The German government has taken control of three liquefied natural gas ships from Russian energy giant Gazprom.
US-listed Dynagas LNG Partners said Germany’s energy network regulator assumed control of three vessels “for an indefinite period of time” after Berlin took ownership of Gazprom Germania in April.
Two Dynagas ships, the Amur River and the Ob River, were chartered to a Gazprom unit until 2028, while the vessel Clean Energy was chartered to the unit until 2026. All have now been taken over by Berlin.
Germany seized control of Gazprom Germania, which controls the country’s largest gas storage facility, to secure its energy supplies amid the Ukraine conflict. It has since renamed the company Securing Energy for Europe.
The takeover came after Gazprom said it no longer owned its subsidiary Gazprom Germania but refused to disclose the unit’s new ownership structure.
Disney to launch new cruise ship
Disney’s chief Bob Chapek is set to christen the group’s first new cruise ship in a decade, the culmination of the first project the executive championed to the company’s board of directors.
The launch of the 4,000-passenger Disney Wish will be a bright spot for Chapek, who became Disney’s boss in February 2020 and secured a three-year contract extension yesterday following recent controversies that prompted questions about his tenure.
The cruise business is part of Disney’s massive theme parks, experiences and products unit, which has rebounded from pandemic closures. Profits hit $4.2bn (£3.2bn) in the first half of the financial year, rebounding from a $535m loss a year earlier.
Tesco stops selling Kraft Heinz products amid price dispute
Tesco said some Kraft Heinz products are currently not available in its stores after the US firm paused supply due to a dispute over pricing.
The supermarket said: “We will not pass on unjustifiable price increases to our customers.
“We’re sorry that this means some products aren’t available right now, but we have plenty of alternatives to choose from and we hope to have this issue resolved soon.”
Heinz said it is confident the dispute will be solved shortly. It told Reuters that, with commodity and production costs rising, it was looking at ways to provide value for customers “through price, size and packs” without compromising on quality.
That’s all from me – thanks for following! Giulia Bottaro takes over from here.
BT asks for more time to strip Huawei tech from its network
BT has asked the government for more time to strip Huawei equipment out of its phone networks, saying supply chain disruption means it risks missing a looming deadline.
Gareth Corfield has more:
Ministers have set a deadline of January 2023 for Huawei equipment to be stripped out of the core of Britain’s telephone networks, following national security fears that the Chinese business could use its privileged access to spy on UK communications.
Howard Watson, the telecommunication company’s chief technical officer, said the effects of the pandemic on global supply chains meant it was taking longer than hoped to replace the infrastructure.
“Not interrupting service for customers is the critical requirement here,” he said.
A BT spokesman acknowledged Mr Watson’s remarks, made in an interview with Bloomberg, and said the one-time state monopoly has “requested a necessary, short extension, to reflect significant Covid-driven impacts to the programme over the past two years.”
All Huawei equipment must be removed from British phone networks by 2027 but the 2023 deadline relates to the “core” of phone networks.
Deliveroo moves into advertising as shares slide
Deliveroo has launched a push into advertising as it seeks to turn a profit and halt a lengthy share slide, writes James Titcomb.
The takeaway app plans to let companies buy space on its order tracking page, hoping it will eke out more revenues from diners.
While restaurants and stores can already pay for priority positions in Deliveroo’s search results and listings, the move will expand the company’s advertising push to consumer brands.
The company described advertising as a “lever the company can pull to increase net revenue” by showing adverts to its 8m users.
Deliveroo’s shares have plummeted since it went public in March last year in what was the UK’s biggest initial public offering of 2021.
Shares have fallen from an offering price of 390p to 88.5p on Wednesday, as investors have become increasingly pessimistic about delivery apps’ ability to deliver the profits once expected of them.
Germany strikes back in Gazprom row
Germany’s decision to seize three LNG ships from Gazprom is the latest salvo in a conflict over energy supplies after the state took control of Gazprom Germania.
Helen Cahill has more:
The takeover allows Germany to operate the Astora gas storage facility in Lower Saxony, which is a key pillar of the country’s energy system.
Last week Germany triggered the second stage of its emergency gas plan after Russia throttled supply. Mr Habeck called the move an “economic attack.”
Germany is now in talks with Canada over securing exports of LNG amid rising tensions with Russia over gas supplies.
Reuters reported Germany Chancellor Olaf Scholz and Canadian Prime Minister Justin Trudeau discussed arranging gas supplies while at the G7 summit this week.
Canadian minister Jonathan Wilkinson said the government was encouraging the companies behind two LNG export facilities on the country’s east coast to speed up the delivery of the project and boost shipments to Europe.
Germany now holds the charters of half of Dynagas’ fleet. Yamal LNG has contracted the company’s Yenisei River and Lena River ships until 2035, while Equinor has chartered the Arctic Aurora until 2023.
Unilever forces Ben & Jerry’s to start selling ice cream in Israel again
Unilever has sold its Ben & Jerry’s business in Israel in a bid to force the ice cream maker to resume sales in the country.
Ben & Jerry’s last year announced it would stop selling ice cream in occupied Palestinian territories, sparking a diplomatic row.
But parent company Unilever has now sold the business to Avi Zinger, the owner of current Israel-based licencee American Quality Products Ltd.
The deal means the ice cream will be sold under its Hebrew and Arabic names throughout Israel and the West Bank.
The company said:
Unilever rejects completely and repudiates unequivocally any form of discrimination or intolerance. Antisemitism has no place in any society.
We have never expressed any support for the Boycott Divestment Sanctions (BDS) movement and have no intention of changing that position.
Andrew Bailey: BoE can act more forcefully
Andrew Bailey has policymakers “have the option” of acting more forcefully to keep a lid on inflation if needed.
The Bank of England governor didn’t rule out raising interest rates by 50 basis points at the next MPC meeting, saying the decision was still a month away.
Speaking at a panel discussion in Portugal, Mr Bailey said: “There will be circumstances in which we will have to do more.
“We’re not there yet in terms of next meeting. But that’s on the table. But you shouldn’t assume it’s the only thing on the table.”
Wall Street falls on rate hike worries
Wall Street lost ground at the opening bell as investors turned their attention back to surging inflation and the risk of a recession.
The world’s top central bankers – including Andrew Bailey, Christine Lagarde and Jay Powell – hinted at more aggressive interest rate rises to combat inflation at a conference this afternoon.
The S&P 500 fell 0.3pc, while the Nasdaq lost 0.6pc. The Dow Jones was up 0.3pc.
Shell chief warns of ‘turbulent’ period amid energy crisis
The boss of Shell has warned the world is heading for a “turbulent period” as a squeeze on liquefied gas and oil supplies exacerbate the global energy crunch.
Ben van Beurden painted a bleak picture of an energy market that will struggle to replace large swathes of Russian oil and gas still flowing into Europe.
He said: “There will be more LNG [liquefied natural gas] supply coming into Europe, but will there be a lot of extra new LNG supply to plug the gap? I don’t think so.
“Spare capacity is very low, demand is still recovering. So with that, also the uncertainties with the war in Ukraine and sanctions that may come from it, there is a fair chance we will be facing a turbulent period.”
UK extends steel tariffs to 2024
The Government said it will extend tariffs on imports of some steel products to mid-2024 in a bid to protect Britain’s domestic industry.
Anne-Marie Trevelyan, International Trade Secretary, said removing the tariffs – which had been due to expire tomorrow – could cause “serious injury to UK steel producers”.
The move comes despite concerns it would conflict with World Trade Organization rules.
Ms Trevelyan said: “From time to time issues may arise where the national interest requires action to be taken which may be in tension with normal rules or procedures.”
The plans appear to be those cited by Boris Johnson’s ethic adviser Lord Geidt in his resignation letter earlier this month. He accused the Prime Minister of putting him in an “odious” position.
German inflation slows as Government steps in
German inflation slowed slightly in June as government measures to ease the impact of soaring inflation took its toll.
Inflation stood at 7.6pc this month, according to figures from Destatis. That’s still well above the 2pc target set by central banks but down from 7.9pc in May.
Consumer prices in Germany have been on an almost constant climb for 18 months, with the last fall in the rate registered in January this year.
The upwards momentum was only broken by government moves to ease the pressure on consumers, including a discounted fuel tax and a flat-rate ticket for public transport.
Destatis said the full impact of these measures could “not be assessed” in the preliminary data.
Record trade deficit weighs on US economy
The US economy contracted in the first quarter amid a record trade deficit.
GDP fell 1.6pc on last year, revised down from initial estimates of a 1.5pc decline, according to the latest official data. That was compared to 6.9pc growth in the fourth quarter.
The US economy appears to have recovered from this slump, with consumer spending picking up in April.
But the rebound could be short-lived, as the Federal Reserve aggressively tightens monetary policy to combat inflation, heightening fears of a recession.
Tesla sacks 200 staff in Autopilot division as deep job cuts continue
Tesla has cut almost 200 staff working on its Autopilot technology as Elon Musk seeks to radically reduce the electric car maker’s costs, writes James Titcomb.
The company has shut down an office in California dedicated to training the artificial intelligence software used by Tesla cars to partially drive themselves.
Mr Musk has said Tesla needs to cut around 10pc of its salaried staff, around 3,500 people, saying he fears an impending recession. The company’s shares have fallen by more than 40pc this year.
Around 400 hourly and salaried staff worked at a Tesla office in San Mateo, focused on manually reviewing footage of the Autopilot software in action, and labelling images to improve its detection of hazards such as other cars, cyclists and pedestrians. Roughly half of those will leave as a result of the office closure.
Autopilot, which automatically keeps cars in their lane and regulates speed, is coming under increasing scrutiny in the US amid a spate of accidents.
US futures fall as growth fears return
Wall Street looks set to follow the FTSE into the red this afternoon amid renewed fears about a possible recession.
Stocks had rebounded over recent sessions, but record-high inflation in Spain and China’s commitment to its zero-Covid strategy brought investor sentiment crashing down again.
Futures tracking the S&P 500 fell 0.2pc, while the tech-heavy Nasdaq was down 0.3pc. The Dow Jones was little changed.
Camelot: We still have a ‘very strong’ case
Camelot has come out swinging in its response to the High Court judgement over the National Lottery licence:
While disappointing, this judgment only addresses whether or not the enabling agreement can be signed while our case is heard.
The judgment on whether the Gambling Commission correctly and lawfully awarded preferred applicant status is being dealt with separately.
We will take some time to consider our next steps and continue to believe that we have a very strong legal case.
In the meantime, we remain dedicated to maximising returns to good causes, building on our record performance over the past two years.
RAC blasts ‘inexplicable’ new fuel price record
Petrol prices hit a fresh record high yesterday in a move the RAC branded “inexplicable”.
Petrol climbed to 191.24p per litre, according to the motoring body. Diesel rose to 199.01p.
Simon Williams, fuel spokesman at the RAC, said: “Inexplicably, fuel prices rose yet again yesterday.
“We can see absolutely no rhyme or reason why average forecourt prices are still going up, given that the wholesale price of both fuels has been falling for weeks.”
Mr Williams said drivers deserved an explanation of why fuel prices are continuing to rise despite lower wholesale costs and called on the Government to investigate retailer margins.
Business Secretary Kwasi Kwarteng has asked the Competition and Markets Authority to urgently review the retail fuel market to assess whether it has hurt consumer interests amid rising prices.
Camelot loses legal battle to keep hold of National Lottery
Camelot’s hopes of running the National Lottery for the next decade have been all but completely extinguished after a High Court judge ruled that control of the draw can be passed to new operator Allwyn Entertainment.
Oliver Gill has the story:
Mrs Justice O’Farrell today said that the Gambling Commission can sign a contract with Allwyn, the gambling empire owned by billionaire Karel Komarek, following a legal challenge.
The decision will mark an end to Camelot’s three decades running the National Lottery in 2024.
Camelot is now expected to pursue a claim for an estimated £500m in damages as it argues the regulator made a mistake in its decision to award the contract to Allwyn.
A trial has been scheduled for October to hear Camelot’s claim. A ruling in Camelot’s favour here could still open the door for a political row over the regulator’s decision, however.
The Gambling Commission said: “We made clear that disrupting the implementation of Allwyn’s plans would present potentially severe consequences for the National Lottery and good causes. It also risked the National Lottery not operating to its full potential at the start of the fourth licence.
“We will also now be preparing for trial of the various claims. We remain resolute that we have run a fair and robust competition, and that our evaluation has been carried out fairly and lawfully in accordance with our statutory duties.”
UK sanctions Russia’s second richest man
The Government has hit oligarch Vladimir Potanin, Russia’s second richest man, in the latest wave of measures against Putin’s inner circle.
Potanin, who owns conglomerate Interros, has continued to amass wealth since the start of Russia’s invasion, acquiring Rosbank and snapping up shares in Tinkoff Bank.
Anna Tsivileva, Putin’s first cousin once removed and President of coal miner Kolmar, has also been sanctioned.
Tsivileva’s husband Sergey Tsivilev is governor of the coal rich Kemerovo region and the couple have significantly benefited from their relationship to Putin. Kolmar was also hit with sanctions.
A government spokesman said:
As long as Putin continues his abhorrent assault on Ukraine, we will use sanctions to weaken the Russian war machine.
Today’s sanctions show that nothing and no one is off the table, including Putin’s inner circle.
Coca-Cola supplies under threat as staff threaten strikes
Britain could suffer a shortage of Coca-Cola this summer as workers threaten to strike over pay and allegations of bullying.
Staff at bottling giant Coca-Cola Europacific Partners have rejected a 21-month pay deal of 3.25pc for the first 12 months and 1.75pc for the next 9 month, saying the “abysmal” offer amounted to a real-terms pay cut.
They also accused the company of threatening staff with further reductions to the pay offer as well as potential changes to “ways of working” should they take industrial action.
Workers employed at CCEP’s factory in Wakefield are now preparing to ballot on a strike that union bosses warned could hit supplies over the summer.
Sharon Graham, Unite general secretary, said:
This scandalous behaviour is tainting one of the world’s biggest brands. This Coca-Cola bottling plant is trying to bully and threaten our members into taking a pay cut while making money hand over fist.
Whitbread chief replaced by Domino’s boss
A bit of corporate transfer news now after Whitbread confirmed that boss Alison Brittain will step down next year.
The Premier Inn and Beefeater owner said Dominic Paul, current head of Domino’s Pizza, will take over as chief executive in March 2023.
Mr Paul led Domino’s throughout the pandemic, having joined the business after leading Costa Coffee during its ownership by Whitbread before the chain was sold to Coca-Cola in 2019.
Ms Brittain will leave Whitbread after eight years in charge.
Ofgem: Energy bills won’t rise under £21bn power grid revamp
Household bills won’t rise as part of plans to spend nearly £21bn overhauling the UK’s regional electricity networks, Ofgem has insisted.
The regulator unveiled a £20.9bn package of funding to build greener and more reliable power grids and vowed to meet the costs from investors and cost savings, rather than consumers.
That includes £2.7bn upfront spending to boost capacity.
Ofgem also announced the new price controls under the five-year plan to 2028 that set the revenue Britain’s 14 distribution network operators can earn from these charges.
Electricity giant SSE said the plans were “tough and stretching”, while National Grid said it will “work hard” with Ofgem on the plans ahead of final determinations expected in December.
Jonathan Brearley, chief executive of Ofgem, said:
These are challenging times, and this is the path out of relying on expensive and polluting imported fossil fuels and moving to a home-grown energy system, that exploits the best of modern technology to level out demand and reduce costs for consumers.
We’re determined to get the best possible deal for consumers and the proposals we’ve published today will mean that substantial additional investment can be made to deliver net zero without placing any further pressure on bills.
We’re confident that the five-year vision we’ve outlined will help build the world class energy infrastructure needed to connect consumers to reliable, cleaner energy at an affordable price.
‘Backfiring’ response to strikes must change, says union chief
The UK’s heavy-handed approach to industrial relations has backfired as employees reject its “nonsense” demands for pay restraint and increasingly join unions.
That’s according to Frances O’Grady, general secretary of the Trades Union Congress, who said unions had seen surging interest about membership from workers grappling with soaring inflation.
Unions say last week’s rail strikes could herald a summer of discontent, with teachers, posties and health workers all threatening to walk out. Even barristers went on strike this week.
The Government has responded by condemning “union barons” and seeking to make it easier for companies to hire agency workers.
Ms O’Grady said that rather than engage with workers during the toughest economic conditions in decades, ministers were “spoiling for a fight”.
She added: “I think that’s backfired massively. I don’t think they’ve won public opinion.”
China lockdowns hit Mulberry sales
Mulberry has reported a slowdown in sales as Covid restrictions in China took their toll.
The luxury brand said retail and digital sales were down 1pc in the first 12 years on the new financial year due to the closure of most of its stores and its Shanghai distribution centre.
However, revenue was up 5pc and Mulberry reported strong full-year figures as more customers returned to physical stores.
Revenue was up almost a third to £152.4m while pre-tax profits rose to £21.3m from £4.6m the year before.
The retailer also reinstated its dividend with a payout of 3p per share. Mulberry jumped 7.8pc in morning trading.
Thierry Andretta, chief executive of Mulberry, said:
Whilst the economic and geo-political outlook remains uncertain, we are an iconic international brand with a clear strategy for future profitable, cash-generative growth. We remain well placed to continue to deliver sustainable returns to the benefit of all our stakeholders.
Gambling shares rise as UK mulls £5 online stake limit
Gambling shares pushed higher this morning following reports the Government could set a maximum £5 stake for online casinos amid a broader crackdown on the industry.
Ministers could also ban free bets, while firms could be required to remove features that increase risk levels for customers, Bloomberg reports.
Online casinos may also have to implement affordability checks to show how much users can safely spend.
Boris Johnson and other Cabinet ministers are expected to sign off on a final decision within the next week as the UK updates 17-year-old gambling legislation to address concerns about addiction.
But analysts said investors may be relieved about the extent of the new legislation, describing it as “relatively benign”.
Shares in 888 rose 6.4pc, while Playtech gained 0.2pc. Flutter was up 0.6pc and Entain rose 0.1pc.
B&M sticks to forecasts despite sales slump
Budget retailer B&M is sticking to its forecasts for the full year despite reporting another slump in sales.
The chain said like-for-like sales tumbled 9.1pc across its 705 UK stores in the quarter to June 25 – falling as much as 19.1pc in the first five weeks as it came up against tough comparatives from a year ago.
But the group stuck by its full-year forecasts for underlying earnings of between £550m and £600m.
Analysts at Jefferies said it was unclear how much B&M would benefit from the shopper switch to budget brands amid the cost-of-living crisis.
Shares rose more than 2pc to the top of the FTSE 100.
Electric cars could pay tax by the mile
ICYMI – Electric cars face being fitted with tracking devices under proposals for a pay-per-mile road taxation system put forward by the Government’s own climate advisers.
Rachel Millard has more:
The Climate Change Committee (CCC) says the Government needs to find ways to cover the “significant hole” in the public finances left by the loss of fuel duty and other taxes when petrol and diesel cars are replaced by electric models.
The new report also calls for the cost of renewable projects to be shifted from electricity bills into general taxation, a move it says could cut energy bills by £90.
On electric cars, the CCC said a “sensible and fair” approach would see the costs covered by drivers, rather than general taxation, arguing that some form of “road pricing” is needed under which drivers are charged for how much they drive.
Potential approaches, it added, range from “a simple charge per mile driven, which could be levied based on annual odometer checks, to more sophisticated schemes that vary the charge based on the time of day or the location/type of road being used, based on vehicle tracking technologies.”
The CCC said the government needed to explore the policy now so it is ready to be implemented this decade. The sale of new petrol and diesel cars is set to be banned in 2030. Introducing a new tax system at an “early stage” will help avoid a situation where drivers “begin to assume that EV driving will always be tax free,” the CCC said.
H&M profits jump as shoppers flock back to stores
There’s little sign of the cost-of-living crisis hurting H&M just yet as the low-cost retailer beat profit estimates for the second quarter.
Pre-tax profits rose by a third to 4.8bn Swedish krona (£387m) in the three months to the end of May as shoppers rushed to replenish their post-Covid wardrobes.
Helena Helmersson, chief executive of H&M, said: “Well-received collections have led to strong development, with a further increase in full-price sales and decrease in markdowns.”
Still, the retailer warned sales could fall 6pc this month as Russia’s war in Ukraine piles pressure on household budgets. Soaring costs also threaten to squeeze margins.
H&M said it was looking at ways to “prioritise initiatives, redistribute resources and ensure continued good profitability” amid wider economic troubles.
Moonpig tumbles as pandemic boost fades
Moonpig has reported a sharp fall in revenue and profits as a pandemic boost that drove demand for online cards begins to ease.
The company reported a 31pc slump in pre-tax profits to £51.5m in its first full year as a listed company. Revenue dropped 17pc to £304m.
Despite the decline, Moonpig issued a bullish outlook, with its acquisition of Buyagift expected to increase revenue to about £350m.
Nickyl Raithatha, chief executive, said the company’s gifting business had grown by over 100pc in the past two years, adding that the acquisition of Buyagift would “accelerate” Moonpig’s journey to becoming the “ultimate gifting companion”.
Shares fell 1.8pc in early trading.
Hilco sets sights on Cath Kidston takeover
Retail investor Hilco is said to be closing in on a takeover of Cath Kidston just two years after it was bought out of administration.
Hilco, which has owned a string of major high street names including HMV and Habitat, has held talks about buying the lifestyle brand from from owner Baring Private Equity Asia, Sky News reports.
Cath Kidston, known for its floral and polka dot designs, collapsed into administration in 2020 as the pandemic took its toll, with the loss of 1,000 jobs.
BPEA struck a pre-pack insolvency deal which resulted in the closure on its entire UK high street estate. It still has fewer than a handful of stores in Saudi Arabia.
UK appoints ‘winter resilience’ czar
The Government has appointed a new official to ensure Britain can keep the lights on this winter as the energy crisis deepens.
Jonathan Mills, previously in government as a director of energy strategy, took up the role of director-general of winter resilience earlier this month.
The Department for Business, Energy and Industrial Strategy said energy security was an “absolute priority”.
The UK is drawing up emergency plans to deal with a power crunch this winter, with officials warning that around 6m British households could face power cuts in a worst-case scenario if Russia turns off the taps.
FTSE risers and fallers
The FTSE 100 has fallen back from two-week highs as weak US consumer confidence data revived fears of a recession.
The blue-chip index fell 0.4pc, putting it on track to snap a three-day winning streak.
Industrial metal and mining stocks were among the worst hit, with Anglo American and Rio Tinto both losing ground.
Drinks giant Diageo dropped 2.6pc after Deutsche Bank cut its rating on the company.
Oil giants BP and Shell both managed to push higher despite pressure on crude prices. National Grid was the biggest riser, gaining as much as 1.5pc even after National Grid said it would cut returns to network operators.
The domestically-focused FTSE 250 slumped more than 1pc, with cruise operator Carnival dropping more than 11pc.
Shop prices surge at fastest rate in 14 years
Prices in British stores are surging at their fastest rate in almost 14 years, leaving millions of families struggling to make ends meet.
The British Retail Consortium said retailers were having to pass on some of the burden of higher raw material costs, leading to the biggest price increases since September 2008.
Food was the biggest driver of inflation, with prices jumping 6pc in the year to June.
A separate report by the Joseph Rowntree Foundation found that millions of low-income households are going without essentials, falling behind on bills and taking on debts.
The poverty campaign group warned that Rishi Sunak’s £15bn support package, announced last month, “doesn’t even touch the sides when it comes to the financial problems of low-income families”.
German flight controller issue sparks Europe-wide chaos
There’s a risk of even more travel chaos across Europe today after German air traffic controllers reported technical difficulties.
Frankfurt Airport warned of disruptions across European airspace, in addition to delays and cancellations at Germany’s biggest transport hub.
Lufthansa, the biggest airline at Frankfurt airport, said it was too soon to say how many of its flights would be affected.
Gas prices rise as supply troubles deepen
Natural gas prices increased across Europe this morning amid fears the supply crisis will deteriorate in the run-up to winter.
European countries are racing to refill storage sites amid lower flows from Russia, with concerns that Putin could turn off the taps completely.
But the UK is now planning to cut off interconnector gas pipelines to Europe under an emergency plans, threatening to deepen the crisis on the continent.
Rising demand in Asia could also push up competition for liquefied natural gas, posing a fresh threat to supplies and driving up prices even further.
Benchmark European gas prices rose 1.8pc.
FTSE 100 drops at the open
The FTSE 100 has dropped sharply at the open as a recent rebound across markets ran out of steam.
The blue-chip index fell 0.7pc to 7,269 points.
Morgan Stanley: Russian gas crisis will push eurozone into recession
As European countries draw up emergency plans to deal with a cut-off in Russian supplies, the economic risks are mounting.
Morgan Stanley now predicts the crisis will push the eurozone into a mild recession in the fourth quarter of this year.
In a report published today, economists at the bank said they expect the economy to contract for two quarters before resuming growth in the second quarter of next year.
The revised forecast was sparked by the risk of reduced gas flows from Russian into Europe, as well as signs that consumer and business morale are slumping due to high inflation.
Despite the slowdown, Morgan Stanley said it expected the ECB to raise interest rates at every meeting this year to 0.75pc in December.
West’s response to Putin starts to splinter
The UK is far less reliant on Russian gas than mainland Europe, but the interconnector pipelines are crucial to balancing supplies across the continent.
As Britain has little storage capacity, excess supplies – including liquefied natural gas imported on ships – are sent to the continent when demand is low over the summer.
During very cold spells, including the Beast from the East in 2018, gas can also be sent the other way.
But plans to cut the pipelines suggest the UK is digging in to protect its own supplies, undermining a coordinated response across Europe.
The Government told the Financial Times it was “fully confident” about the security of energy supply heading into the winter, adding that a gas emergency was “extremely unlikely”.
UK plans to cut gas supplies to Europe
Britain will cut off gas supplies to mainland Europe as part of an emergency plan drawn up to counter the Russian energy crisis.
The so-called interconnector pipelines to the Netherlands and Belgium would be shut down by National Grid if supplies fall short in the coming months, the Financial Times reports.
It’s part of a four-stage emergency plan that could also include rationing gas to large industrial users and urging households to cut consumption.
But European gas firms warned it would undermine efforts to counter Putin’s aggression and exacerbate the energy crisis on the continent.
Germany and the Netherlands have already triggered their own emergency plans after Russia slashed gas supplies to Europe, sparking fears of shortages this winter.
5 things to start your day
1) Electric vehicle shift ‘puts 22,000 jobs at risk’ Transition to electric will mean fewer jobs available and many people forced to retrain, report warns
2) Cut meat, fly less and cycle to work to achieve net zero, say climate change chiefs Climate Change Committee’s progress report ventures into the sensitive territory of lifestyle choices to help the environment
3) Inflation leaves British military spending facing cuts despite Boris Johnson’s rallying cry Prime Minister urges allies to ‘dig deep’ on defence spending
4) Why a 30pc pay rise for doctors is far too unrealistic British Medical Association pay demands would pile pressure on the public finances and benefit already ultra-high earners
5) Disney chief survives row over Florida ‘Don’t say gay’ bill Board renews embattled Bob Chapek’s contract for another three years
What happened overnight
Hong Kong stocks dropped more than 1pc this morning, following a sharp sell-off on Wall Street amid concerns about the impact of runaway inflation on the economy.
The Hang Seng Index fell 1.3pc, the Shanghai Composite Index slipped 0.3pc and the Shenzhen Composite Index on China’s second exchange also fell 0.3pc.
Tokyo stocks opened lower, with the benchmark Nikkei 225 index down 0.7pc, while the broader Topix index slipped 0.8pc.
Coming up today
Corporate: Moonpig, Mulberry (full-year results); B&M, Meggitt (trading statement)
Economics: GDP (US), core personal consumption expenditures (US), business climate (EU), consumer confidence (EU)