FTSE falls as shortages sharpen growth fears - live updates

© Chris J Ratcliffe/Getty Images Gaps in supermarket shelves have appeared more frequently as a shortage of lorry drivers disrupt supply chains – Chris J Ratcliffe/Getty Images

  • Interest rates set to rise as soon as February amid inflation surge
  • Grant Shapps pledges ‘to move heaven and Earth’ to solve fuel crisis
  • FTSE falls after Bank of England inflation warnings
  • Ben Wright: Our complacent leaders are fuelling a cost of living shock
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07:38 AM

FTSE 100 opens in the red

Meanwhile the FTSE 100 has sunk 0.24pc at the open to 7,050.7 points as growth worries persisted after yesterday’s warning from the Bank of England that inflation is likely to climb above its previous forecast of 4pc.

AstraZeneca jumped 2.7pc to the top of the main London index after trials of its prostate cancer drug Lynparza showed positive results.

However, retail stocks such as JD Sports (down 2.6pc), industrial miners and life insurers were the top losing sectors.

It comes amid growing worries over energy bills, food costs and tax hikes, which conspired to push consumer confidence in the economy to its steepest fall since October 2020.

Mid-cap index the FTSE 250 fell 0.36pc.

07:26 AM

Shapps: ‘I will move heaven and Earth to solve petrol crisis’

Grant Shapps has said he will move “heaven and Earth” so that petrol and other goods can continue moving around the country easily.

The Transport Secretary earlier blamed the pandemic for the shortage of lorry drivers that prompted BP to shut fuel forecourts that it simply could not reach to stock up.

Now he has told the BBC Today programme:

I’ll move heaven and Earth to do anything that’s required to make sure that lorries carry on moving our good and services and petrol around the country.

I’ll do anything which actually helps. The big query actually is where is the blockage? What we do know is that there are a lot of people who have their HGV licences but many of which will have lapsed to come out of the market, often because there has been cheaper European labour.

We want to get those people back in.

Here’s a chart showing how UK and EU driver shortages have hit Britain’s logistics sector:

07:20 AM

‘Tax hikes, energy bills and a lack of goods to blame’

Linda Ellett, KPMG UK’s head of consumer markets, said the Chancellor’s big tax hike, inflation, rising energy bills and a lack of goods on shop shelves have all conspired to deal the blow to households’ outlook.

She added:

It’s impossible for consumers to ignore the challenges all around us.

Now is also the time that many retailers are ramping up for the festive season. It remains to be seen quite how many challenges they face and how this will be received by consumers, who are preparing to spend big after last year’s cancellations, but who may be left frustrated by a lack of choice and availability.

The grocery industry has been preparing some time for the months ahead, and retailers are having to make bold and often difficult decisions to ensure that the best possible products and shopping experiences will still be available at Christmas – even if that means cutting product lines temporarily for now.|

We will need to wait and see whether confidence takes a further knock due to this lack of choice. After last year’s muted festivities, families may decide to go all-out with the quality of their gifts and Christmas dinner, rather than quantity, and the Christmas spirit may override frustration caused by limited choices.

07:06 AM

Cost of living crisis blow to consumer confidence

Consumer confidence has plunged amid increasing anxiety about the rising cost of living, a long-running survey suggests.

PA has the details:

GfK’s Consumer Confidence Barometer fell by five points to minus 13 in September, a drop not seen since October last year.

All measures of the survey, including confidence in the general economic situation and personal finances, were down in comparison to last month.

The index also recorded a three-point drop to minus six in the major purchase index, an indicator of consumer confidence in buying big ticket items, in worrying news for hard-pressed retailers looking to build sales as they go into the key holiday period.

Confidence in personal finances over the last 12 months dropped four points to minus four, while the forecast for the next 12 months fell six points to five – although it remains four points higher than this time last year.

Expectations for the general economic situation over the coming 12 months fell 10 points to minus 16, but is still 22 points higher than September last year.

GfK client strategy director Joe Staton said: “On the back of concerns about rising prices for fuel and food, the growth in headline inflation, tax hikes, empty shelves and the end of the furlough scheme, September sees consumers slamming on the brakes as those already in economic hardship anticipate a potential cost of living crisis.

“All measures have declined this month and consumers are clearly worrying about their personal financial situation and the wider economic prospects for the year ahead.”

“When consumer confidence drops, shoppers tend to spend less, and this dampens the overall economic prospects for the UK. This really is an unwelcome picture going into 2022 and beyond.”

06:50 AM

Shapps tells motorists to ‘carry on as normal’

© BEN STANSALL/AFP via Getty Images Mr Shapps blamed the pandemic for the shortage of drivers and said Brexit was not part of the problem – BEN STANSALL/AFP via Getty Images

Transport Secretary Grant Shapps has told motorists to “carry on as normal” after BP was forced to close petrol stations yesterday owing to a lack of lorry drivers to deliver fuel.

Mr Shapps told Sky News: “The advice would be to carry on as normal, and that is what BP is saying as well.

“They describe it on the average day that they have a handful of petrol stations that they had to close out of 1,200.

“The problem is not new. There has been a lack of drivers for many months through this pandemic because during the lockdown drivers couldn’t be passed through their lorry HGV tests, and that is what has led to this problem.

“But many more tests are being made available now, so we should see it smooth out fairly quickly.”

The minister denied that Brexit was part of the problem for recruiting HGV drivers in the UK, instead arguing that being divorced from the EU had helped enable some of the solutions.

 “I’ve seen people point to Brexit as if it is the culprit here. In fact, they are wrong,” Mr Shapps said.

“Not only are there very large and even larger shortages in other EU countries like Poland and Germany, which clearly can’t be to do with Brexit, but actually because of Brexit I’ve been able to change the law and alter the way our driving tests operate in a way I could not have done if we were still part of the EU.

“So, Brexit actually has provided part of the solution of giving more slots available for HGV tests and there are a lot more – twice as many – tests available now than before the pandemic, a large proportion of those we’ve only been able to do because we are no longer in the EU.”

Instead he blamed the pandemic, calling the driver shortage a “global” issue, adding: “Europe is hit particularly bad.”

“We’ve got, for example, in Germany a 60,000 shortage and Poland a 123,000 shortage of lorry drivers, so as I say it is the principal cause of the problem and we are working very hard to change it, including changing the law in order to provide more tests for HGV drivers and encouraging people back into the market.

“There are longer-term problems, which is that it is difficult – it is a long day’s work, it is hard work, it is a skilled job and, actually, it has been underpaid up until now, so we very much welcome the salary going up, the wages going up, and that’s attracting more people back to the sector.”

06:23 AM

FTSE 100 to inch higher

Good morning.

The FTSE 100 is expected to inch higher this morning after yesterday’s climb was cut short by the Bank of England’s warning that inflation will be even higher than its 4pc forecast amid the ongoing supply chain crisis.

That sent the pound soaring 0.6pc against the dollar yesterday as London’s main index ran out of steam, falling to 7,078.35 points by the close of trading.

Today it is set to open 0.16pc higher to hit 7,088 points after Germany and France bourses posted close to 1pc gains.

Michael Hewson, chief market analyst at CMC Markets, said: “Yesterday saw another positive day for European markets, rising for the third day in a row, shrugging off early week concerns about the Chinese property market, and despite evidence that the wider economy is slowing, due to increasing supply chain constraints.  

“The FTSE100 did its best to reprise its role as the perennial party pooper, sliding back from its intraday highs, to finish in negative territory, which in some part may have been down to the sharp rise in the pound, and gilt yields.

“Nonetheless markets in Europe, as well as the US are now back in positive territory for the week, a scenario that didn’t look very likely back on Monday, when fears of an Evergrande bankruptcy had investors circling the wagons.”

5 things to start your day 

1) Interest rates set to rise as soon as February amid inflation surge: The Bank of England has been forced to revise up its inflation forecasts as surging energy costs, labour shortages and chaos in the supply chain hold back Britain’s recovery from Covid.

2) Alarm as petrol stations begin rationing fuel: Motorists were warned on Thursday night of shortages at fuel forecourts as BP announced it was closing pumps and rationing petrol and diesel because of a lack of lorry drivers.

3) George Osborne brings in Russian oligarch to his new investment bank: George Osborne has won his new investment bank employer a role advising EN+, the Russian metals giant founded by Oleg Deripaska, according to reports.

4) British Airways abandons plans for new budget airline at Gatwick: British Airways is poised to scrap almost all short-haul flights from Gatwick after pilots rejected the carrier’s plan to set up a new budget airline and hand them sweeping pay cuts.

5) Ford considers Halewood plant over Germany for EV systems: Ford is weighing up whether to build transmission systems for electric cars at its Halewood plant on Merseyside rather than at a site in Germany.

What happened overnight 

Asian shares were on edge on Friday, hurt by persistent uncertainty around the fate of debt-ridden China Evergrande, even as more risk appetite drove gains for Wall Street and US benchmark Treasury yields.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.1pc and was set for a weekly loss of 0.68pc. Australian shares fell 0.41pc, while the Hong Kong benchmark was mostly flat.

Japan’s Nikkei rose 1.93pc, however, catching up on global gains after a public holiday. Chinese blue chips reversed early losses to gain 0.6pc after a cash injection from the central bank.

Investors continue to worry about the fate of property developer China Evergrande, which faces an interest payment deadline due Thursday. Its shares fell 5.2pc on Friday after bouncing 17.6pc a day earlier.

Coming up today

  • Economics: CBI retail sales survey (UK); new home sales (US)
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