Chancellor Kwasi Kwarteng U-turns on plans to scrap 45p tax rate

(qlmbusinessnews.com via bbc.co.uk – – Mon, 3rd Oct 2022) London, Uk – –

The government has U-turned on plans to scrap the 45p rate of income tax for higher earners.

Chancellor Kwasi Kwarteng told the BBC the proposals, announced just 10 days ago, had become “a massive distraction on what was a strong package”.


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“We just talked to people, we listened to people, I get it,” he added.

The decision, which marks a humiliating climbdown for Prime Minister Liz Truss, comes after several Tory MPs criticised the plan.

On Sunday, Ms Truss had said she was committed to the policy.

The plan to scrap the 45p rate, paid by people earning more than £150,000 a year, was announced as part of a package of tax cuts.

Mr Kwarteng told BBC Breakfast the proposal was “drowning out a strong package”, including support for energy bills, and cuts to the basic rate of income tax and corporation tax.

Asked whether he owed people an apology, he said: “We've listened to people. And yeah, there is humility and contrition in that. And I'm happy to own it.”

On how the decision was made, he said: “The prime minister decided not to proceed with the abolition of the rate.”

However, pressed on whether it was her U-turn, Mr Kwarteng added: “No, we talked together, I said this is what I was minded to do and we decided together, we were in agreement that we wouldn't proceed with the abolition of the rate.”

Asked if he had considered resigning, he said: “Not at all.”

On Sunday, the prime minister had told the BBC the move to cut the top rate of income tax was “a decision that the chancellor made”.

But she also said she was absolutely committed to it as part of a package to make the tax system “simpler” and boost growth.

Asked whether his previous comment that there was “more to come” on tax cuts still stood, Mr Kwarteng said there would be no tax cuts ahead of the next Budget in the spring.

Pressed on whether his economic plans would mean spending cuts for public services, the chancellor said there would be more details in the government's fiscal plan on 23 November.

However, he said the government was sticking to its 2021 comprehensive spending review, meaning it will not raise spending in line with inflation.

BBC political editor Chris Mason said the U-turn had left the chancellor and prime minister “humiliated, wounded and weakened”.

“But Liz Truss will hope it creates space to move forward, hauling herself out of the political quagmire of a budgetary statement that imploded on contact with political reality,” he said.

Labour called for the government to “reverse their whole economic, discredited trickle down strategy”.

Shadow chancellor Rachel Reeves said the U-turn came “too late for the families who will pay higher mortgages and higher prices for years to come”.

Lib Dem leader Sir Ed Davey called on the chancellor to resign, saying he no longer had “any credibility” and the whole mini-budget needed an overhaul.

Plans to scrap the top rate of tax had seen remarkable opposition from the markets, other parties and a growing number of Tory MPs.

Conservative Party chairman Jake Berry had previously warned Tory MPs who voted against the prime minister's tax measures that they would be kicked out of the parliamentary party – known as losing the whip.

But increasingly, it seemed Ms Truss did not have the numbers to get it through Parliament.

On Sunday, senior Tory Michael Gove hinted he would not vote for the plan when it came to Parliament, saying “I don't believe it's right”.

The former cabinet minister said the PM's decision was “a display of the wrong values”.

Former cabinet minister Grant Shapps had warned the prime minister would lose a Commons vote on the proposal.

He welcomed the U-turn, telling the BBC: “It's better to act, it's better to reverse ferret on something that's causing a problem like this, and it sends a very important signal to the public and also to the markets that we are serious about sound money.”

The decision was also welcomed by the Confederation of British Industry.

Director-general Tony Danker said the pledge had become a “distraction” from other economic reforms, which he said would “make a real difference to growth”.

The U-turn, suggestions of which were first reported by the Sun, comes on the second day of the Conservative conference in Birmingham, with Mr Kwarteng due to speak later on Monday.

The pound jumped on the news, rising by more than a cent against the dollar to $1.1263, before falling back.

The currency touched a record low last week after Mr Kwarteng's mini-budget created turmoil on the markets.


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A 45% tax rate applies to income above £150,000 in England, Wales and Northern Ireland.

Scrapping the top rate made up around £2bn of the £45bn worth of tax cuts announced by the chancellor in his mini-budget.

Other measures announced included a cut to the basic rate of income tax to 19%, a reversal of the recent rise in National Insurance and scrapping the cap on bankers' bonuses.

By Nick Eardley

 

UK mortgages rates to rise further: ‘next 10 days crucial’ as to how high

(qlmbusinessnews.com via theguardian.com – – Tue, 27th Sept 2022) London, Uk – –

Building society chief responds as stock market falls and pound slides after Kwarteng’s mini-budget.

Mortgage rates in the UK will rise further in coming days, and the next 10 days in financial markets will be crucial in determining how high they will go, according to the head of Principality building society.


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Experts are predicting that a typical two-year fix, which has cost borrowers £850 a month, could go up to almost £1,500 a month, after Kwasi Kwarteng’s mini-budget on Friday shocked markets and sent the pound plunging, as well as triggering a government bond sell-off. Sterling hit a record low of about $1.035 on Monday morning and has recovered slightly to $1.08, but is still down 7% this month.

Julie-Ann Haines, the chief executive of the building society, which has 500,000 members, said: “This £6,000-a-year difference [in mortgage costs] is really dependent on whether the markets over the next two weeks continue to think that the Bank of England base rate will get to 6%.”

The pound’s slide, which makes crude oil, priced in dollars, and imported goods more expensive, threatens to push UK inflation, already at 9.9%, even higher and is expected to force the Bank of England to raise interest rates to 5% or 6% by next summer. It lifted its base rate by a half a percentage point to 2.25% the day before the mini-budget.

Haines told BBC Radio 4’s Today programme: “What we do know is over 2022 we’ve seen very significant increases. Even so far, what we’ve seen passed on in mortgage rates is resulting in about an extra £3,000 to £4,000 a year for an average £250,000 mortgage. What the markets do in the next 10 days is really quite important in determining how big the impact is.”

UK government bonds, known as gilts, are on track for their worst month on record, going back to the 1950s. The sell-off has pushed the cost of borrowing for 10 years up to 4.1%, from 3.1% before the mini-budget. The slump in gilt prices has forced several mortgage providers, including Virgin Money and Skipton building society, to pull deals.


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Haines said Principality had a “a slightly smaller range than normal” and, as a small lender, was affected by others pulling mortgage deals, but that the mutual was working hard to help customers. She stressed that building societies and other lenders needed to be able to make a margin to survive as businesses.

“We no doubt see [mortgage] rates increase over the next 10 days,” she said. “If we can start to get a grip on what’s happening in the markets through building confidence from the Bank of England and the government then you are hoping that mortgage lenders will come back into the market.”

By Julia Kollewe

 

Pound sinks to a record low against the dollar

(qlmbusinessnews.com via news.sky.com– Mon, 26th Sept 2022) London, Uk – –

Labour demands a “credible plan” as sterling's decline continues, fuelling fears the currency could plunge to parity with the US dollar.

Chancellor Kwasi Kwarteng’s Mini Budget key Announcements

(qlmbusinessnews.com via news.sky.com– Fri, 23rd Sept 2022) London, Uk – –

Stamp duty, energy bills and alcohol duty: The key announcements in Chancellor Kwasi Kwarteng's mini-budget.

Here are the key points from Chancellor Kwasi Kwarteng's mini-budget statement to MPs:

TAXES

• The basic rate of income tax will be cut to 19p in the pound from April 2023. Will mean 31 million people will be better off by an average of £170 per year.

• The 45% higher rate of income tax is to be abolished.


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• It was already announced that April's National Insurance hike is to be reversed from 6 November – saving money for businesses and 28 million workers. The 1.25 percentage points increase was introduced under former chancellor Rishi Sunak.

• Planned duty rises on beer, cider, wine and spirits cancelled

HOUSING

• Stamp duty to be cut from “today”. Nothing will be paid for first £250,000 of property's value – double the current amount allowed. The threshold for first-time buyers is to be increased from £300,000 to £425,000. The value of the property on which first-time buyers can claim relief is to also go up from £500,000 to £625,000.

• Household bills to be cut by an expected £1,400 this year with aid from energy price guarantee and £400 grant. Millions of the most vulnerable households will receive additional payments, taking their total savings this year to £2,200.

INFLATION

• Total cost of energy package, including business support, over next six months estimated at £60bn. It is “entirely appropriate for the government to use our borrowing powers to fund temporary measures to support families and businesses”.

• Treasury estimates see tax cut measures costing nearly £45bn a year in         2026.

• Independent forecasters expect the government's energy plan “will reduce peak inflation by around five percentage points”.

• Bank of England independence is “sacrosanct”.

• Government to set out its fiscal approach more fully in future and the Office for Budget Responsibility will publish an economic and fiscal forecast before the end of the year.

BANKERS BONUSES

• The cap on bankers' bonuses is to be lifted as part of efforts to “reaffirm” the UK's status as a financial services hub.

BUSINESS SUPPORT

• Planned rise in corporation tax to 25% next year is cancelled. “We will have the lowest rate of corporation tax in the G20. This will plough almost £19 billion a year back into the economy”, Mr Kwarteng said.

• Will legislate to require trade unions to put pay offers to a member vote so strikes can only be called once negotiations have fully broken down.

• To cut taxes for businesses in designated sites for 10 years to support investment, jobs and growth. In talks with 38 local and mayoral combined authority areas in England about “investment zones”. Aims to roll out more widely across UK.

• New legislation will cut barriers and restrictions to building new roads, rail and energy infrastructure.

• Universal Credit Claimants who earn less than the equivalent of 15 hours a week at National Living Wage will be required to meet regularly with their Work Coach and take active steps to increase their earnings or face having their benefits reduced. Aim is to reduce vacancies in economy.

• Introducing VAT-free shopping for overseas visitors.


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• Changing regulations to increase investment by pension funds into UK assets, benefiting savers and boosting economic growth, and incentivising investment into Britain's science and tech companies.

• Annual Investment Allowance – tax relief for businesses on plant and technology investment – to remain at £1m permanently, rather than letting it return to £200,000 in March 2023.

 

BoE set for second hefty rate rise in a row

(qlmbusinessnews.com via uk.reuters.com — Thur, 22nd Sept, 2022) London, UK —

The Bank of England looks set to raise interest rates by at least half a percentage point on Thursday in a bid to tame inflation that is just off a 40-year high, against a backdrop of a tumbling currency and a free-spending government.

Economists polled by Reuters last week expect the BoE to announce at 1200 GMT that rates will rise to 2.25% from 1.75%, while financial markets have priced in a bigger move to 2.5%.

The BoE is also expected to confirm that it will soon sell some of the 838 billion pounds ($944 billion) of government bonds which it bought during more than a decade of quantitative easing – the first major central bank to do so.


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The BoE's half-point increase in rates last month was its biggest since 1995. If it raises rates by three-quarters of a point on Thursday it would be the largest hike since 1989, barring a failed, temporary attempt to shore up sterling in 1992.

The U.S. Federal Reserve increased its main interest rate by three-quarters of a percentage point on Wednesday and signalled more large increases to come.

Sterling sank to its lowest since 1985 against the U.S. dollar after the Fed decision and is at its lowest against a basket of currencies since 2020, pushing up the price of imports.

Central banks globally have been hiking rates to tackle inflation caused by the surge in energy prices following Russia's invasion of Ukraine, as well as supply-chain pressures and labour shortages since the COVID-19 pandemic.

The BoE was the first major central bank to raise rates in the current cycle, beginning in December last year.

Britain's annual rate of consumer price inflation edged down to 9.9% in August from a 40-year high of 10.1% in July, its first drop in nearly a year though still far above the BoE's 2% target and the highest in the Group of Seven.

MIXED INFLATION OUTLOOK

The short-term outlook for inflation is now somewhat better than at the time of the BoE's last meeting in early August.

New Prime Minister Liz Truss's caps on household and business energy tariffs mean inflation is unlikely to rise as high as the 13.3% peak the BoE had pencilled in for October, or rates of more than 15% which economists expected for early 2023.

However, the caps – combined with likely cuts to taxes on employment, business profits and potentially house purchases – amount to more than 150 billion pounds of economic stimulus that was not factored into the BoE's forecasts last month.

This, in turn, could prompt the BoE to raise rates more than previously thought over the coming year, despite what will still be a big squeeze on living standards from high inflation.

“Although the immediate risk of recession over the coming winter is diminished, substantial fiscal stimulus adds to the risk of high inflation being maintained for longer – and hence the chances of, ultimately, substantially more policy tightening by the Bank of England being required,” Investec economist Sandra Horsfield said.

Interest rate futures late on Wednesday showed BoE rates reaching 3.75% in December and plateauing at 4.75% from March.

New finance minister Kwasi Kwarteng will set out more details of the budget plans on Friday, including an update to debt issuance.

Last month, the BoE forecast the economy would enter recession in the final quarter of 2022 and shrink throughout 2023.


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A recession of this length now looks unlikely, economists say, but there is a risk – following contraction in the second quarter and weak retail sales and business survey data since – that the economy is already in a technical recession.

A public holiday to mark Queen Elizabeth's funeral, following more than a week of national mourning that led to the cancellation of some public events, will also reduce third-quarter output. The BoE also decided to delay by a week its policy announcement, which had been due out on Sept. 15.

Reporting by David Milliken

Pound falls to its lowest in 37-year as retail sales slide

(qlmbusinessnews.com via bbc.co.uk – – Mon, 19th Sept 2022) London, Uk – –

By Michael Race

The pound has fallen to a new 37-year low against the US dollar after figures showed UK retail sales fell sharply in August as the rise in the cost of living continued to hit households.

The larger-than-expected drop in sales volumes of 1.6% prompted fresh concerns over the state of the economy.

Sales across all retail sectors fell in August as households cut back in the face of rising prices.

One analyst suggested the figures showed the UK is already in recession.

Sterling fell more than 1% against the dollar to $1.1351 at one point, its lowest since 1985, following the release of the retail sales figures. The pound recovered later to climb above $1.14.

The pound has been falling against the US currency for most of the year, partly due to the strength of the dollar. A weak pound means Brits travelling overseas will find their spending money will not stretch as far.

This comes at a time when UK inflation, which is the rate at which prices rise, is running at a near 40-year high, despite slipping to 9.9% from July's 10.1%.

The Bank of England has predicted the UK will fall into recession towards the end of this year and it is expected to keep increasing interest rates in a bid to curb inflation.

Olivia Cross, assistant economist at Capital Economics, said August's retail sales figures backed up the consultancy's view that the UK economy is “already in recession”.

A recession is defined by the economy getting smaller for two consecutive three-month periods.

“Retail sales will probably continue to struggle as the cost of living crisis hits harder in the coming months,” Ms Cross said.

“But nonetheless the Bank of England will still have to raise interest rates aggressively.”

Higher prices, along with upcoming energy bill rises in October, have led households to tighten their belts when it comes to spending.

The government announced the Energy Price Guarantee last week to help people with energy bills. The support will see annual energy bill for a typical household capped at £2,500 for two years.

Typical energy bills were set to rise to £3,549 a year and even higher in 2023, before the government intervened.

Ms Cross, of Capital Economics, said that because of the intervention, any recession would be “smaller and shorter” than it had expected previously.

Martyn Beck, chief economic adviser to the EY Item Club, said the government support “should ease both the income squeeze and lift consumers' sentiment, suggesting the outlook for retailers isn't as gloomy as could have been the case”.

“However, real household incomes are still on course for a significant fall over the next 12 months or so,” he added.

The government is expected to set out the estimated cost of plans to cap energy prices in a “mini-Budget” next Friday, as well as tax cuts pledged by Prime Minister Liz Truss in a bid to boost the economy.

Analysis: Faisal Islam

Sterling's fall to a fresh 37-year low against the dollar today is not isolated. The pound also hit its weakest level against the euro for nearly a year and a half.

So while the big picture movement is strength in the US dollar, there continues to be specific additional pressure on the pound sterling in international markets.

This morning's trigger was far weaker than expected retail sales figures. But markets await next Friday and the extent of borrowing required for the government's energy plan and tax cuts.

The eurozone too is heading for recession, but there is little comfort in such company.

The risk is that a weaker currency, makes imports of essentials, from energy to food, more expensive, prolonging the period of high inflation. And if the UK's nearest trading partners are also in recession, exporters will not see significant benefit from a weaker pound.

The fall in retail sales continues the slide since the summer of 2021, when all Covid restrictions were removed, the Office for National Statistics (ONS) said. The drop seen in August was the largest month-on-month fall since December 2021.

Sales of food, online, non-food and fuel all fell in the month, the ONS said.

Supermarkets' sales volumes also fell by 0.9% in August, but alcohol and tobacco sales rose by 6.3%.

“Feedback from retailers suggests that consumers are cutting back on spending because of increased prices and affordability concerns,” the ONS said.

Danni Hewson, AJ Bell financial analyst, said people were “clearly thinking hard about what they spend their money on”.

“It's just not stretching as far as it used to, and essentials have to come first. But even essentials are costing more and with the spectre of unmanageable fuel bills looming large people did the only thing they could, cut back,” she said.

According to the ONS, department stores saw a large drop in sales in August – 2.7% – while sales in clothing shops fell by 0.6%.

“Big ticket purchases are being put off and that's unlikely to change in the coming months,” said AJ Bell's Ms Hewson.

On Thursday, John Lewis revealed that while its shopper numbers were higher than last year, customers were spending less and avoiding buying as many “big ticket” items.

The department store and its supermarket chain Waitrose reported a loss of £99m for the first half of its trading year. Waitrose said it sales were down 5% on last year, with basket sizes shrinking by “nearly a fifth”.

Food prices have been increasing around the world following Russia's invasion of Ukraine, which has been one of the main factors pushing up prices at supermarket tills.

Meanwhile, the proportion of retail sales online fell to 25.7% in August from 26.3% in July, but the figure remains significantly above pre-pandemic levels.

 

Chancellor Kwasi Kwarteng considering plans to scrap caps on bankers’ bonuses to boost City’s competitiveness

(qlmbusinessnews.com via news.sky.com– Fri, 16th Sept 2022) London, Uk – –

Kwasi Kwarteng is expected to outline next week a series of measures, including tax cuts, aimed at boosting the UK economy in line with the PM's Tory leadership campaign assertion that recession is not inevitable.

Chancellor Kwasi Kwarteng is considering a plan to scrap caps on bankers' bonuses as part of a post-Brexit bid to boost the City's competitiveness and the UK economy, Sky News understands.


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He argues the cap, which was introduced under EU rules in 2014 following the 2008 financial crisis and subsequent eurozone debt crisis, would make London a more attractive destination for top global talent.

The measure, first reported by the Financial Times, was always opposed by the UK on the grounds that it would damage London's standing as a global financial hub.

But the idea of ditching the cap was dropped by Boris Johnson's government on the grounds it would be politically difficult to support wealthy bankers at a time of a cost of living crisis.

Mr Kwarteng, appointed chancellor by new prime minister Liz Truss following her victory over ex-Number 11 inhabitant Rishi Sunak in the Tory leadership contest, would set the move in the context of the energy bill aid for households and businesses, the FT report added.

It could also be defended on the basis that Paris is offering an incentive – a 30% income tax rate – to attract investment banking professionals to the French capital.

The fear within Number 11 Downing St would be that any brain drain across the Channel would be to the detriment of UK tax revenues.

He is expected to outline to MPs next week the details of further support through the PM's long-promised tax cuts to help boost spending and growth in the economy.

Sky News reported last week that the chancellor was holding talks with bank bosses to outline the new administration's approach.

It is not known whether a need to overturn the cap was impressed on him during that meeting.

Banks have long argued that the EU rule pushes up base salaries in London to secure talent, making the likes of New York and Hong Kong more attractive in terms of their fixed costs.

Critics say that uncapped bonuses only encourage personnel to take more risks.

Sky News has contacted the Treasury for a statement.

The union reaction was predictably critical.

Unite general secretary, Sharon Graham, said: “Workers will be appalled and angry at these plans.


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“When millions are struggling to feed their families and keep the lights on, the government's priority appears to be boosting the telephone number salaries of their friends in the city.

“Britain's economy is now dominated by rampant profiteering. Removing the cap on banker's bonuses will make that worse.

“Last year Britain's banks made £45.6bn of profits. So the Chancellor's signal to the city is ‘let it rip' further and further, while the Bank of England lectures workers about pay restraint. You could not make it up.”

 

UK retail sales fall, underlining signs of a looming recession

(qlmbusinessnews.com via uk.reuters.com — Fri, 16th Sept, 2022) London, UK —

 UK retail sales fell much more than expected in August, in another sign that the economy is sliding into recession as the cost of living crunch squeezes households' disposable spending.

Retail sales volumes dropped by 1.6% in monthly terms in August, the Office for National Statistics said – the biggest fall since December 2021 and worse than all forecasts in a Reuters poll of economists that had pointed to a 0.5% fall.


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The data are likely to add to worries about the strength of demand in Britain's economy. UK fashion retailers Primark (ABF.L) and ASOS (ASOS.L) and online supermarket Ocado Retail (OCDO.L) have all warned about their profits this month.

The pound slid further towards $1.14 on the back of the data.

“With a difficult winter to come, it will come as a worry to retailers that shoppers have already reined in their spending despite the hot summer,” said Lynda Petherick, retail lead at Accenture.

All of the main retail sectors – food stores, non-food stores, non-store retailing and fuel – fell over the month for the first time since July 2021, when COVID-19 restrictions on hospitality were lifted, the ONS said.

The period of mourning following the death of Queen Elizabeth poses another challenge to retailers, with widespread business closures due on Monday to mark the queen's funeral.

“The sombre atmosphere in the UK this week and news of slow economic growth will be adding to the sense of concern among retailers as the weather gets colder,” Petherick said.


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Although inflation dipped below 10% last month, households are still grappling with the biggest price increases since the early 1980s, caused mostly by surging energy prices in the aftermath of Russia's invasion of Ukraine.

The ONS said people cut back on furniture purchases last month.

“Feedback from retailers suggests that consumers are cutting back on spending because of increased prices and affordability concerns,” it said.

By Andy Bruce. Additional reporting by James Davey

 

BoE delays interest rate decision after Queen’s death

(qlmbusinessnews.com via bbc.co.uk – – Mon, 12th Sept 2022) London, Uk – –

The Bank of England has postponed a key decision on interest rates following the death of Queen Elizabeth II.

It said that “in light of the period of national mourning”, the Monetary Policy Committee's decision would now be announced at midday on 22 September.

It follows moves by several public bodies to change their plans for the coming week after the death of Britain's longest-reigning monarch.


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The Bank had widely been expected to increase rates on Thursday.

Economists had been predicting that the UK's central bank would raise rates to 2.25% – the highest level since December 2008.

Last month, the Bank raised interest rates by the highest margin in 27 years in an attempt to keep soaring prices under control. It also predicted that the UK economy would fall into recession later this year.

Higher interest rates can make borrowing more expensive, meaning people have less money to spend and prices will stop rising as quickly. However, some have question how effective UK rate rises can be when inflation is caused by global issues.

Energy prices climbed sharply when lockdown was lifted and the economy started to return to normal. They have increased further as Russia sharply cut its gas supplies to Europe. It has pushed up the price of gas across the continent, including in the UK, having a huge knock-on effect on consumers.

Speaking in front of the Treasury Committee earlier this week, the Bank of England's governor, Andrew Bailey, defended its track record: “The person going to put the UK in recession is Vladimir Putin, not the MPC [Monetary Policy Committee].”

He also said the Bank would take Prime Minister Liz Truss's energy plan announcement “into account” when next deciding on interest rates.

During her campaign, Ms Truss hit out at the Bank of England, accusing it of being slow to react to rising prices and protect vulnerable households.

But the new Chancellor, Kwasi Kwarteng, has reiterated his “full support for the independent Bank of England and their mission to control inflation, which is central to tackling cost of living challenges”.

He has also said that he and Mr Bailey would meet twice a week from now on to discuss the rising cost of living.

Prices are rising at its fastest rate in 40 years, with inflation at 10.1%.

On Thursday, the prime minister has announced that the government would limit energy bill rises for all households for two years in an attempt to prevent widespread hardship.

A typical household energy bill will be capped at £2,500 annually until 2024.


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Analysts say the huge support scheme could cost up to £150bn, but announcing the package Ms Truss said “extraordinary times call for extraordinary measures”.

Further detail is expected by the end of the month, as the chancellor is expected to set out costings in a “fiscal event”, where he will outline the level of borrowing necessary and any new tax measures he deems necessary to fund the package of support.

Truss, UK’s new PM, plans $46 billion energy package for businesses -Bloomberg

(qlmbusinessnews.com via uk.reuters.com — Tue, 6th Sept 2022) London, UK —

Incoming British prime Minster Liz Truss is planning a 40 billion pound ($46.22 billion) support package for businesses to help them cope with rising energy costs, Bloomberg News reported on Tuesday.

The plan would involve discounting firms' energy bills by fixing the wholesale price of gas and electricity, with the government making up the difference, Bloomberg reported.


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Truss, who is due to take office later on Tuesday, has promised to act immediately to help households cope with soaring gas and electricity prices. She has not publicly set out details of her plans for consumers or businesses.

Citing documents, Bloomberg said Truss was considering either setting a guaranteed unit price for businesses, or a reduction that all energy suppliers must offer firms.

Truss's spokeswoman did not immediately respond to request for comment.

By William James and Akanksha Khushi

Thames Water plans to raise additional funding weeks after tapping investors for £1.5bn

(qlmbusinessnews.com via news.sky.com– Mon, 5th Sept 2022) London, Uk – –

The UK’s biggest water company – which last month banned 10m customers from using hosepipes, has begun exploring plans to raise further capital as it battles increasingly intense political criticism, Sky News learns.

Britain’s biggest water utility is working on plans to raise additional funding just weeks after unveiling plans to tap shareholders for £1.5bn in new equity.

Sky News has learnt that Thames Water has begun debating whether it needs to seek new capital to deliver the transformation plan it has set out under Sarah Bentley, its relatively new chief executive.

Water industry sources said this weekend that firm plans had yet to be determined, but said that Thames Water could decide to raise hundreds of millions of pounds beyond the £1.5bn figure outlined in June.

The company, which last month introduced a hosepipe ban affecting 10m customers across southern England, has come under substantial fire for its dire performance in relation to leaks and multimillion pound executive pay packages.

A Thames Water spokesperson said: “Like all businesses, Thames Water actively manages its financial position.


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“This year, we have successfully raised additional equity from our supportive shareholders and have refinanced maturing debt in order to put us in the best possible position as we continue to execute against the eight year turnaround plan that we launched in May 2021.

“As we look forward to the next regulatory period, and consider the evolving expectations of the regulator and the effects of a changing climate, we keep a range of opportunities under consideration to ensure that we can optimise delivery for customers today and over the long term.”

The £1.5bn of new equity was divided into £500m in the current financial year, followed by a further £1bn before March 2025, when the current industry regulatory period ends.

In its June statement, the company added: “Thames Water shareholders acknowledge that further shareholder support may be required to improve financial resilience.”

The additional shareholder funding formed part of a £2bn expenditure increase designed to improve the company's performance on leaks and river health, taking its total spending during the current five-year regulatory period to £11.6bn.

Thames Water's shareholders include China Investment Corporation, the country's sovereign wealth fund; the Universities Superannuation Scheme, the UK's biggest private pension fund; and Infinity Investments, a subsidiary of the Abu Dhabi Investment Authority, are said to have endorsed the plans.

Serving roughly a quarter of Britain's population, Thames Water has seen its reputation battered by revelations about its cavalier approach to pollution and indifferent treatment of customers.


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A year ago, it was fined £4m for allowing untreated sewage to escape from London sewers into a nearby river and park, while in August 2021, it was ordered to pay £11m for overcharging thousands of customers.

Ms Bentley, who joined as chief executive two years ago, has pledged to deliver better results for both customers and the environment at a time when Britain's privatised water companies are under pressure for paying substantial dividends.

In total, tens of billions of pounds have been handed to shareholders in water utilities across Britain since privatisation, stoking public and political anger given the industry's frequent mishaps.

By Mark Kleinman

 

The UK to sell £1.5 billion of government property under new policy

(qlmbusinessnews.com via uk.reuters.com — Thur, 1st Sept 2022) London, UK —

 Britain set out plans on Wednesday to sell 1.5 billion pounds of government offices over the next three years as part of a plan new property strategy to squeeze public-sector workers into a smaller number of buildings.


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“We are cutting the cost of the public estate so that we can return money to the taxpayer,” Britain's Minister for Brexit Opportunities Jacob Rees-Mogg said in a statement.

The government also said it aimed to save 500 million pounds through reducing operating costs, spending less on leases and using different building materials and energy sources.

Reporting by Sachin Ravikumar

UK contemplating giving loans to energy providers as costs rise -Telegraph

(qlmbusinessnews.com via uk.reuters.com — Tue, 30th Aug 2022) London, UK —

The British government's options to support people facing sky-rocketing energy bills include handing loans to energy suppliers that could cut bills by up to 500 pounds ($587) a year, the Daily Telegraph newspaper reported on Saturday.

Britain's energy regulator said on Friday energy bills will jump 80% to an average of 3,549 pounds a year from October, spurring calls for urgent government support to households and businesses.


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Finance Minister Nadhim Zahawi has prepared a range of options for government support that the next prime minister, who will take office in early September, can consider, the Telegraph said.

Zahawi told the Telegraph he had been working on a plan to help energy suppliers with loans to provide them greater liquidity in a move that could “put a downward pressure on the price cap by anywhere between (400 and 500 pounds).” The idea, previously rejected, was now “back on the table”, the newspaper reported.

Increases in wholesale prices are passed on to British consumers through a price cap, calculated every three months.

Other options being drawn up by the finance minister include freezing the price cap, increasing state benefits and a grant scheme for small businesses, the Telegraph said.

Zahawi said he was concerned that only targeting support at those who receive state benefits would leave out others including pensioners and middle-income earners who will also likely struggle to pay their bills.


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Soaring energy bills, exacerbated by Russia's invasion of Ukraine, have driven British inflation to 40-year-highs, but Britain's response has been hampered by the race to replace Prime Minister Boris Johnson that runs until Sept. 5.

Liz Truss, the foreign minister and the frontrunner to replace Johnson, has said she would look at doing more to help businesses with soaring energy costs if she becomes prime minister next month.

Reporting by Sachin Ravikumar

 

China’s largest real estate developer, Country Garden, profits drop 96%

(qlmbusinessnews.com via theguardian.com – – Tue, 30th Aug 2022) London, Uk – –

The company blames the ‘severe depression’ in the property market and says ‘only the fittest will survive’

China’s biggest property developer Country Garden Holdings has reported a 96% drop in profits, blaming a “severe depression” in the country’s crisi-hit property market in which “only the fittest can survive”.

The company, which is listed in Hong Kong, said preliminary net profit collapsed from 15bn yuan ($2bn) to 612m yuan ($88m) in the first six months of the year thanks to the housing market crisis that is slowly engulfing the Chinese economy.


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Country Garden, which boasts thousands of property projects and a footprint in nearly 300 municipalities, has seen its shares plunge more than 70% this year and the stock dropped another 2.3% on Tuesday to stand at HK$2.54.

It had warned earlier that profits could fall up to 70% and the even bigger than expected drop came with a grim warning in a statement to the Hong Kong stock market.

“In 2022, the property sector faced myriad challenges, including the market’s weakening expectations, sluggish demand and a fall in property prices,” the company said.

“All these exert mounting pressure on all participants in the property market, which has slid rapidly into severe depression. The harsh business environment in which only the fittest can survive means even higher requirements for businesses’ competitive strength.”

China’s property crisis began to rear its head nearly a year ago when the second biggest developer, Evergrande, said that it might not be able to meet repayments on the offshore, dollar-denominated part of its massive $300bn debt mountain.

At the time, market watchers believed that companies such as Country Garden – which did not have such high borrowings – would not be tainted by the problems.

But the debt contagion has spread from Evergrande throughout the enormous $60tr Chinese property market, bringing a 40% drop in sales, falling prices, and a mortgage strike by homeowners angered by the non-completion of homes for which they have paid upfront.

The bleak outlook has been compounded by the zero-Covid lockdowns that have strangled economic activity all over China in the past 12 months, and Country Garden also blamed the recent extreme weather for upsetting profits.

The company’s problems have also seen its majority shareholder – Yang Huiyan, daughter of the founder – lose half her $24bn fortune.

However, the company still managed to strike an optimistic note and said there was hope for an upturn in fortunes because urbanisation of the population was still progressing.


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“China’s economy has proven resilient and its strong fundamentals for long-term development remain intact,” ti said. “The country’s new type of urbanization still has a long way to go and the desire for a good life will always remain dear to people’s hearts. The real estate industry will always exist.”

“We will persevere and remain hopeful despite adversity. Country Garden keeps its feet on the ground as it works hard to get through a harsh winter and anticipates the arrival of spring.”

By Martin Farrer

Former chancellor warns energy bills could break firms

(qlmbusinessnews.com via bbc.co.uk – – Mon, 29th Aug 2022) London, Uk – –

Soaring energy bills could be the “straw that finally breaks the camel's back” for small businesses, former chancellor Alistair Darling has warned.

Mr Darling, who was Labour chancellor during the financial crisis, said “bold action” was needed to help the economy.

The energy price cap for households will soar by 80% from October.

But firms are not covered by the cap and Mr Darling said that after surviving Covid, energy costs risked finishing them off.

Mr Darling described the current situation as a “lethal cocktail” and said it required “bold action” to be taken by the government.

Both candidates in the Conservative Party leadership race, Liz Truss and Rishi Sunak, have come under pressure to outline further support for households and firms following the announcement that energy bills would rise again this Autumn. A new leader – and prime minster to succeed Boris Johnson – will be announced next Monday.


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Ms Truss has so far confirmed she will cut National Insurance and green levies on bills. Mr Sunak has proposed tax cuts on energy bills as part of a £10bn package.

It emerged at the weekend that Ms Truss is considering a “nuclear” option of cutting VAT by 5% as well as raising the threshold at which people start paying tax.

In May, the government announced £37bn worth of help for households with the rising cost of living.

But Mr Darling told the BBC's Today programme the government needed to announce more support.

“You've got to announce it now,” he said. “Frankly the stuff that's been announced so far might have passed muster earlier this year, it simply won't do now, you need something far more substantial.”

Mr Darling said many firms, “especially the smaller ones who have been struggling through the whole Covid problems over the last couple of years may find that [the cost of energy] is the straw that finally breaks the camel's back”.

He said: “My fear is if the government doesn't do something, you will not just have hardship for individuals and businesses, but you will find that people's spending goes down.

“And the risk is, at the moment people are saying the chances of us going into recession are 50-50. It could just tip us into recession, which of course would be disastrous for us.”

He added: “One lesson I drew from what happened in 2008 is you've got to do more than people expect and you've got to it more quickly than people expect if it's going to work.”

A spokesperson for the Treasury said it is “making the necessary preparations to ensure a new government has options to deliver additional support as quickly as possible, as the chancellor has made clear”.

“And as the prime minister has made clear, no major fiscal decisions will be taken until the new prime minister is in post,” they added.

On Friday, energy regulator Ofgem announced a rise in the energy price cap. It means a typical household will pay £3,549 a year for gas and electricity staring in October up from £1,971 currently. And some economists have warned that could rise even further.

Wholesale gas prices have been rising since last year but have worsened recently because of Russia's invasion of Ukraine and the Kremlin's decision to squeeze energy supplies to Europe.

Small businesses across a number of industries have voiced their concerns over rising energy bills.

More than 750 restaurant and café owners called on the government and Conservative leadership candidates for support through VAT cuts, grants and business rate rebates.

In an open letter, the signatories said takeaways were being quoted “eyewatering bills” that were “simply impossible to pay”.

“The government has waited until the last moment to act before, but now cannot be one of those times. It must work with the Conservative leadership candidates on a plan to support Britain's smallest restaurants before it's too late,” said Ibrahim Dogus, chair of the British Takeaway Campaign.

Jon Long, who runs five fish and chips shops in Dorset, told the BBC if he had to pay the current market rate for gas and electricity, it would mean the end his business after four generations in his family.

He managed to fix his gas and electric rates with his energy provider in 2021 and secured a two-year contract, but many businesses aren't in his position.

“What seemed to be extortionate then now seems like an absolute steal,” he said.

The 59-year-old said currently his average bill per shop is about £15,000 per year, but based on current wholesale prices, it would cost him up to £80,000.

“We are on a war-footing here. There has been a lot of talk, a lot of sympathy, they (the government) have been listening but no action,” he said.

“Businesses coming out of contracts need drastic help, and they need it now or we face losing 1000s of previously viable businesses.”


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The Bank of England recently warned that the UK economy will fall into recession later this year as rising energy costs push up the rate of inflation. It recently raised interest rates by 0.5% – the biggest increase in 27 years – in an attempt to cool rising consumer prices which hit 10.1% in July.

Mr Darling said the financial crisis more than a decade ago was different to today's economic climate but warned the current situation was “just as threatening to people, [and] to the economy as the financial crisis was back in 2008”.

“It's not just people on low incomes who are going to be affected by this, it's going to be people right up the income chain,” he said.

By Michael Race

Felixstowe UK’s biggest container port strike to go ahead after talks break down

(qlmbusinessnews.com via news.sky.com– Wed, 10th Aug 2022) London, Uk – –

The eight-day strike will hit supply chains, the logistics and haulage sectors, as well as international maritime trade, the Unite union says.

An eight-day strike at the UK's biggest container port will go ahead after talks between bosses and unions broke down.


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More than 1,900 members of Unite will strike from Sunday 21 August until Monday 29 August, unhappy with the 7% pay rise offered by Felixstowe Dock and Railway Company following a 1.4% increase last year.

A spokesman for the port authority said: “We are disappointed and regret that, despite our best efforts, we have still been unable to reach an agreement with the hourly branch of Unite.

“During talks yesterday the port further improved its position, offering a £500 lump sum in addition to 7%.

“The staff branch of Unite and the Police Federation of Felixstowe Dock and Railway Company have agreed to put a similar offer to their members.

“In contrast, the hourly branch of Unite has again rejected the port's improved position and refused to put it to its members.

“We urge them to consult their members on the latest offer as soon as possible. There will be no winners from a strike which will only result in their members losing money they would otherwise have earned.

“Our focus has been to find a solution that works for our employees and protects the future success of the port. The union has rejected the company's offer to meet again.”

Unite national officer Robert Morton said: “Felixstowe docks is massively profitable. In 2020 alone, it raked in £61m in pre-tax profits and paid dividends of £99m.

“It can afford to put forward a reasonable pay offer to our members but once again has chosen not to.


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“That decision was driven by greed not need. Unite's door remains open for further talks but strike action will go ahead unless the company tables an offer that our members can accept.”

Almost half of the UK's container traffic comes through Felixstowe and Unite said the action would hit supply chains, the logistics and haulage sectors, as well as international maritime trade.

It is the latest round of industrial action by workers pushing for pay to keep up with the rising cost of living.

BoE governor defends decision to raise interest rates, ahead of looming recession

The governor of the Bank of England has defended its decision to raise interest rates, saying there is a “real risk” of soaring prices becoming “embedded”.

Interest rates rose to 1.75% – the biggest rise in 27 years – with inflation now set to hit more than 13%.

The UK is forecast to fall into recession this year, with the longest downturn since 2008 predicted.


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Increasing interest rates is one way to try and control inflation as it raises borrowing costs.

This should encourage people to borrow and spend less. It can also encourage people to save more.

However, many households will be squeezed further following the interest rate rise, including some mortgage-holders.

The Bank's governor, Andrew Bailey, told BBC Radio 4's Today programme: “The real risk we're responding to is that inflation becomes embedded and it doesn't come down in the way that we would otherwise expect.”

“We've had a domestic shock, we've had a shrinkage in the labour force over the last two years or so,” he said.

“The first thing that businesses want to talk to me about is the problems they're having hiring people… They're also saying to us, actually they're not finding it difficult to raise prices at the moment. Now we think that can't go on.”

However, Attorney General Suella Braverman said interest rates “should have been raised a long time ago”.

In response Mr Bailey said “If you go back two years…given the situation we were facing at that point in the context of Covid, in the context of the labour market, the idea that at that point we would have tightened monetary policy, you know I don't remember there were many people saying that.”

UK inflation – the rate at which prices rise – is currently at 9.4% which the highest level for more than 40 years.

But the Bank has warned it could peak at more than 13% and stay at “very elevated levels” throughout much of next year, before eventually returning to the Bank's 2% target the following year.

The main reason for high inflation and low growth is soaring energy bills, driven by Russia's invasion of Ukraine.

Households have also been hit by higher petrol, diesel and food costs.

The economy is forecast to shrink in the final three months of this year and keep shrinking until the end of 2023.

The expected recession would be the longest downturn since 2008, when the UK banking system faced collapse, bringing lending to a halt.

The slump is not set to be as deep as 14 years ago but may last just as long.

Paul Johnson, director of the independent Institute for Fiscal Studies, said the economic situation would mean there would have to be “many more billions to support households” and more money for public services.

He told the BBC that the Tory leadership candidates, Liz Truss and Rishi Sunak, should be focused on tackling inflation rather than tax cuts.

Mr Johnson rejected the idea that tax cuts could be funded in part by “fiscal headroom”.

“What [the leadership candidates are] talking about is that the Office for Budget Responsibility [in March] said we'd be borrowing about £30bn less than we absolutely could to meet the fiscal target of a balanced current budget in a few years' time,” he said.

But he added that this was “highly uncertain” and now “massively out of date”, given the economy was heading for recession.

Labour's Johnathan Ashworth said the cost of living support measures announced by the government so far was “clearly not enough”.

“There will be families and pensioners across the country waking up this morning, reading the news, who are absolutely terrified because a juggernaut is heading [their] way which will smash through family finances,” the shadow work and pensions secretary told the BBC.

He said a Labour government would reduce VAT on energy bills, abolish the tax relief currently offered to oil and gas companies who invest, and provide support to help people retrofit their homes to make them more energy efficient.


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Meanwhile, higher interest rates will hit some mortgage holders.

Now rates have gone up to 1.75%, homeowners on a typical tracker mortgage will have to pay about £52 more a month. Those on standard variable rate mortgages will see a £59 increase.

It means tracker mortgage holders could be paying about £167 more a month compared with pre-December 2021, with variable mortgage holders paying up to £132 more. Interest rates have risen six times in a row since the end of last year.

Higher interest rates also mean higher charges on things like credit cards, bank loans and car loans.

By Becky Morton

Taylor Wimpey, homebuilder, provides employees with a £1,000 cost-of-living bonus.

(qlmbusinessnews.com via news.sky.com– Wed, 3rd Aug 2022) London, Uk – –

Rival housebuilder Barratt, Lloyds, Rolls-Royce, and HSBC are also among the big companies to have given workers bonuses to help them handle rising living costs.

Housebuilder Taylor Wimpey will give most of its employees £1,000 on top of their salaries to help them cope with rising fuel costs this winter.

The payments will be given to workers on salaries of up to £70,000, meaning that about 90% of the workforce is eligible.


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Money will be paid in monthly instalments from September to February.

It comes as UK households grapple with 9.4% inflation, rising food and energy costs, high fuel costs, and an increase in national insurance and council tax.

Taylor Wimpey said: “We have been closely monitoring the impact of rising inflation and the predicted increase in fuel bills this winter on the cost of living for our employees.”

The group said it has been reviewing wages to “ensure competitive levels of pay, alongside our excellent benefits package”.

It comes after rival Barratt announced a £1,000 cost-of-living bonus for 6,000 staff below senior management level, following a 5% pay rise from July to 1 April.

Lloyds, Rolls-Royce, and HSBC are also among the big companies to have given workers bonuses to help them cope with the rising cost of living.

Nationwide: House prices continue to rise – up for the 12th month in a row
Inflation at 40-year high of 9.4% as cost of living crisis mounts

Also on Wednesday, Taylor Wimpey announced a 16.3% rise in pre-tax profits to £334.5m for the six months to the end of June.


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Like many businesses, the firm's costs have increased due to the higher cost of materials, but it said this was fully offset by house price growth.

It expects property prices to increase 4% to 5% year-on-year.

Nationwide Building Society data on Tuesday showed that annual UK house price growth was up slightly in July to 11%, compared with 10.7% in June, although it is expected to slow in the months ahead.

UK coal power plants to be on standby this winter by request of National Grid

(qlmbusinessnews.com via theguardian.com – – Thur, 28th July 2022) London, Uk – –

Users may also be paid to use less electricity, as country prepares for gas shortfalls across Europe

Coal power plants could be paid to generate more electricity, with consumers and businesses paid to use less, as the UK hunkers down for a winter of gas shortfalls across Europe caused by the standoff with Russia over the war in Ukraine.

In its early outlook forecasting Britain’s ability to keep the lights on over winter, the National Grid admitted there could be “tight periods” in early December, which would trigger a call for power plants to ramp up generation.


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While the grid expects to be able to maintain the buffer that prevents blackouts, it issued a warning about the potential impact of a shortfall in Russian gas supply into Europe.

It came as Moscow reduced flows through the Nord Stream 1 pipeline, sending wholesale gas prices soaring and leading to predictions that household energy bills could hit £3,850 next year and remain above £3,500 into 2024.

The UK is much less dependent on Russian gas than European countries such as Germany but National Grid said shortfalls across Europe were likely to lead to “very high” prices for the gas that heats homes on cold days and generates electricity.

In preparation for turmoil in the energy markets, it has asked five coal power units to be available to supply power to the grid but not to the wider electricity market. It said EDF and Drax, which own four of the five, have already agreed to do so, but did not disclose the fifth.

The agreement follows government negotiations with French state-owned energy firm EDF, over its West Burton A plant in Nottinghamshire, as well as with Drax over its plant in Yorkshire.

National Grid is also looking at how to reduce demand, which could involve industrial users being paid to reduce their power usage.

It could also trigger a scheme trialled earlier this year under which customers of household energy supplier Octopus Energy would be paid to put off using the dishwasher or delay a laundry cycle until after peak demand times.

In addition, the electricity system operator will work with the owners of transmission networks to reduce maintenance outages, or time them to cause less disruption.


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Jess Ralston, senior analyst at the Energy and Climate Intelligence Unit (ECIU) thinktank, said: “We may well get through the winter without major incident but the gas bill at the end will likely be extortionate.

“With calls for the £15bn winter energy package [to support domestic billpayers] to be expanded, the government will be kicking itself for not having invested more in energy efficiency over the years.

“The high cost of gas will be adding £2,000 to bills from October, but this could rise with Putin already turning down the flow to Germany.”

Reporting by Rob Davies

 

Gas supply via Nord Stream 1 pipeline restarted to Europe by Russia

(qlmbusinessnews.com via news.sky.com– Fri, 2 2nd July 2022) London, Uk – –

By

The pipeline restarts after the EU warns a “full cut-off” of Russian gas flows is a “likely scenario” for which the continent needs to be ready.

Moscow has allowed gas to flow through the biggest pipeline between Russia and Germany after it was cut off for 10 days – as the UK warned Vladimir Putin's forces were closing in on Ukraine's second biggest power plant.

The Nord Stream 1 gas pipeline has restarted after concerns Moscow would use its vast energy exports to push back against Western pressure over its invasion of Ukraine.


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Gas stopped flowing through the pipeline while it was undergoing annual maintenance, and while it has now resumed, the gas flow is expected to fall well short of full capacity.

Europe remains braced for possible further supply cuts during an economic tit-for-tat with the Kremlin.

Concerns that Russian supplies of gas sent through the Nord Stream 1 pipeline could be stopped by Moscow prompted the European Union to tell member states on Wednesday to cut gas usage by 15% until March as an emergency step.


ANALYSIS: By Adam Parsons

EUROPE'S RELIEF OVER NORD STREAM EXPOSES AN AWKWARD TRUTH

The reopening of Nord Stream will come as a great relief to many, not least the German government.

Europe's richest country is slowly weaning itself away from Russian gas, but that process will take time and a certain amount of ingenuity.

The question, though, is whether President Putin will allow such flexibility.

The Kremlin wants the huge amounts of money it gets from selling gas to Europe, which goes towards financing the war in Ukraine.

Switching off the Nord Stream tap would have big economic repercussions in both Germany and Russia so President Putin now has a curious balance to draw, between causing Europe pain and drawing out as much money as he can.

The European Commission is desperately trying to persuade its members to adopt a Plan B – measures to limit the use of energy and so end that dependence on Russian supplies.

But even if that's adopted (and no, that isn't guaranteed), it will take time.

The awkward truth is that, for the moment at least, Europe would struggle to cope if Russian pipelines, including Nord Stream, were turned off.

UK warns Russia is trying to capture key Ukrainian power plant

Meanwhile, the UK's Ministry of Defence has warned Russian forces are likely closing in on Ukraine's second biggest power plant at Vuhlehirska in Donetsk.

In its regular bulletin, British military intelligence said Russia is “prioritising the capture of critical national infrastructure, such as power plants”.

It added that Russia is probably attempting to break through at Vuhlehirska as “part of its efforts to regain momentum on the southern pincer of its advance towards the key cities of Kramatorsk and Sloviansk”.

Russia warns West not to supply Ukraine with weapons

The MoD's warning comes as Russia's Foreign Minister Sergei Lavrov said the Kremlin's goals had expanded during the five-month war.

Mr Lavrov told state news agency RIA Novosti on Wednesday that Russia's military “tasks” in Ukraine now go beyond the eastern Donbas region.

He also said Moscow's objectives will expand further if the West keeps supplying Kyiv with long-range weapons such as the US-made High Mobility Artillery Rocket Systems (HIMARS).

“That means the geographical tasks will extend still further from the current line,” he said, adding peace talks made no sense at the moment.

However, Kremlin spokesman Dmitry Peskov later told RIA that Moscow is not closing the door on talks with Kyiv despite Mr Lavrov's comments.

Russia has touched ‘every square metre of Luhansk'

On the battlefront, the Ukrainian military reported heavy and sometimes fatal Russian shelling amid what its says were largely failed attempts by Moscow's ground forces to advance in the Luhansk and Donetsk regions that make up the Donbas.

“In the Luhansk region, there is probably not a single square metre of land left untouched by Russian artillery,” Serhiy Gaidai, the regional governor said.

“Shelling is very intense. They stop only when the metal ‘gets tired'.”

In the previous 24 hours, Ukrainian forces said they had killed more than 100 Russian soldiers in the south and east and destroyed 17 vehicles, some of them armoured.

The Russian-installed administration in the partially occupied Ukrainian region of Zaporizhzhia said Ukraine had conducted a drone strike on a nuclear power


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Russia's invasion has killed thousands, displaced millions and flattened cities, particularly in Russian-speaking areas in
the east and southeast of Ukraine.

It has also raised global energy and food prices and increased fears of famine in poorer countries as Ukraine and Russia are both major grain producers.

The United States estimates that Russian casualties in Ukraine so far have reached around 15,000 killed and perhaps 45,000 wounded, CIA Director William Burns said on Wednesday.