Government steps up plans for collapse of big energy supplier Bulb, reports say - as it happened

Last modified: 02: 10 PM GMT+0

Latest:

Closing summary

Time to wrap up today’s main stories:

Inflation in the eurozone shot up to a 13-year high, while Europe’s largest economy, Germany, showed disappointing growth in the third quarter as a result of supply chain bottlenecks.

Shares in Volvo Cars rose on Friday after the firm’s £13bn stock market debut. Investors liked the Swedish company’s planned shift to electric vehicles.

The UK’s energy regulator said it was ready to take “bold action” to overhaul the price cap protecting millions of households from rocketing bills as suppliers face a deepening energy crisis this winter.

British borrowers are being warned that the era of record low mortgage rates is over

Thanks for reading and commenting this week, and wishing you all a lovely weekend. JP

The number of businesses going bust in the UK during the three months to September hit the highest level in any quarter since 2012 as labour shortages and rising energy bills took their toll, official insolvency figures have shown.

There were 3,765 corporate insolvencies in the third quarter of 2021 across England and Wales, an increase of 16.7% compared to the 3,226 registered in the second quarter.

Most of the firms collapsed without appointing administrators, indicating that an increasing number of firms that have struggled though pandemic came to believe the outlook was bleak.

Nicky Fisher, deputy vice president at insolvency trade body R3, said: “The economic damage caused by the pandemic is now starting to be reflected in levels of corporate insolvency.

She said the rise in liquidations “would suggest that company directors are choosing to close their businesses after trading for more than a year and half during a pandemic and deeming future success unlikely”.

Life moves fast in the world of crypto, and the latest currency on the block is inspired by Netflix’s hit Squid Game TV show.

SQUID, a coin inspired by the Korean-language programme, was created so it could be used to play an online game version of the show, which is based around debt-ridden players who sign up to compete in six games in order to win a cash prize, or face death if they lose.

A giant doll from Netflix show Squid Game installed at the Olympic Park in Seoul, South Korea
A giant doll from Netflix show Squid Game installed at the Olympic Park in Seoul, South Korea Photograph: Simon Shin/SOPA Images/REX/Shutterstock

The token is what’s known as a “play-to-earn” crypto, where users play a game and earn cryptocurrency while doing so, and buys entry to an online version of Squid Game, which is reportedly due to begin in November.

The SQUID coin’s appears to have caught crypto investors’ attention in much the same way as the TV show. Its value has shot up by 193% in just the last 24 hours, according to crypto price tracking website CoinMarketCap.

SQUID was worth just $0.01 earlier in week, but is currently worth over $6.

$SQUID seems to have hit the zeitgeist at the right time, amid the explosive popularity of Netflix’s Squid Game and rising play-to-earn adoption.@egreechee reports https://t.co/FWZjJLNOVU

— CoinDesk (@CoinDesk) October 29, 2021

For the sequel: Will players play if they're paid in SQUID crypto?

Netflix's 'Squid Game' Spawns Crypto Coin With Market Cap Above $174Mhttps://t.co/Im9Bj8wZQY

— Charles Mok 莫乃光 (@charlesmok) October 29, 2021

However, CoinMarketCap carries a warning that it has “received multiple reports that the users are not able to sell this token in Pancakeswap”, which is a decentralised exchange. It is urging investors to “exercise caution while trading!”

In other news from this morning - Morrisons supermarket chain must continue to be run as a separate business following the £7bn takeover by US private equity group Clayton, Dubilier & Rice (CD&R), the UK competition watchdog has said, while it reviews the deal.

The Competition and Markets Authority (CMA) has issued an Initial Enforcement Order, which requires Morrisons to be run separately and not re-organised or integrated into CD&R until the deal is cleared.

The CMA said the order “does not prohibit the completion of the transaction provided that the acquirer group and Morrisons” observe its restrictions.

CD&R said it was looking forward to “working constructively with the CMA to address any concerns they may have”.

The CMA is currently gathering evidence before it formally launches an investigation into the Morrisons takeover. After that, the regulator then has 40 days to decide whether to clear the deal, or demand remedies, or to launch a longer investigation.

Morrisons shareholders waved through the deal earlier this month.

The supermarket chain was the subject of an auction showdown, where CD&R’s offe narrowly saw off a rival bid by Softbank-owned Fortress Investment Group.

UK government stepping up plans to deal with collapse of large energy supplier Bulb - reports

Energy supplier Bulb - which has 1.7m household customers in the UK - could collapse in the coming days, leading the government to accelerate its plans to deal with the fallout, as first reported by Sky News.

The broadcaster is reporting that rescue talks with a small number of potential buyers are ongoing, but that a rescue deal looks increasingly unlikely, leading ministers, officials and the energy regulator to step up contingency plans.

The failure of the firm - the UK’s seventh-largest domestic energy supplier - would be the biggest insolvency so far in the crisis sweeping through the sector.

Despite its size, Bulb has been in the spotlight for several weeks, amid takeover speculation and reports that it has been on the hunt for new investment to keep the company funded.

At the start of the month Bulb customers vented their anger over large increases to their bills, even for those who remain hundreds of pounds in credit to the supplier.

Other suppliers including Igloo Energy, Symbio Energy and Enstroga have already gone to the wall in the face of soaring wholesale gas prices.

Bulb has proved popular with many customers because of its claim to supply them with 100% renewable electricity and 100% carbon neutral gas, but this does not offer protection from rising fossil fuel costs.

Updated

The backdrop of rising prices and expectation of interest rate hikes may soon make itself felt for UK homeowners in their mortgage costs, according to the latest calculations.

The days of record low mortgage rates appear to be over, writes my colleague Hilary Osborne.

Inflation predictions from the Office for Budget Responsibility, (OBR) released alongside Wednesday’s budget, suggest that the cost of servicing a mortgage could grow by 5.6% next year and 13.1% the year after, as increases in the Bank of England base rate are passed on to borrowers.

According to financial firm AJ Bell, if the predictions are correct, someone who borrowed £250,000 on a two-year fixed-rate mortgage at 2.06% earlier this year could see their annual payments jump by £600 when they go to remortgage in 2023. Someone with £450,000 of borrowing, on the same terms, would see their costs rise by £1,068 a year.

In recent years fixed-rate mortgages have been so cheap that most borrowers have chosen them. Industry data shows that 74% of borrowers are on this kind of deal, and that the 2.2 million with variable rate loans typically owe less.

You can read the rest of the story here:

Updated

NatWest Group tripled its profits in the third quarter to a better than expected £1.1bn, thanks to a jump in mortgage lending and a recovery in the economy despite setting aside cash to cover fines linked to money-laundering charges.

The bank, which is majority-owned by the taxpayer, said the stronger economic position had allowed it to release £242m worth of provisions in the three months to 30 September, which it had made to cover a potential rise in defaults because of the coronavirus pandemic. That compares with the £254m it put aside during the same period last year. Analysts had expected the bank to take a further £40m charge.

NatWest’s chief financial officer, Katie Murray, said despite reports of an increase in company insolvencies, the bank “is in a very good situation. So if there is an uptick, we’re not seeing it coming through yet, which is why we were comfortable to release what we released.”

More here:

While Germany’s Q3 economic growth may have come in lower than anticipated this morning, the wider eurozone picture looks slightly more rosy.

Overall, the bloc’s economy grew at its fastest pace in a year between July and September, as Covid restrictions were gradually loosened across the region.

Eurostat, the EU’s statistical office, said eurozone GDP increased by 2.2% quarter-on-quarter, which represents a 3.7% year-on-year increase.

Euro area #GDP +2.2% in Q3 2021, +3.7% compared with Q3 2020: preliminary flash estimate from #Eurostat https://t.co/KdqS0Kgre7 pic.twitter.com/CEQ6Yr7yPB

— EU_Eurostat (@EU_Eurostat) October 29, 2021

Standout performers were Austria and France, although Lithuania’s economy did not grow during the quarter, and Latvia’s by just 0.3%.

The next estimate for growth across the 19 countries which share the euro will be released on 16th November.

Yesterday, data from the United States showed that its economy grew at an annualised rate of 2%, which was lower than had been predicted.

Given that inflation is on the march globally, at a time that growth rates in certain developed economies are disappointing, some are asking whether much-dreaded stagflation - a troublesome blend of rising prices, and slowing growth - could be on the horizon.

4-5 % inflation prints with 2 % growth. Smells like stagflation. Two words: policy mistake.https://t.co/NgSfadB9fq

— Mikael Mattlin (@Mattlin_M) October 29, 2021

Another big inflation surprise!

Euro area CPI 4.1%, core 2.1%

Inflation surprises UP, growth surprises DOWN

Curve flattening + massive performance in long duration upcoming! pic.twitter.com/B82m9ADaOX

— AndreasStenoLarsen (@AndreasSteno) October 29, 2021

Others are more circumspect and say that it’s not reached that stage just yet. Spyros Andreopoulos, senior European economist at BNP Paribas, is calling it “slowflation” instead.

🎙️ 👨‍💼 “We would call this phenomenon we are seeing now ‘#slowflation’ rather than ‘stagflation’“, Spyros Andreopoulos, our senior European economist for @CNBC 👇 https://t.co/LMRvmo8KgX

— BNP Paribas Markets 360 (@BNPP_Markets360) October 29, 2021

Andreopoulos told CNBC in the wake of yesterday’s ECB rates decision:

Stagflation is reminiscent of the 70s where you had many years of very slow growth, even negative growth, recession and at the same time higher inflation. We don’t think that is really the risk, the risk is probably that we get some more sustained inflation, and indeed we are in the camp that thinks we will inflation rates going in line with what central banks want and possibly even beyond as a risk, much earlier than certainly the ECB expects

Inflation in the eurozone soars past expectations to reach 13-year high

Prices are certainly on the rise in the 19 countries which use the euro - after inflation in the bloc in October rocketed past analysts’ expectations.

Consumer price growth hit 4.1% this month, a considerable leap up from 3.4% in September according to Eurostat data. It came in well ahead of forecasts of 3.7%.

Inflation in the eurozone is now at its highest level since July 2008 - after being driven higher by soaring energy costs, tax increases and growing price pressures as a result of the supply chain crisis (which also weighed on German Q3 GDP which was released earlier this morning).

Inflation also rose at the fastest rate since this data series was first launched back in 1997.

Friday shocker from Eurostat. Eurozone inflation up to 4.1%, vs est. 3.7% https://t.co/WA2kVmbm4s pic.twitter.com/LXXQ6ESHHk

— Fergal O'Brien (@fergalob) October 29, 2021

This creates an even bigger headache for the European Central Bank which kept rates on hold yesterday, insisted higher inflation was “transitory” and pushed back against market bets that it would need to hike rates as soon as early next year.

Some think that the ECB has played down, and underestimated, inflation over the past year as economies sprung back to life following the pandemic.

OUCH! #Eurozone #Inflation tops expectations as energy crunch bites. Consumer prices rose 4.1% in Oct, highest since 2008, core rate reached 2.1%, highest since 2003. pic.twitter.com/ZLoDtwDd9d

— Holger Zschaepitz (@Schuldensuehner) October 29, 2021

The question now is whether inflation comes back down as soon as policymakers and central bankers predict it will - or whether higher prices, wages and higher raw material costs stick.

Supply shortages are at the root of Germany’s disappointing third quarter GDP.

Manufacturers who have full order books aren’t able to run production at full capacity, while at the same time consumers in the country are facing rises prices, including soaring energy costs.

Supply chain frictions, higher energy prices and the resultant surge in inflation do not bode well for the short-term outlook in Germany, writes @carstenbrzeskihttps://t.co/jlyOt4Aovs

— ING Economics (@ING_Economics) October 29, 2021

These are some stark stats from CESifo research network:

🇩🇪Supply Bottlenecks: German #Industry Production Losses - The @ifo_Institut estimates that German industry has lost nearly EUR 40 billion to date in value added due to supply bottlenecks. That’s a good 1% of Germany’s total economic output in one year.https://t.co/eLD3idHvV9 pic.twitter.com/WM0xNlFJnF

— CESifo (@CESifoGroup) October 29, 2021

German carmakers including Volkswagen are feeling the pinch of the global semiconductor shortage.

However Mercedes Benz owner Daimler reported a higher quarterly profit this morning despite the chip crunch, after it cut its costs and focused on sales of more profitable luxury cars.

Daimler said it expected chip supplies to improve somewhat in the final three months of the year, but has previously cautioned that the global chip shortage could last into 2023.

German economy grows less than expected in the third quarter

Figures just out - Germany’s economy grew by 1.8% quarter-on-quarter between July and September, according to data from the Federal Statistics Office. That’s lower than forecasts, such as a Reuters poll which had forecast 2.2% growth.

Europe’s largest economy, with its strength in manufacturing, has been knocked by global supply disruption, and lower-than-expected growth is being attributed to these bottlenecks.

#Germany economy grew at a slower-than-expected pace in 3Q. GDP rose by 1.8% on the quarter smaller than economists' expectations of 2.2% growth pic.twitter.com/XW3MrYtH3E

— Holger Zschaepitz (@Schuldensuehner) October 29, 2021

However, it’s a mixed picture across other eurozone economies.

France’s Q3 GDP came in at 3%, beating analysts’ expectations, and Italy’s economy grew by 2.6% last quarter, which was a larger rise than expected.

Interesting #GDP figures for EZ countries coming out this morning for Q3. #France beats expectations with 3% growth, but Germany disappointing with just 1.8%. We know supply bottlenecks have hurt manufactures, which #Germany is more exposed to.

— Azad Zangana (@AzadZangana) October 29, 2021

#Italy also beat expectations with 2.6% growth, while Spain missed, growing 2%.

— Azad Zangana (@AzadZangana) October 29, 2021

#Eurozone #GDP growth for Q3 should come in at around 2.2% q/q based on the reported numbers so far from the big member states. That will be slightly better than consensus expectations of 2%.

— Azad Zangana (@AzadZangana) October 29, 2021

The dispute between Britain and France over fishing rights continues.

France’s ambassador to the UK has been summoned, and two Royal Navy patrol vessels have been put on a state of “high readiness” to tackle potential port blockades by French fishing boats, after the row over post-Brexit access to British waters escalated.

Yesterday it was revealed that French maritime police had seized a British trawler found in its territorial waters without a licence.

Since then, France has threatened to clog British exports in red tape over a lack of fishing licences for their vessels.

The dispute over the issuing of permits to French boats operating in the coastal waters of the UK and Jersey has ramped up ahead of the weekend expiry date on current licences.

The environment secretary George Eustice told BBC Radio 4’s Today programme he wanted a negotiated solution:

We’ve got an agreement with the European Union and obviously the European Union has got a role in making sure that France abides by both EU law and the terms of the agreement that we’ve got. So we have spoken to the European Commission and we also thought it appropriate to call in the French ambassador as well, so we are raising this through diplomatic channels.

Colleagues in Paris, Brussels and here in London are following the story closely:

And here is all you need to know about post-Brexit fishing arrangements:

The energy industry regulator is poised to take “bold action” to overhaul the price cap protecting millions of households from rocketing bills as suppliers face a deepening energy crisis this winter.

In an open letter to the industry, Ofgem promised to open a consultation on how the energy price cap is calculated as soon as next month to make sure that it allows suppliers to recover their costs.

The regulator did not suggest any specific changes in the letter but the industry is expected to take the opportunity to call for the price cap, which changes only twice a year, to be more responsive to swings in the market by changing as often as once every quarter.

“These are challenging times, requiring bold action,” Jonathan Brearley, the chief executive of Ofgem, wrote.

This would be the first major change made to the price cap, which was introduced in early 2019 to protect households from unfair energy bills through a maximum cap based on the costs of buying and supplying gas and electricity.

Read Jillian’s full story here:

In case you missed it: Facebook made an announcement overnight that it is changing the name of its holding company to Meta, which prompted mockery and backlash in response.

At a time when the social media giant is facing a series of PR crises, and has also been slammed by whistleblowers who have leaked documents, the firm has opted for a rebrand.

Facebook CEO Mark Zuckerberg unveiled the new name at an annual conference last night, at the same time as revealing the company’s virtual-reality vision of the future.

Announcing @Meta — the Facebook company’s new name. Meta is helping to build the metaverse, a place where we’ll play and connect in 3D. Welcome to the next chapter of social connection. pic.twitter.com/ywSJPLsCoD

— Meta (@Meta) October 28, 2021

The social media network has been outlining its plans to build the “metaverse”, which is a digital world built on top of the real one, and accessed using virtual reality headsets and augmented reality.

Zuckerberg said:

We believe the metaverse will be the successor of the mobile internet. We’ll be able to feel present – like we’re right there with people no matter how far apart we actually are.

But it didn’t take long for politicians, comedians, analysts and other companies to mock the firm’s rebrand and blue infinity symbol logo.

Facebook said it will rebrand itself as “Meta”. Earlier this month we wrote a Leader arguing why a name change won’t fix its problems https://t.co/gGp5gY5XHk

— The Economist (@TheEconomist) October 29, 2021

New York progressive congresswoman Alexandria Ocasio-Cortez didn’t hold back in her assessment of the firm and its rebrand.

Meta as in “we are a cancer to democracy metastasizing into a global surveillance and propaganda machine for boosting authoritarian regimes and destroying civil society… for profit!” https://t.co/jzOcCFaWkJ

— Alexandria Ocasio-Cortez (@AOC) October 28, 2021

Read the full story of the rebrand here:

And here’s a round-up of how the rebrand was received:

Oil prices on track for first weekly fall in two months

Oil prices are moving slighter higher again this morning, after yesterday’s slide, but look to be heading for their first weekly loss in at least eight weeks.

Brent crude is currently up around $0.34, or 0.44%, taking it to $84.63 a barrel, while US West Texas Intermediate (WTI) is also trading around $0.31, or 0.4% higher at $83.13 a barrel.

The move lower came after Iran said on Wednesday that it hoped to resume talks on its nuclear programme with world powers by the end of next month, which could lead to an end of sanctions. In addition, US crude stocks also rose more than had been anticipated.

The next meeting of the group known as OPEC+ - the Organization of the Petroleum Exporting Countries (OPEC), as well as Russia and their allies - is due on 4th November. Analysts don’t expect the group to deviate from their current plans to increase supply by 400,000 barrels per day each month up until April 2022.

Introduction: UK mortgage costs tipped to rise for homeowners; markets await eurozone inflation

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

British homeowners are being warned that years of ultra-low mortgage costs are coming to an end, and are now facing the biggest rise in costs since the financial crisis.

Property owners could expect the amount of interest they have to pay to jump by 13% in 2023, according to forecasts from the government’s independent forecasting unit suggests.

Politicians and analysts seized on a table “buried” in a report published by the Office for Budget Responsibility (OBR) alongside the budget, which stated that mortgage interest payments were set for their biggest rise since at least 2008.

Lenders have been pulling their cheapest mortgage deals for some time already, in expectation of the Bank of England raising interest rates from historic lows.

Financial markets are already pricing in a rate rise when the Bank of England meets next week, which could lift the base rate to 0.25%, followed by a 0.25-point increase in December. With two more 0.25% hikes forecast for next year, that could take the base rate to 1% by the end of 2022.

My colleagues Rupert Jones and Philip Inman have got the full story on mortgage cost predictions here:

Looking ahead to later this morning, there is a clutch of third quarter GDP data expected from eurozone economies, as well as inflation numbers from the bloc for October. The inflation statistics will be especially closed watched, after the European Central Bank insisted yesterday that higher inflation was only temporary and pushed back against market bets that rates will have to rise early next year.

Meanwhile in other news overnight, debt-laden Chinese real estate developer Evergrande has reportedly made an interest payment on an offshore bond ahead of the deadline for a grace period. This means it has narrowly averted a catastrophic default for the second time in a week, according to Reuters.

Evergrande is grappling with some $300bn (£218bn) in liabilities, which has stoked concerns about the impact on the world’s second-largest economy if it wasn’t able to meet its repayments.

You can read the full story here:

The agenda:

09.00 BST Germany flash Q3 GDP
09.00 BST Italy flash Q3 GDP
09.30 BST Portugal flash Q3 GDP
10.00 BST Eurozone flash Q3 GDP
10.00 BST Eurozone October inflation
13.30 BST US September core PCE price index

Contributors

Joanna Partridge

The GuardianTramp

Related Content

Article image
UK CPI inflation unexpectedly holds steady at 2.6% in July - as it happened
Consumer price index forecast to edge up slightly in July, while US retail sales also awaited

Nick Fletcher

15, Aug, 2017 @1:05 PM

Article image
Mark Carney: central banks not to blame for rising inequality - as it happened
BoE governor says central banks aren’t solely responsible for rising inequality and record low interest rates, as he insists he’ll leave in 2019

Graeme Wearden (until 2.15pm GMT) and Nick Fletcher (now)

15, Nov, 2016 @6:11 PM

Article image
Dow tumbles 800 points as US and UK yield curves invert – as it happened
Investors are alarmed to see longer-dated UK and US bonds trading at lower interest rates than shorter alternatives, a possible sign of recession

Graeme Wearden

14, Aug, 2019 @9:40 PM

Article image
Markets nervous again as US inflation unexpectedly spikes higher - as it happened
Busy day for economic news sees key US inflation figures, IMF on the UK and eurozone growth data

Nick Fletcher

14, Feb, 2018 @3:00 PM

Article image
Energy supplier Bulb to enter special administration; pandemic hits eurozone consumer confidence – as it happened
Rolling coverage of the latest economic and financial news

Graeme Wearden

22, Nov, 2021 @5:01 PM

Article image
Janet Yellen says Fed on course to raise US rates, UK inflation jumps to 1.8% - as it happened
Fed chair Yellen says rate rises probably appropriate but warns of uncertain economic outlook

Graeme Wearden (until 2pm) and Nick Fletcher

14, Feb, 2017 @6:06 PM

Article image
Bulb Energy: key questions answered for customers after collapse
What happened, what happens next, and what will happen to your bills

Miles Brignall

23, Nov, 2021 @9:30 AM

Article image
Poor households hit hard as UK inflation sticks at five-year high - as it happened
The pound’s weakness since the Brexit vote pushed consumer prices up by 3% in the last year, the joint-highest since early 2012

Graeme Wearden (until 1.30pm) and Nick Fletcher

14, Nov, 2017 @6:06 PM

Article image
US GDP beats forecasts with 3% growth, as markets recover from Korea shock - as it happened
Investors calmer after Wall Street shrugs off missile launch; US growth and jobs beat forecasts but UK consumer credit below expectations

Nick Fletcher

30, Aug, 2017 @1:49 PM

Article image
Solarplicity becomes 13th energy supplier to collapse since 2018
Thousands of homes left without an energy provider after firm goes bust

Jillian Ambrose Energy correspondent

13, Aug, 2019 @5:01 PM