)
🔥Core PPI inflation 6.6% (-0.2pt) pic.twitter.com/ty0HDAHUde
Inflationary concerns mean the US Federal Reserve is all-but-certain to raise interest rates on Wednesday, for the first time since the pandemic began.
The UK government has hit hundreds of Russian individuals and entities with new sanctions.
The list includes super-wealthy individuals and their families with a combined net worth of £100bn.
The move comes as Britain catches up with the EU and US in the race to target allies of Russian President Vladimir Putin, after fast-tracking the Economic Crime Bill into law overnight.
Those on the list include former president Dmitry Medvedev, defence minister Sergei Shoigu and Russian television executive Konstantin Ernst (also sanctioned by the EU today).
Oligarchs Mikhail Fridman, who co-founded Russian conglomerate Alfa-Group, and close Putin ally Petr Aven are also being sanctioned. They were both sanctioned by the EU earlier this month, leading to their shares in the $22bn (£17bn) conglomerate LetterOne being suspended.
Foreign minister Liz Truss said.
“We are going further and faster than ever in hitting those closest to Putin - from major oligarchs, to his prime minister, and the propagandists who peddle his lies and disinformation. We are holding them to account for their complicity in Russia’s crimes in Ukraine,”
Sanctions Update: After today we will have designated over 1,000 individuals and entities since Russia’s invasion.
— Liz Truss (@trussliz) March 15, 2022
This includes over 370 new sanctions announced today - possible thanks to the new Economic Crime Act.
Putin must fail in Ukraine
More here:
Updated
Back on sanctions...
The EU has imposed sanctions on the boss of anti-war protester Marina Ovsyannikova at Russia’s Channel One, along with Chelsea owner Roman Abramovich for his “very good relations with Vladimir Putin”.
Konstantin Ernst, the chief executive of the state-controlled TV channel, and Chelsea football club’s owner are among 15 individuals newly targeted by the EU.
The EU is also banning investments in Russia’s energy sector, as well as exports of finished steel products and most luxury goods, such as precious stones, clothes and carpets, over the value of €300 (£252) and cars worth more than €50,000.
There is also a complete transaction ban with nine Russian state-owned enterprises and the EU has prohibited the rating of the country and its companies by credit rating agencies.
Here’s the full story, by Daniel Boffey and Jennifer Rankin:
US crude oil has also dropped, with a barrel of West Texas Intermediate falling as low as $93.54, before a small rebound.
That’s the lowest since late February, down from $103 a barrel last night - and as high as $130/barrel a week ago.
WTI crude Oil goes back to the 90s. https://t.co/mqRanA8Xlm pic.twitter.com/fOuxG6l0tw
— Faizan Hayat Khan (@FaizanHayat13) March 15, 2022
Oil collapsing again this morning:
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) March 15, 2022
WTI $94, down $8
RBOB down 22c/gal
It’s only time before we sink back under $4/gal average as long as these levels hold.
Hopes of a breakthrough in the Iran nuclear talks are also pushing oil down.
Russia, which has been meeting with Iran today, has indicated it is in favour of the nuclear deal resuming as soon as possible, according to Reuters.
Russian foreign minister Sergei Lavrov has told a news conference that Moscow has received written guarantees that its cooperation with Iran will not be impacted by Westen sanctions over the Ukraine war.
This has lifted optimism that the 2015 nuclear deal could be revived, meaning sanctions on Iranian oil would be lifted, boosting supplies.
Talks were put on hold last week, after Moscow demanded that Western sanctions over Ukraine will “not in any way damage our right to free and full trade, economic and investment cooperation and military-technical cooperation” with Iran, if the deal was agreed.
Reuters says:
Russian Foreign Minister Sergei Lavrov on Tuesday said US suggestions that Moscow was blocking efforts to revive the Iran nuclear deal were untrue, following talks with his Iranian counterpart Hossein Amirabdollahian in Moscow.
Lavrov said Russia had received written assurances from Washington that sanctions against Moscow over Ukraine would not hinder cooperation within the framework of the deal, which lifted sanctions on Tehran in return for curbs on its nuclear programme.
An important statement from Lavrov suggesting that Russia's demands/concerns over the impact of U.S. sanctions related to Ukraine war, on its future work with Iran (on trade and nuclear industry) have been resolved. Indicates that the Iran talks may resume soon. https://t.co/73EnkSJr86
— Golnar Motevalli (@golnarM) March 15, 2022
*RUSSIAN FOREIGN MINISTER LAVROV SAYS RUSSIA SEEKS RESUMPTION OF NUCLEAR DEAL ON IRAN AS SOON AS POSSIBLE
— Investing.com (@Investingcom) March 15, 2022
*LAVROV SAYS BOTH OIL CONSUMERS AND SUPPLIERS WILL FEEL RETURN OF IRANIAN OIL DELIVERIES TO THE MARKET#OOTT 🇷🇺🇮🇷🌎🌍🌏
The talks were paused last week, after Moscow has insisted Washington pledge not to impose sanctions on any trade between Russia and Iran once an agreement is signed.
Iran pumped 2.4m barrels per day on average in 2021, and has said it could eventually increase output to 3.8m bpd if sanctions are lifted.
Updated
Brent crude falls below $100
Brent crude has fallen back below the $100 per barrel mark for the first time since the start of March.
Hope of progress in the Russia-Ukraine peace talks, and concerns that rising Covid cases in China will hit its recovery, have pushed oil prices to a two-week low.
Brent has now tumbled 8% to around $98 per barrel:
![The Brent crude oil price over the last three months](https://media.guim.co.uk/96292cdd38ce44d2fcd38d2fb9baa9b0336fe061/0_0_748_407/500.jpg)
The surge in Covid-19 cases in China to a two-year high is raising fears of more lockdowns, hitting demand for energy at its factories.
Stephen Innes, managing partner at SPI Asset Management, explains:
Though global demand is widely expected to return to pre-covid levels this year, China is an important enough part of the worldwide demand picture that a new wave of lockdowns could prolong the recovery cycle.
Ceasefire talks between Russia and Ukraine are also easing fears of further supply disruptions.
Toshitaka Tazawa, an analyst at Fujitomi Securities, says:
“Expectations of positive developments in the Russia-Ukraine ceasefire talks bolstered hopes to ease tightness in the global crude market.
“Fresh lockdowns to curb the COVID-19 pandemic in China also raised concerns over slower demand.”
Brent hit a 14-year high of $139 at the start of last week, as the US pushed allies for a ban on Russian oil imports.
But crude prices have eased back since, despite president Biden announcing a US ban, with Europe resisting pressure to boycott Russian energy imports now.
Crude oil prices have reversed most of the spike since the start of the Russia-Ukraine war pic.twitter.com/zDTUCTEthj
— Kathy Jones (@KathyJones) March 15, 2022
Brent crude extending drop from its peak to nearly -23% pic.twitter.com/3QmbNAHicO
— Liz Ann Sonders (@LizAnnSonders) March 15, 2022
UK fuel prices at new highs
UK fuel prices have hit new highs despite a slump in wholesale costs over the last week.
Figures from data firm Experian Catalist show the average cost of a litre of petrol at UK forecourts on Monday was 163.7p, up from 150p at the end of February.
This takes the cost of filling a typical 55-litre family car with petrol above £90 for the first time.
The average cost of a litre of diesel on Monday was a record 173.7p.
Yesterday, MPs heard that prices could rise by another 50% due to sanctions on Russia, which exports around 5 million barrels of crude per day.
Oil prices surged after Russia’s invasion of Ukraine but declined in recent days, leading to a cut in wholesale costs for fuel retailers.
RAC fuel spokesman Simon Williams says petrol retailers need to pass on the impact of falling crude prices:
“Drivers should be encouraged by oil and wholesale prices dropping again yesterday.
“It’s now vital that the biggest retailers who buy fuel most often start to reflect these reductions at the pumps to give drivers a much-needed break from the pain of constantly rising prices.”
German recession looms after record slump in investor morale
Over in Germany, investor confidence has plunged at a record rate as the Russia-Ukraine war pushes Europe’s largest economy towards recession.
Economic sentiment tumbled by the most since the ZEW economic research institute began tracking it in December 1991.
It fell from 54.3 in February to -39.3 points this month, as the conflict and sanctions imposed on Russia threaten the recovery.
#ZEWEconomicSentiment: Biggest drop in expectations since survey start. ZEW Index stands at -39.3 Points. „The war in Ukraine & the sanctions against Russia are significantly dampening the economic outlook for Germany,“ says #ZEW president @AchimWambach https://t.co/zQ5RtMtXU3 pic.twitter.com/oFPmpfHsD7
— ZEW_en (@zew_en) March 15, 2022
A measure of current economic conditions also slumped (to -21.4 from -8.1)
President Achim Wambach said that fears of surging inflation had also risen, following the jump in oil and commodity prices.
“A recession is becoming more and more likely. The war in Ukraine and the sanctions against Russia are significantly dampening the economic outlook for Germany.”
The collapsing economic expectations are accompanied by an extreme rise in inflation expectations. The experts therefore expect stagflation in the coming months.
The worsened outlook affects practically all sectors of the German economy, but especially the energy-intensive sectors and the financial sector.
ZEW Economic Sentiment Index in Germany decreased to -39.30 points in March from 54.30 points in February of 2022. https://t.co/2TOP8G26fS pic.twitter.com/MNcsnLGp95
— Trading Economics (@tEconomics) March 15, 2022
UK cuts off export finance support to Russia and Belarus
The UK is also cutting off all export finance support to Russia and Belarus, a move which will also hit trade from Britain to both countries.
Britain will no longer issue any new guarantees, loans or insurance for exports to Russia and Belarus.
Export finance support helps companies win contracts, fulfil them, and get insurance in case their buyer defaults.
UK Export Finance (UKEF), the UK’s export credit agency, says it is still supporting trade with Ukraine with £3.5bn of capacity available “as part of its continuing and unwavering alliance”.
This backing would help UK exporters and Ukrainian buyers access the finance they need to trade commercially.
Without government export credit support, any financial backing from the private sector to the region is “virtually impossible”, UKEF says.
International Trade Secretary Anne-Marie Trevelyan says economic sanctions are working:
We are tightening the screws on Russia to ensure they feel real consequences for their illegal military invasion.
At the same time, we are doing everything we can to ensure Ukraine remains open to the world. We have signed an international treaty so that UK supplies can reach Ukraine and strengthen their defences, and UK Export Finance – our first-class export credit agency - is supporting them with this.
Labour MP Emily Thornberry, shadow Attorney General, says the government should have acted faster:
I started tabling parliamentary questions on 28th February asking why UK Export Finance was still offering support on exports to Russia. I'm glad the government has now finally ended that support, but why does everything take them so long? https://t.co/l40zXNKHhR
— Emily Thornberry (@EmilyThornberry) March 15, 2022
The Department for International Trade also reports that fifty-four licences for exports to Russia have been voluntarily surrendered by UK businesses, while 33 new licence applications to export items to support Ukraine have been submitted.
British car dealership Inchcape is also leaving Russia, having concluded that it is “no longer tenable” to operate there.
Inchcape, which operates in around 40 countries, told shareholders:
In light of the current circumstances, we have concluded that the Group’s ownership of its business interests in Russia is no longer tenable. Therefore, working in conjunction with our OEM partners, we have initiated a process to transition our Russian business.
We intend to do so in full compliance with international and local regulations and with the aim of safeguarding the continuing employment of our colleagues.
Russia provided around 10%, or £750m, of Inchcape’s sales last year and 5% of operating profits in the last five years.
![An Imperial Brands plc logo.](https://media.guim.co.uk/27552738004164c7dde492ffdc58cef3b61776f6/0_0_3888_2333/1000.jpg)
Cigarette maker Imperial Brands is quitting Russia, joining the swelling ranks of Western companies exiting due to the Ukraine war.
Imperial said this morning it has begun negotiations with a local third party to transfer its Russian assets and operations, saying this was the best option for its 1,000 staff in Russia.
We believe that, in the current circumstances, an orderly transfer of our business as a going concern would be in the best interests of our Russian colleagues.
We employ 1,000 people in Russia in our sales and marketing operations and in our factory in Volgograd - and their safety and wellbeing is our key priority in this process. We will also continue to pay their salaries until any transfer is concluded.
Last week, Imperial, the maker of Winston and Davidoff cigarettes, suspended all operations in Russia.
On Friday, rival British American Tobacco announced it would pull out of Russia, having initially deciding to keep selling products.
Here’s our story on the latest UK economic sanctions on Russia:
UK hits Russian goods with new tariffs and bans luxury exports
![Bottles of vodka in a supermarket.](https://media.guim.co.uk/d20434213aecee68508234f69f11fbbf6dfd6ca9/0_203_3500_2100/1000.jpg)
The UK is imposing new tariffs on some Russian imports, including vodka, and announcing a ban on exports of some high-end luxury goods to Russia.
A new 35% tariff will be imposed on a range of goods imported from Russia, on top of existing tariffs, in the latest round of economic sanctions over the invasion of Ukraine.
The tariffs will affect £900m of imports, while the ban on luxury goods is likely to apply to luxury vehicles, high-end fashion and works of art.
Products affected by the new tariffs on Russian imports are:
- Iron, steel, fertilisers, wood, tyres, railway containers, cement, copper, aluminium, silver, lead, iron ore, residue/food waste products, beverages, spirits and vinegar (this includes vodka), glass and glassware, cereals, oil seeds, paper and paperboard, machinery, works of art, antiques, fur skins and artificial fur, ships and white fish
The government says the products were chosen to inflict maximum damage on the Russian economy while minimising the impact on the UK:
It adds:
The export ban will come into force shortly and will make sure oligarchs and other members of the elite, who have grown rich under President Putin’s reign and support his illegal invasion, are deprived of access to luxury goods.
The UK is also denying Russia and Belarus access to Most Favoured Nation tariff for hundreds of their exports, which will remove key benefits of WTO membership.
Chancellor of the Exchequer Rishi Sunak said:
Our new tariffs will further isolate the Russian economy from global trade, ensuring it does not benefit from the rules-based international system it does not respect.
These tariffs build on the UK’s existing work to starve Russia’s access to international finance, sanction Putin’s cronies and exert maximum economic pressure on his regime.
Updated
Brent crude has tumbled back to $101 per barrel, on concerns that China’s recovery will be hit by the latest Covid outbreak.
That’s its lowest level since the start of March, after it hit $139/barrel just over a week ago.
Oil falls sharply on fears of hit to global economy from Covid-19 outbreak in China. Question is how quickly will petrol retailers and supermarkets - who have "rebuilt" profit margins on petrol over the last 18 months - pass on the price falls? pic.twitter.com/RYfpFz3AkC
— Richard Fletcher (@fletcherr) March 15, 2022
European stock markets are also in the red, following losses in Asia-Pacific markets overnight.
In London, the FTSE 100 index has fallen 1.5% or 107 points to 7085 points, back to last Thursday’s levels.
Mining stocks are among the fallers, as worries over the economic outlook hit commodity prices and oil (which is down over 5% today)
Asia-Pacific focused financial groups Standard Chartered (-4.4%) and Prudential (-4.3%) are also sliding, on worries about the pandemic.
Germany’s DAX and France’s CAC have both dropped 2.4%, having rallied yesterday on hopes of progress in the Russia-Ukraine peace talks.
Russ Mould, investment director at AJ Bell, says China’s Covid lockdowns could cause a fresh supply chain crisis:
“A hard-line approach to Covid is not new for the country, but the resurgence in cases has provided a stark reminder that the pandemic is still lingering. Investors might have become too complacent over the risks of lockdowns returning once again.
“Disruption to the Chinese economy is not good news for commodity producers which have relied on the region to buy their metals and minerals for the past few decades. Heightened concerns explain why miners had a bad day on the market – and if they’re falling, you can be almost certain that the resources-heavy FTSE 100 will be dragged down.
“Prudential’s sharpened focused on Asia saw its shares succumb to heavy selling as its growth plans are all about selling financial services to the wealthy. Any concerns about reduced economic prosperity in China act as a dark cloud for its share price.
Hong Kong’s Hang Seng index closed down another 5.8% today at a new six-year low, amid fresh heavy selling among technology stocks.
Fears of a regulatory crackdown by US officials on China’s tech firms added to worries that Covid cases in China have doubled overnight, and the ongoing Russia-Ukraine war.
Last week, the SEC named the first batch of Chinese stocks who could be forced to delist in the US for refusing to open their books to regulators.
Failure to meet auditing rules could cut China’s tech firms off from Wall Street - where they had boomed in 2020, before slumping as Beijing also clamped down on the sector.
⚠️BREAKING:
— Investing.com (@Investingcom) March 15, 2022
*HONG KONG'S HANG SENG TECH INDEX EXTENDS LOSSES, DOWN 6%
🇭🇰🇭🇰 pic.twitter.com/Z9XdjQt2y4
JPMorgan Chase & Co added to the angst, by downgrading 28 Chinese stocks listed in the United States and Hong Kong.
In a note, JP Morgan analysts said (via Reuters):
“We find China Internet unattractive on a 6-12 month view with an unpredictable share price outlook, depending on the market perception of China’s geopolitical risks, macro recovery and Internet regulation risk”
They also flagged the risk that the US hit China with sanctions, if it provides military assistance to Russia.
“As the Russia-Ukraine conflict continues, we believe global investors are increasingly nervous about geopolitical risks to China as more and more country and corporates impose sanctions on Russia.”
China's stocks hit 21-month low amid Covid surge and Ukraine worries
China’s stock market has slumped to its lowest level since June 2020, as more provinces bring in lockdowns to combat rising Covid infections.
The CSI 300 share index has tumbled by 4.6% today, a 21-month low, with property companies leading the rout.
The lockdowns in multiple cities, including technology hub Shenzhen, are threatening to disrupt the world’s second-largest economy, if the outbreak isn’t curbed quickly.
🇨🇳 Sickly closes in China, with the risk-off flow driven by multiple Chinese cities including tech hub Shenzhen re-tightening COVID restrictions.
— PiQ (@PriapusIQ) March 15, 2022
📉 Shanghai Composite Index Closes Down 5.0 Pct At 3,063.97
📉 CSI300 Index Closes Down 4.6 Pct At 3,983.81 pic.twitter.com/Z8ruqhCJGj
Here’s Bloomberg’s take:
The city of Langfang, located just 55 kilometers from Beijing, joined Shenzhen and Jilin province in imposing lockdowns as more than 45 million people are restricted from leaving their homes.
International flights are being diverted from Shanghai, the Pudong district is encouraging working from home and trucking across the trucking sector is being hit by delays as drivers undergo more stringent testing requirements.
Rising tensions between Beijing and Washington over Ukraine are also hitting China’s stocks.
US officials fear that China has already decided to provide Russia with economic and financial support during its war on Ukraine, and is considering sending military supplies such as armed drones.
That has raised concerns that China could be hit by US. sanctions over Russia’s war.
Updated
Economists: Expect Bank of England to raise rates in Thursday
Today’s jobs data will spur the Bank of England on to hike interest rates on Thursday, economists predict.
It would be the third rise since December, as the Bank has been alarmed by the faster-than-expected rise in inflation further from its 2% target.
Paul Dales of Capital Economics says:
The further fall in the unemployment rate to within a whisker of the pre-pandemic rate will only encourage the Bank of England to raise interest rates on Thursday, probably from 0.50% to 0.75%, despite the coming extra hit to households’ real incomes from the war in Ukraine.
What’s more, we think a low unemployment rate and high wage growth will prompt the Bank to raise rates to 2.00% next year.
Last month, governor Andrew Bailey was widely criticised for saying that workers shouldn’t seek big pay rises to keep pace with inflation.
Those fears over a wage-price spiral won’t have faded, predicts Martin Beck, chief economic advisor to the EY ITEM Club:
“The MPC’s worry will be that a tight jobs market risks inflationary second-round effects, as workers seek to offset cost of living pressures by asking for higher wages.
This means it’s now even likelier that the committee will raise interest rates on Thursday.
Derrick Dunne, CEO of YOU Asset Management, says labour shortages will worry the Bank, with more than 1.3m vacancies over the last quarter.
“The labour shortage is in danger of becoming a bigger issue that feeds further inflation. Record high vacancies are a big dilemma for the Bank of England and another cloud in the broader cost-of-living crisis. Wage growth still lags inflation and people are moving jobs at record levels in search of better pay packets as a result.
“Such a tight labour market and pressure from workers will keep pushing employers to increase salaries. The BoE will be very conscious that this may have the effect of entrenching inflation more deeply into the economic landscape, by ensuring a vicious cycle of more wage growth and inflation.
Updated
Public sector workers are being particularly hit by the cost of living squeeze, the labour market report shows.
Average total pay growth for the private sector was 5.3% in the three months to January 2022, but just 2.4% in the public sector.
CPI inflation rose to a near 30-year high of 5.5% in January, and expected to keep climbing.
Total pay (which includes bonuses) was lifted by strong growth in the financial sector, where bankers saw the biggest bonuses since the financial crisis.
The ONS says:
All industry sectors saw pay growth in November 2021 to January 2022, with the finance and business services sector seeing the largest growth rate at 8.6% as well as strong bonus payments.
Pay at wholesaling, retailing, hotels and restaurants grew by 5.9%, including 8.9% year-on-year in accommodation and food (but that could be distorted by the impact of the furlough scheme a year ago, the ONS adds)
![UK pay rates](https://media.guim.co.uk/8fc545207f6256897559e579fa7ec5b8c9560a24/0_0_629_458/500.jpg)
Camelot set to lose National Lottery licence
Big news in the gambling world: National Lottery operator Camelot is set to lose its licence to run the lottery, after three decades.
The Gambling Commission has named rival Allwyn Entertainment, a Czech gambling firm, as its preferred applicant to take on the Lottery in 2024.
The Commission says:
Allwyn has committed to investment in the National Lottery that is expected to deliver growth and innovation across the National Lottery’s products and channels, resulting in increased contributions to good causes, subject to the protection of participants and propriety.
Camelot has run the Lottery since it began in 1994 - since when it has raised £45bn for good causes, the Commission says.
Big news this morning: Camelot set to lose National Lottery licence for the first time in the history of the draw. Allwyn (owned by Czech firm Sazka) named preferred bidder by the Gambling Commission.
— Rob Davies (@ByRobDavies) March 15, 2022
Camelot named reserve applicant, which could be interesting if they go for a judicial review.
— Rob Davies (@ByRobDavies) March 15, 2022
Inactivity rises due to rising long-term sickness
Worryingly, more people have left the labour market because they are ill - perhaps a sign of the long-term health damage caused by the pandemic.
The UK’s economic inactivity rate, which measures the number of people out of the labour market, rose to 21.3% in the last quarter.
That’s 1.1 percentage point higher than before the coronavirus pandemic -- and one reason that the unemployment rate has fallen.
The increase in activity over the last quarter was driven by those who are economically inactive because of long-term sickness and those who retired.
![Inactivity](https://media.guim.co.uk/d6d92c80d8777c62cadcf650ee2993b17c25fa22/0_0_617_534/500.jpg)
IES Director Tony Wilson explains:
“People shouldn’t be fooled by the fall in headline unemployment in today’s figures. Unemployment is falling because people are leaving the labour force at a worryingly high rate, with one hundred thousand fewer in the labour market than just three months ago. Older people are leading this exodus, with half a million fewer people aged over 50 in the labour market than two years ago.
This is the largest fall since comparable records began thirty years ago, and is being particularly driven by fewer older women in work. This is happening in spite of continued record vacancies, and the tightest jobs market for employers in at least fifty years.
Minister for Employment, Mims Davies MP says the government is focused on helping people back into work:
“These figures show unemployment remains low, below pre-pandemic levels for the first time, and employment is continuing to grow, providing a stable foundation as new global challenges emerge.
With record numbers of vacancies out there, our focus is on helping people build their skills and improve their prospects by moving into work.
“We are connecting thousands of job-ready claimants to live opportunities, giving them a platform to progress and pursue a career. To achieve this, we are working with a wide range of sectors to create and maintain a workforce that is skilled, productive, reliable and resilient.”
ONS: Labour market recovering, but regular real pay down
Grant Fitzner, chief economist at the Office for National Statistics (ONS), said:
“The labour market continues to recover from the effects of the pandemic, with the number of unemployed people falling below its pre-pandemic level for the first time and another strong rise in employees on payroll in February.
“However, the number of people out of work and not looking for a job rose again, meaning total employment remained well below its pre-pandemic level.
“We have seen yet another record number of job vacancies, and with the redundancy rate falling to a new record low, demand for workers remains strong.
“Because bonuses have continued at high levels for some workers, total earnings growth just kept ahead of rising prices over the past year, though regular pay has dropped again in real terms.”
Commenting on today’s labour market data, ONS chief economist Grant Fitzner said:
— Office for National Statistics (ONS) (@ONS) March 15, 2022
(1/4) pic.twitter.com/XYiYP3ALrr
Continuing, ONS Chief Economist, Grant Fitzner said:
— Office for National Statistics (ONS) (@ONS) March 15, 2022
(2/4) pic.twitter.com/IozxzudhXB
ONS Chief Economist, Grant Fitzner added:
— Office for National Statistics (ONS) (@ONS) March 15, 2022
(3/4) pic.twitter.com/3eCDcyg4bt
ONS Chief Economist, Grant Fitzner concluded:
— Office for National Statistics (ONS) (@ONS) March 15, 2022
(4/4) pic.twitter.com/yNxDdTlmzn
Introduction: Wage squeeze deepens as real regular pay shrinks
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The UK’s cost of living squeeze has tightened, with basic pay falling behind inflation at the fastest rate in over seven years.
The latest jobs figures, just released, show that regular real pay (adjusted for inflation) fell by 1% year-on-year in the three months to January. That’s the biggest fall in real regular pay since May to July 2014 (it also fell 0.9% early in the pandemic).
Total pay rose just 0.1% in real terms, due to strong bonus payments over the past six months.
Wages did rise in nominal terms: total pay (including bonuses) grew 4.8%, while regular pay (excluding bonuses) was 3.8% in November-January 2022.
But those pay increases were eroded by rising prices -- CPIH inflation (the ONS’s preferred inflation measure) averaged 4.8% in the quarter.
And the squeeze will continue in the coming months, as higher energy and food prices push up the cost of living. Consumer inflation is expected to jump over 7% by April.
After taking inflation into account, average pay including bonuses rose 0.1% in the year to November 2021 to January 2022, while excluding bonuses it fell 1.0% https://t.co/aQD7xRiAOQ pic.twitter.com/l0Rjrqwn84
— Office for National Statistics (ONS) (@ONS) March 15, 2022
The report also shows that the UK unemployment rate fell again, to 3.9% from 4.1% three months earlier -- back to its pre-coronavirus pandemic levels.
But while the employment rate rose by 0.1 percentage points, to 75.6%, it was still 1.0 percentage points below pre-pandemic levels, due to the fall in self-employment.
There were nearly 32.5m people in employment - up 380,000k in the last year, but still 580k less than before the pandemic.
Vacancies rose to a new record of 1,318,000 in the three months to February, as companies struggled to fill roles.
There were an average of 1.318 million job vacancies across December 2021 to February 2022, up from 1.213 million in the previous quarter https://t.co/DMbHJG1dqA pic.twitter.com/7TPsEJNcL3
— Office for National Statistics (ONS) (@ONS) March 15, 2022
The number of people on company payrolls hit a new record high in February, up 275,000 to a new record of 29.7 million.
More details and reation to follow.
Also coming up today
Stock markets are edgy as Covid-19 infections rise sharply in China, raising fears that more lockdowns could be introduced to slow the pandemic.
Domestically-transmitted cases more than doubled yesterday to 3,507, testing the country’s tough “dynamic clearance” approach to Covid.
Yesterday, a province of 24 million people was locked down, leading companies such as Apple supplier Foxconn to suspend work.
Hong Kong’s Hang Seng index, which hit a six-year low yesterday, is down another 6% today.
🇭🇰 Esshh.. It's a grim over in Hong Kong
— PiQ (@PriapusIQ) March 15, 2022
~ Hang Seng Index Down More Than 6% pic.twitter.com/GJu23bq4PE
European markets are set to open lower.
European Opening Calls:#FTSE 7156 -0.52%#DAX 13860 -0.49%#CAC 6335 -0.54%#AEX 670 -0.71%#MIB 23225 -0.86%#IBEX 8184 -0.61%#OMX 2087 -0.43%#SMI 11595 -0.72%#STOXX 3720 -0.57%#IGOpeningCall
— IGSquawk (@IGSquawk) March 15, 2022
Britain is expected to name hundreds of oligarchs, individuals and organisations with links to the Putin regime who will be added to the UK’s sanctions list, after the economic crime bill was fast-tracked last night.
Investors are also watching Russia, which faces a $117m debt repayment tomorrow. Last night, Moscow said it has started the payment process, but it’s not clear if the payment is in US dollars -- the currency they were issued in -- or roubles.
With much of Russia’s foreign exchange reserves frozen, it may not be able to make the dollar payments, meaning it could default (after a 30-day grace period).
The agenda
- 7am GMT: UK labour market report
- 7.45am GMT: French inflation for February
- 10am GMT: ZEW survey of eurozone economic confidence
- 12.30pm GMT: US PPI measure of American producer prices for February
Updated