Closing summary

Time for a recap....

New research has shown the extent of the UK’s cost of living crisis, and how a decade of austerity-driven cuts to benefits has left single parents among the most exposed to soaring inflation.

The executive responsible for running easyJet’s operations has resigned following months of disruption at the budget airline, including thousands of flight cancellations.

Peter Bellew resigned “to pursue other business opportunities” after two and a half years in the role.

Bellew, who joined from rival Ryanair shortly before the pandemic, had seen his star wane -- with senior executive level changes had been looming since the chair of easyJet, Stephen Hester, started taking closer charge in response to the crisis.

Problems at its main base at Gatwick, in particular, led to the airline cancelling hundreds of flights at the last moment during the half-term holidays.

Half of all children in lone-parent families are now living in relative poverty, according to exclusive research published today, due to the erosion of benefits.

Research shared exclusively with the Guardian by the Institute for Fiscal Studies show that relative poverty for children in lone-parent families has risen at a significantly faster rate compared with other households.

Former prime minister Tony Blair said Conservative austerity cuts had undermined progress against poverty:

Blair said:

“The last Labour government made it a priority to tackle child poverty. Our policies revolutionised opportunities for lone parents by making work pay – lone-parent employment rose and child poverty fell sharply as a result.

“That legacy has been undermined over the past decade as state benefits have been eroded, growth has been weak and wages stagnant, despite high employment rates for lone parents.”

UK families have suffered 15 years of income stagnation which left them “brutally exposed” to the current cost-of-living crisis, Resolution Foundation warned.

The cost of living squeeze has knocked UK consumer confidence to a record low, and led to a boom in business at pawnbrokers.

Petrol prices have hit a new record, prompting the RAC to blame supermarkets for passing on lower wholesale fuel prices.....

.... as convoys of protesters demonstrating against high fuel prices have caused delays and disruption on motorways and main A roads in the UK. Police have arrested a number of those involved for driving too slowly.

The cost of living crisis, soaring costs and the pandemic have pushed the number of pubs in England and Wales to an alltime low.

Surging imported energy costs, and a fall in exports, has dragged Germany into its first trade deficit in around 30 years.

1. Another Macro Red Flag to start this new week = 1st Germany's monthly trade deficit since 1991:

— Chris Ollari (@ftx_chris) July 4, 2022

The Suez Canal has recorded its highest ever annual revenues, hitting $7bn for the first time thanks to a jump in trade and higher fees.

Concerns over a strike in Norway’s energy sector pushed up UK gas prices.

Turkey’s inflation rate has climbed to even more alarming levels, with prices jumping by 78% over the last year.

Amazon is launching a fleet of e-cargo bikes and a team of on-foot delivery staff to replace thousands of van deliveries on London’s roads, from a new micromobility hub in Hackney.

Kellogg’s has failed in a legal challenge against regulations that would ban it from promoting sugar-filled cereals with buy one, get one free offers.

The sandwich chain Pret a Manger has returned to profitable operations after two years in which it lost a cumulative £570m.

Analysts have warned there is a growing risk of recession in Europe, if there is further disruption to Russian oil and gas suppliers.

In the finacnial markets, the FTSE 100 index has jumped 1% in London, led by oil companies.

But Germany’s DAX has lost 0.5%, on worries about the economic outlook -- which have also knocked metal prices today.

Goodnight. GW


David Muir, senior economist at Moody’s Analytics, predicts that German exporters will continue to struggle this year.

Writing after Germany recorded a trade deficit in goods for the first time in decades, he says:

Rising import prices have pushed nominal readings through the roof. But this is happening at the same time that there is strong real demand for imports amidst a rush to refill energy supplies and in the post-lockdown spending spree.

Moreover, exports have been struggling to keep up due to supply shortages at factories and a lull in orders out of China because of this spring’s harsh lockdowns. Heightened uncertainty around the outlook for the global economy is likely to continue to weigh on Germany’s export prospects in the second half of the year.”

The Manufacturing Technology Centre, which develops and implements technology emerging from universities, is embracing the idea of a four-day week after a successful trial.

The MTC has decided to offer its 820 staff flexible working, including a four-day week with no loss of pay

This follow a large-scale, two-year trial at the Centre, which works with industrial partners such as Rolls-Royce, Siemens, and Meggitt.

A staff survey found that 83% of employees said they were happier, 42% reported increased energy levels, and 40% experienced better mental health.

Vicki Sanderson, HR director at the Manufacturing Technology Centre, explained:

We’ve been operating flexible working patterns since April 2018, but employee engagement surveys have shown that staff wanted to extend this further.

We explored a range of options, including researching what was important for millennials and generation Z, as 79% of our workforce fall into these categories. Work-life balance was the priority, and our survey results reflected this.”

The MTC calculates flexible working will save 664 tonnes of carbon each year.

Soaring inflation has prompted the Bank of Israel to raise interest rates sharply.

Policymakers at Israel’s central bank decided to increase the interest rate by 0.5 percentage points, from 0.75% to 1.25%, at their meeting today.

Announcing the decision, the Monetary Policy Committee said the Ukraine war, global supply chain disruption, and strong domestic pressures were all pushing up prices.

We are facing a complex reality, with significant developments in both the domestic and global economies. Some are positive, indicating a recovery after the crisis and showing the return to strong activity, which in some measures is even higher than before the crisis.

However, others are less positive, and indicate difficulties in supply chains, increased uncertainty and inflationary developments.

As expected, Bank of Israel raises benchmark interest rate by a half-point to 1.25%. 3rd straight rate hike. Biggest policy move since 2011. Inflation above 4%, economic growth still strong. More hikes to come in coming decisions

— Steven Scheer (@StevenMScheer) July 4, 2022

Demand at UK’s biggest pawnbroker at record high amid cost of living crisis

A record number of people are pawning items to borrow money from Britain’s largest pawnbroker amid an escalating cost of living crisis.

H&T Group said “pledge lending” – lending secured against a customer’s valuable items such as watches or jewellery – was at record levels, in a trading update published on Monday.

Borrowing from H&T has exceeded the pre-pandemic high with no relaxation of lending criteria.

The pawnbroker’s growth has been prompted by customers’ squeezed finances amid 40-year high inflation, according to Shore Capital, an investment bank.

Gary Greenwood, a Shore Capital analyst, wrote:

“This strong demand, in our view, reflects the impact of the cost of living crisis as well as the withdrawal of competition from the unsecured high-cost credit space, including through the recent closure of two of the leading home-collected credit firms.

Back in London, online electricals retailer AO World has confirmed that one of its third-party credit insurers have cut their cover levels.

AO told the City that the move was a reduction from the heightened levels needed during the pandemic, and that the move has not affected its liquidity position.

AO made the announcement after the Sunday Times reported that Atradius, the credit insurance division of Grupo Catalana Occidente, had cut its credit cover.

That credit insurance protects suppliers from losses if their customer goes bust before they receive payment. If it isn’t available, suppliers usually seek upfront payment instead.

Shares in AO World are down 13% today, hitting a two-year low.

#AOWorld tanks on cash concerns.

🔌The electricals retailer is facing trouble as its credit insurer cut cover for suppliers.

🔗Credit insurance is a vital part of supply chain protection.#AO 🔽 15%

RW: 75.71% of retail clients lose money.

— UK (@tradingdotcomuk) July 4, 2022

Suez Canal records highest ever annual revenue of $7 bn

A shipping container of the China Ocean Shipping Company moving through the Suez Canal in Suez, Egypt.
A shipping container of the China Ocean Shipping Company moving through the Suez Canal in Suez, Egypt. Photograph: Mohamed Abd El Ghany/Reuters

The Suez Canal has broken its all-time record for revenues, after hiking its prices as global trade rebounded from the pandemic.

Egypt’s Suez Canal Authority has announced it achieved revenues of $7bn in its last financial year, between July 2021 and June 2022.

That’s around 20% more than in the previous year, when revenues reached a record $5.84bn despite the canal being blocked by the Ever Given container ship in March 2021.

أعلن الفريق أسامة ربيع رئيس هيئة قناة السويس، اليوم الإثنين، أن إحصائيات الملاحة بالقناة خلال العام المالي 2021/ 2022 سجلت أرقاما قياسية جديدة وغير مسبوقة على مدار تاريخ القناة، محققة أعلى حمولة صافية سنوية لعام مالي قدرها 1.32 مليار طن، وأعلى إيراد سنوي مالي بلغ 7 مليار دولار…

— هيئة قناة السويس Suez Canal Authority (@SuezAuthorityEG) July 4, 2022

Revenues were boosted by the recovery in global trade, despite the Ukraine war and lockdown in China, and by an increase in transit tolls last year.

Suez Canal Authority (SCA) chief Osama Rabie added that some 1.32 billion tons of cargo were shipped through the canal, which links the Red Sea and the Mediterranean, in the last 12 months.

Rabie said:

“Global crises have proven the importance of the Suez Canal to ensuring the sustainability of global supply chains,” Rabie said Monday.

In April, the waterway recorded its highest-ever monthly revenue of $629 million, despite the rise in oil prices due to Russia’s invasion of Ukraine, AFP newswire reports.

Cost of living squeeze hammers UK consumer confidence

UK economic confidence has tumbled to a joint record low, amid the cost of living crisis.

Polling company Ipsos’s latest Political Monitor has found that three in four Britons expect the economy to worsen in the next 12 months.

One in three say they would struggle to cope if inflation hits 11% -- as the Bank of England expected to happen this autumn.

IPSOS says:

When asked about their current financial situation, half of Britons (50%) tell us they ‘have had to make some reductions in what I normally buy because of rising prices but I can cope’.

However, 1 in 5 (20%) say they are ‘finding it very difficult to cope with the rise in prices’.

One in four (27%) say they have not had to make any changes in what they buy due to rising prices.

IPSOS’s Economic Optimism Index tumbled to a joint record low, touching levels seen in March this year, in July 2008 and January 1980.

💥 NEW - @IpsosUK gauge of UK economic optimism falls to joint record low (matching July 2008 and January 1980)

— Andy Bruce (@BruceReuters) July 4, 2022

The poll also found that voters are split on which party is better at managing inflation, with 30% say they would trust the Conservatives most, and 27% Labour.

Labour are more trusted on reducing the cost of living, at 33% to 21%. But the Conservatives are more trusted to grow the economy, by 32% to 26%.

Full story: EasyJet executive quits after weeks of turmoil and flight cancellations

EasyJet is parting ways with its chief operating officer, after weeks of turmoil and last-minute cancellations hit the airline’s reputation for reliability and customer service.

The airline said Peter Bellew had resigned “to pursue other business opportunities” after two and a half years in the role. Bellew joined from rival Ryanair shortly before the pandemic, in a move that the Irish airline attempted to block in court.

However, his star has since waned and senior executive level changes had been looming since the chairof easyJet, Stephen Hester, started taking closer charge in response to the crisis. Problems at its main base at Gatwick, in particular, led to the airline cancelling hundreds of flights at the last moment during the half-term holidays.

David Morgan, who was interim COO before Bellew’s appointment, will step up to the role again.

Johan Lundgren, the airline’s chief executive, said:

“Everyone at easyJet remains absolutely focused on delivering a safe and reliable operation this summer.

“[Morgan] has significant experience and deep knowledge of the business and operation and will provide strong leadership for the airline this summer.”

Last month, easyJet cancelled about 11,000 flights from its summer schedule, reducing overall capacity from 97% of pre-pandemic levels to about 90%.

Here’s the full story:

UK petrol price climbs to new record

Police escort vehicles across the Prince of Wales Bridge, which runs between England and Wales, during the morning rush hour as drivers hold a go-slow protest on the M4.
Police escort vehicles across the Prince of Wales Bridge, which runs between England and Wales, during the morning rush hour as drivers hold a go-slow protest on the M4. Photograph: Rod Minchin/PA

Today’s fuel price protests on UK motorways came as petrol hit a new record high, despite recent falls in wholesale prices.

The average price of petrol crept to a new record of 191.53p a litre on Sunday, while diesel averaged 199.03p, near its all-time high of 199.09p set the previous weekend.

RAC fuel spokesman Simon Williams singles out Britain’s major supermarkets for not reducing prices:

“There doesn’t appear to be any sign that retailers are reducing their forecourt petrol prices despite average weekly wholesale costs having fallen for five straight weeks.

The average cost of delivered unleaded was 145.7p a litre last week which after adding 7p a litre retailer margin and 20% VAT produces a price of 183p.

Despite this the big four supermarkets, which dominate fuel sales, are standing firm with a litre of petrol at their stores costing an average of 190.19p.

We would love to hear their reasoning for keeping their prices so high in this instance, but we’ve never known them publicly defend themselves. Far too often it’s the smallest retailers, who sell far less fuel combined despite having more forecourts, that stand up for the industry.

“We’ve been lobbying the Government for months to take further action to ease the financial burden caused by record pump prices. It’s time to take action and announce a further cut to duty or to VAT to help hard-pressed drivers and businesses.


Police escort vehicles along the M4 motorway during the morning rush hour as drivers hold a go-slow protest on the M4.
Police escort vehicles along the M4 motorway during the morning rush hour as drivers hold a go-slow protest on the M4. Photograph: Rod Minchin/PA

In other least eight protesters who were carrying out a demonstration against record high fuel prices along the M4 have been arrested on suspicion of committing a public order offence, PA reports.

The drivers of the vehicles were told they were being arrested for driving too slow, below the 30mph or more they were told they had to drive to carry out the action legally.

Dozens of police vans and police officers blocked the eastbound and westbound carriageways of the M4 just past the Prince of Wales Bridge into Wales to carry out the arrests.

Those arrested were taken into custody and PA news agency understands they were transported by police van to Newport Central Police Station, South Wales.

Their vehicles were seized, and those considered passengers were driven back to Magor Service Station where their convoy started from.

Protesters, many in lorries and vans, have been using rolling roadblocks to slow or stop in other parts of the country too, including Essex, Yorkshire and Lincolnshire,

Here’s the full story:

Strike of Spain-based cabin crew of Easyjet airlines in MalagaPeople queue at Easyjet’s check-in desks during an Easyjet cabin crew strike, at Malaga-Costa del Sol Airport, in Malaga, Spain, July 1, 2022. REUTERS/Jon Nazca
People queue at Easyjet’s check-in desks during an Easyjet cabin crew strike, at Malaga-Costa del Sol Airport, in Malaga, Spain, on Friday July 1st, 2022. Photograph: Jon Nazca/Reuters

Peter Bellew’s resignation also comes as Spain-based cabin crew at easyJet held a strike demanding higher pay from the budget airline.

Workers walked out for three days from last Friday to Sunday, and are due to strike again on 15-17 July, and 29-31st, local union USO said last month.

That industrial action could add to travel woes as the sector struggles to cope with rebounding demand.


EasyJet’s chief operating officer Peter Bellew’s resignation comes amid growing anger over flight disruption, points out PA Media:

The aviation sector is struggling to cope with the rising demand for travel amid staff shortages and difficulties obtaining security clearance for new recruits.

Trade union Unite last month claimed there was a “lack of leadership” within easyJet, and Mr Bellew should be “taking control of this situation”.

Unions had recently blamed the newly-departed Peter Bellew for the breakdown in relations between crew and easyJet’s management, as aviation analyst Alex Macheras points out:

Breaking: Exclusive: easyJet’s Chief Operating Officer Peter Bellew has resigned from the airline 🚨✈️ — his resignation comes as easyJet faces a crisis of immense disruption and now significant strike action across Europe. #aviation

— Alex Macheras (@AlexInAir) July 4, 2022

Just weeks ago, pilots at easyJet blamed “the breakdown in relations between crew and the airline management” on easyJet’s Chief Operating Officer Peter Bellew — an aviation veteran with more than 30 years of industry experience, who has now resigned.

— Alex Macheras (@AlexInAir) July 4, 2022

easyJet’s top executives were supposed to fly to Mallorca this week for a “corporate retreat” while thousands of passengers bear the weight of the ongoing travel chaos in UK & across EU

easyJet continue to cancel flights due to staff shortages, & further strike action is ahead.

— Alex Macheras (@AlexInAir) July 4, 2022


easyJet's Chief Operating Officer Peter Bellew has resigned from the airline with effect from 1 July.

He is leaving to "pursue other business opportunities".

David Morgan, who has been with easyJet since 2016, will act as interim COO.

— London Air Travel (@LondonAirTravel) July 4, 2022

EasyJet COO Peter Bellew departs

Just in: budget airline easyJet has announced the resignation of its chief operating officer, Peter Bellew, with effect from last Friday.

Bellew is leaving to “pursue other business opportunities” says easyJet, which has experienced significant disruption and cancelled flights in this year’s travel chaos.

Johan Lundgren, CEO of easyJet, says in a statement:

“I would like to thank Peter for his hard work and wish him well. Everyone at easyJet remains absolutely focused on delivering a safe and reliable operation this summer.

Bellow’s departures comes as easyJet tries to avoid a repeat of the shambolic scenes at airports last Easter and over half term.

EasyJet has appointed David Morgan, who served as interim COO in 2019 (before Bellow arrived), to lead its operations function as interim COO, in a critical summer for the airline industry.

Lundgren says:

“I am pleased that Operations will be in the very capable hands of David Morgan who can move seamlessly into this role having previously led the operation, as interim Chief Operating Officer, throughout 2019.

“David has significant experience and deep knowledge of the business and operation and will provide strong leadership for the airline this summer.”

EasyJet cut its summer flight capacity last month, having previously been cancelling flights, often at the last minute, due to problems including staff shortages, air traffic control problems, and airport disruption.

Our transport correspondent, Gwyn Topham, wrote in the Observer’s Agenda last month that Bellew could be ousted:

Some sources say the [easyJet] board, led by chairman Stephen Hester, may get twitchy.

Chief executive Johan Lundgren, who pledged to use data to reduce disruption and cancellations when he took the job in 2017, and chief operating officer Peter Bellew, formerly of Ryanair, would probably be first in the line of fire.

Easyjet's crisis costs COO Peter Bellew his job, as predicted by @GwynTopham last month. But will chairman Stephen Hester stop there...

— John Collingridge (@jmcollingridge) July 4, 2022

The Sunday Times reported yesterday that easyJet’s senior managers were set to jet off to a corporate jamboree in Mallorca this week.

They wrote:

The executives will stay for two nights at the five-star Iberostar resort hotel in Palma. The Iberostar, which is on the beach, has a rooftop infinity pool and a sunset champagne bar.


Gas prices rise as strike adds to supply worries

UK gas prices have jumped this morning, on fears that a planned strike among Norwegian oil and gas workers will hit production.

The day-ahead price of natural gas in the UK has soared 35% to 225p per therm, the highest in over two weeks.

Gas for UK delivery next month has jumped 13%, to 274p per therm.

Norwegian supply is becoming increasingly important for Europe due to the cuts in shipments from Russia.

European gas prices also rose this morning, as Bloomberg explains:

Natural gas in Europe rose to the highest level in almost four months as planned strikes in Norway threaten to further tighten a market that’s already reeling from Russia’s supply cuts.

Benchmark futures, which have already more than doubled this year, surged as much as 9.8% on Monday. About 13% of Norway’s daily gas exports are at risk amid plans to escalate an impending strike by managers, the nation’s oil and gas lobby warned over the weekend.

Three fields are set to be shut by the strike starting Tuesday, while planned action the following day would take out another three projects.

Turkey's inflation rate hits nearly 79%

While inflation in the UK is painfully high, it has soared to staggering levels in Turkey.

Turkey’s inflation rate rose to 78.62% last month, the highest the country has seen in almost 25 years, up from 73.5% in May. It was led by rocketing transport and food prices.

Turkey’s inflation rate
Turkey’s inflation rate Photograph: Refinitiv

Prices rose by almost 5% in June alone, according to the Turkish Statistical Institute.

June’s inflation repoirt showed that

  • Transportation prices more than doubled, up 123% in the last year
  • Food and non-alcoholic foood prices jumped by 93.93% per year, up from 91.6%
  • The lowest annual increase was 23.74% in communication, while clothing and footwear prices rose 26.99%

Prices soared due to the energy and commodity price shock from the Ukraine war. But inflation has also been pumped up by a weak currency -- the lira tumbled last year as Turkey’s central bank cut interest rates, under pressure from president Erdoğan.

Turkey June headline inflation comes in at %78.6% - - exactly in line with our estimates.

Increases were widespread across sub components, and imply higher inflation in the second half of the year.

— Selva Baziki (@SelvaBaziki) July 4, 2022

Germany’s top union official has warned that the country’s heavy industries could face collapse because of cuts in the supplies of Russian natural gas.

The warning came last weekend, before crisis talks with Chancellor Olaf Scholz start today.

“Because of the gas bottlenecks, entire industries are in danger of permanently collapsing: aluminum, glass, the chemical industry,” said Yasmin Fahimi, the head of the German Federation of Trade Unions (DGB), in an interview with the newspaper Bild am Sonntag.

“Such a collapse would have massive consequences for the entire economy and jobs in Germany.”

Here’s the full story, on Bloomberg.

Germany’s union head warns of collapse of entire industries

— Zoe Schneeweiss (@ZSchneeweiss) July 3, 2022

Britain made progress in reducing child poverty rates at single-parent families in the 2000s.

But that progress was ‘entirely undone’ in the last decade due to benefit cuts (in the Conservative austerity drive), points out IFS senior economist Xiaowei Xu (one of the authors of today’s research).

Half of all children in single-parent families were in poverty in 2019-20.

Child poverty rates fell steeply for single-parent families in the 2000s. This progress was entirely undone in the 2010s as result of benefit cuts.

— Xiaowei Xu (@xiaoweixu_) July 4, 2022

This is an early finding from my chapter on child poverty with @JCribbEcon and Tom Wernham, published on 14 July as part of our annual living standards report. Funded by @jrf_uk.

— Xiaowei Xu (@xiaoweixu_) July 4, 2022

Excellent article by @RJPartington today drawing on our research.

Reminds us that when we talk about single parents, we mean mothers. 9 out of 10 single parents are mothers.

— Xiaowei Xu (@xiaoweixu_) July 4, 2022

Here’s Sam Freedman, senior fellow at the Institute for Government, on the rise in lone-parent families in relative poverty:

We'll now almost certainly be back to over half of lone parents in poverty. 90% of lone parents are mothers.

— Sam Freedman (@Samfr) July 4, 2022

Investor morale in the eurozone has fallen to its lowest level since May 2020, pointing to an “inevitable” recession in the 19-country currency bloc.

Research group Sentix’s index for the eurozone fell to -26.4 from -15.8 in June, worse than expected, to levels that suggest a downturn.

Sentix managing director Manfred Huebner said “the energy crisis … is leading to considerable economic distortions”:

“In every respect, the dynamics are reminiscent of the crisis year 2008, and what was then the collapse of the financial system is now the danger of the collapse of the European energy supply.

June was only the calm before the storm. The #sentix economic index in the #eurozone surprised with a sharp drop to -26.4 points. This is the lowest value since May 2020. Germany data plummet too. We have to report an all-time low of for expectations!

— sentix (@sentixsurvey) July 4, 2022

Analysts at Nomura have predicted that Europe will fall into recession this year, with economists worried that Russian gas and oil supplies could be cut this winter.

Here’s one for the history books. Germany, Europe’s manufacturing powerhouse, has run up a trade deficit for the first time in over 30 years, according to Bloomberg.

FYI, #Germany ran a #trade deficit in goods in May - only 1 billion euros, but still a collectors item.

— Andrew Man (@TegoArcanaDei) July 4, 2022

German exports fell by 0.5% in May, as slowing economic growth hit demand for its wares, data firm Destatis reported this morning.

That included a 2.8% drop in sales to other European Union countries, as Russia’s invasion of Ukraine and China’s lockdowns both disrupted supply chains.

But imports rose by 2.7%, with the costs of imported goods such as fuel rising this year.

This left Germany with a trade deficit of €1bn for May, rather than its usual surplus.

Thomas Gitzel, chief economist at VP Bank, said the fall in exports should not be overemphasised.

“But the number of negative reports is growing, which is why a sober view of the figures leaves one with an uneasy feeling.”

Germany has its first monthly trade deficit since 1991 on exports due to its failed energy policy and weak manufacturing. When Germany sneezes, Europe catches pneumonia. #geoeconomics #realpolitik #Velsig

— Velina Tchakarova (@vtchakarova) July 4, 2022

From The Living Standards Audit 2022: There has been a marked slowdown in income growth in the past two decades. GDP per person grew by 13% between 2004-05 and 2019-20, but this was the smallest increase over a 15-year period since 1919-34 – which spans the Great Depression.

— Resolution Foundation (@resfoundation) July 4, 2022

In the City, shares in oil companies are rallying amid forecasts that tight supply will keep crude prices up.

North Sea producer Harbour (+4.2%) and BP (+3.1%) are the top risers on the FTSE 100, with Brent crude steady around $111.30 per barrel - even as metal prices weaken.

Analysts at Saxo Strategy Team explain:

Crude oil and fuel products have maintained support throughout the current recession-focused storm which has seen metals and agriculture suffer steep declines, and it shows that commodities with tight supply can be supported despite the risk of slowing demand.

However, the upside potential for crude oil remains limited with China reporting widening Covid-19 outbreaks and with recession risks rising in the US and elsewhere.

That’s pushed the FTSE 100 index of blue-chip shares up 70 points, or almost 1%, to 7237.


Government proposals to cut childcare costs branded 'pathetic'

A child playing.

Plans to ease childcare staffing ratios in nurseries in England have drawn an angry response from providers and parents who say their concerns have been ignored.

The government has announced it is launching a consultation on ways to reduce childcare costs for parents, most notably by changing staff-to-child ratios so that each adult can look after five two-year-olds instead of four as currently permitted.

It says the move could reduce costs by up to 15% or £40 a week for a family paying £265 a week for care for a two-year-old, if providers adopt the changes and pass on all the savings.

However, the figures have been questioned by the charity Pregnant Then Screwed, which described them as “nonsense”.

Purnima Tanuku, the chief executive of the National Day Nurseries Association (NDNA), said altering ratios for two-year-olds from 1:4 to 1:5 won’t make any meaningful difference to the cost of childcare for providers or parents.

Tanuku explains:

That can only come from the government paying the full rate for funded childcare places for children under five.

Neil Leitch, CEO of the Early Years Alliance, said the government must recognise that substantial investment is needed:

Our own research has clearly shown that the proposal to relax ratios for two-year-olds in nurseries and pre-schools from 1:4 to 1:5 will not only fail to lower the cost of early years places, but in any settings that do adopt the new ratios, will drive down quality and worsen the already catastrophic recruitment and retention crisis the sector is already experiencing.”

Here’s the full story:

A closed Fuller’s pub in London.

More pubs are being forced to close as the cost of living squeeze hits consumer spending, on top of the lost trade in the pandemic.

There are fewer pubs in England and Wales than ever before following a 7,000 fall over the last decade, real estate advisers Altus Group says.

That takes the total number of pubs below 40,000 during the first half of 2022, as national lockdowns cut sales and caused pubs to shut for good.

And those pubs who survived the pandemic now face record-high inflation, with the energy crisis pushing up their bills and wholesale beer and food prices jumping.

Robert Hayton, Altus Group’s UK president, says:

“While pubs proved remarkably resilient during the pandemic, they’re now facing new headwinds grappling with the cost of doing business crisis through soaring energy costs, inflationary pressures and tax rises.

Record number of firms plan price rises

More UK firms are planning to raise their prices over the next quarter than ever before, which will add to the cost of living squeeze.

The British Chambers of Commerce warns this morning that economic indicators are “flashing red” as companies face increasing inflationary pressures, and look to pass them onto customers.

Two-thirds of firms said they expect their prices to rise in the next three months, a record high, a BCC survey of 5,700 firms found.

Utility bills, labour costs, fuel and raw materials were said to be driving price rises.

David Bharier, head of research at the BCC, said:

“This quarter’s survey results clearly point to a weakening economic outlook amid unprecedented cost pressures and falling business confidence....

“Businesses face an unprecedented convergence of cost pressures, with the main drivers coming from raw materials, fuel, utilities, taxes, and labour.

“The continuing supply chain crisis, exacerbated by conflict in Ukraine and lockdowns in China, has further compounded this.”

Price rises will fuel concerns of profiteering, but 28% of respondents have predicted their profits will decrease.

The rise in relative poverty among children of lone parents is an ‘entirely predictable’ results of recent benefit cuts, says economics professor Jonathan Portes:

The entirely predictable result of very large cuts to benefits (tax credits/Universal Credit cuts, the benefit cap, and the 2 child limit).

And for what?

— Jonathan Portes (@jdportes) July 4, 2022

IFS: No progress in reducing absolute poverty in lone-parent families

You can read the IFS’s report showing the high relative poverty rate for children of lone parents online, here.

It explains how relative poverty for children of lone parents rose from 40% in 2013-14 to 49% by 2019-20, before the pandemic struck (as shown in the opening post).

In addition, there was no progress in reducing absolute poverty for children of lone parents in the years leading up to the pandemic.

That flatlining of absolute poverty and rise in relative poverty for children of lone parents reflect reductions in the real value of state benefits in the years from 2011 to 2019, IFS says.

Jonathan Cribb, associate director at IFS and an author of the report, explains:

‘Rises in employment pushed up incomes of lone-parent families in the years running up to the pandemic, but cuts to state benefits and tax credits reduced their incomes.

The combined effect was that there was no progress in reducing absolute poverty in lone-parent families between 2010 and 2019, and their incomes fell further behind those on average incomes.’

Food industry warns 'worse to come for food price rises'

A shopping trolley at a supermarket in London.

In another blow to families, the “relentless” increases in the price of food may not hit their peak until next year, an industry group has warned.

The Food and Drink Federation, which represents UK food and drink makers, said it usually takes 7-12 months for producers’ costs to reach shop shelves.

The federation’s boss, Karen Betts, warned the BBC that prices would “absolutely” get worse before they get better -- as the surge in energy and fertilizer prices following Russia’s invasion of Ukraine continued to feed through to the shops.

Food and drink price inflation rose to 8.7% in the year to May, according to the Office for National Statistics.

Betts believes prices will accelerate, predicting:

“I think the peak could well be into next year and that prices could well rise some way above 10%.”

Last week, the British Retail Consortium warned that shop price inflation had hit its highest rate in almost 14 years, particularly for fresh food:

‘I’m really feeling the squeeze’: single mothers on the living costs crisis

Several single mothers have spoken to us about the challenge of looking after children in the cost of living crisis, as prices of essentials such as food and energy push higher.

Here’s Steph Owens, 29, from Kent:

I’ve been a single mother since my son was born. He’s now five. We live in a house together in Kent, and I work as an NHS associate practitioner – helping to plan and facilitate discharges from hospital.

I was working in learning disabilities, and we had such a heavy drop in case load because of the pandemic they couldn’t take me on and made me redundant. That was very difficult. I was unemployed for four months and had to use food banks because universal credit payments just didn’t catch up with my income.

There was a sense of shame in it. Almost a sense that you can’t provide the very basics you should be able to for your child. I contacted Single Parent Rights and they signposted me to the benefits I was entitled to. You see in the comments all the time on social media, people saying things like: “Well don’t have children if you can’t afford them.” But life isn’t like that. Circumstances change. You can’t predict the future like that.

I still rely on universal credit despite working full-time now, and I am really feeling the squeeze. My energy bills and food costs have gone up by about £200 a month. I’m absolutely terrified about October when they are set to go even higher. My rent has been going up every three years now, and the council tax has also risen. The cost of the gas hit me hard over winter. I use pay as you go so I don’t get a huge bill at the end of the month but we have had to wrap up warm and just switch it off most days.

You can read more from Steph, and other single mothers, here:

UK's poorest households ‘brutally exposed’ to cost of living crisis

UK families have suffered 15 years of income stagnation which left them “brutally exposed” to the current cost-of-living crisis.

So warns the Resolution Foundation, who says there has been a “complete collapse of income growth for poor households” over the past two decades.

Resolution has calculated that real typical household disposable income growth for working age families has slumped to just 0.7% a year in the 15 years leading up to the Covid-19 pandemic.

That meagre increase in income, after inflation and tax, left households ill-prepared for the fastest surge in prices in decades. Those in rented accommodation and with young children were particularly vulnerable.

Resolution’s latest annual Living Standards Audit showed the consequences of the UK’s “toxic combination” of low growth, and persistently high income inequality.

Published today! The Living Standards Audit 2022 - our 14th annual examination of household income across Britain - by @adamcorlett @LalithaTry & @FeliciaAyensua

— Resolution Foundation (@resfoundation) July 4, 2022

It says that between 1961 and 2004-05, typical household incomes for non-pensioners grew by 2.3% in real terms, on average, or 25% per decade.

Between 2004-05 and 2019-20 however, typical real income growth slowed to a crawl.

Even more starkly, the typical incomes of the poorest fifth of the population were no higher on the eve of the pandemic than they were back in 2004-05, despite GDP per person growing by 12% over this period.

Adam Corlett, principal economist at the Resolution Foundation, explains:

“Households across Britain – and across many other countries – are currently grappling with high levels of inflation that we haven’t seen for generations.

“But while many of the causes of the current crisis are global in nature, it is Britain’s recent history of low income growth and high inequality that has left so many households really struggling to cope.

“Britain’s poor recent record on living standards – notably the complete collapse of income growth for poor households over the past 20 years – must be turned around in the decade ahead.

“To do that, we must address our failure to raise pay and productivity levels, strengthen our social safety net, reduce housing costs and build on what we’ve done well – such as boosting employment for lower-income households.”

From our new report - the relative importance of different income sources varies between households. But employment income dominates for all working-age income deciles.

— Resolution Foundation (@resfoundation) July 4, 2022

Introduction: Half of all children in lone-parent families are in relative poverty

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

As the cost of living crisis escalates, single-parent families are among the most exposed to soaring inflation after a decade of austerity-driven cuts to benefits, new research shows.

The Guardian reports this morning that half of all children in lone-parent families are now living in relative poverty.

In the first of a series of reports from the frontline of the cost of living crisis, we show how women raising their children alone are in a much weaker position to cope with the shocks of the pandemic and rising prices of basics such as food and heating, following cuts to state support by successive Conservative governments.

Our economics correspondent Richard Partington explains:

Research shared exclusively with the Guardian by the Institute for Fiscal Studies sets out the scale of the crisis. It shows relative poverty for children in lone-parent families has risen at a significantly faster rate compared with other households.

Relative poverty is defined as having an income of less than 60% of the national median, adjusted for household size. For single parents, this measure of poverty rose by nine percentage points between 2013-14 and 2019-20 to reach 49% at the onset of the global health emergency.

In sharp contrast, the rate for children in two-parent families rose by only two percentage points to reach 25%.

Tony Blair, the former Labour prime minister, warned that a “painful cost of living squeeze” was hitting families and that progress in tackling child poverty was severely undermined by sweeping benefit cuts imposed over the past decade.

Research on single parent families

With households across the country facing the worst inflationary shock since the 1980s, charities warned that single mothers were suffering a heavier toll from soaring energy prices and the rising cost of a weekly shop.

68% of lone parent respondents had experienced food insecurity

Here’s the full story:

Also coming up today

UK motorists have been warned they could face major disruption today amid widespread protests at rising petrol and diesel costs and calls for a cut in fuel duty.

Organisers are expected to block the Prince of Wales Bridge crossing between England and Wales, according to police.

Essex Police said they are also aware of a planned protest and will work to “minimise disruption to the public on the county’s main roads”.

The financial markets could be subdued, with Wall Street is closed for Independence Day. European stock are set to open a little higher.

As NY is closed for Independence Day. European bourses may enjoy temporary relief, but US futures suggest threat of recession, Ukraine crisis & rampant inflation prevail. Oil $111; Asia reflective; Opening calls - FTSE +33 @ 7201 DAX +50 @ 12863 CAC40 +20 @ 5951 DJIA -212 @ 30885

— David Buik (@truemagic68) July 4, 2022

The agenda

  • 7am BST: German trade balance for May
  • 10am BST: Eurozone producer prices report on factory inflation for May
  • 2pm BST: Bank of Israel interest rate decision



Graeme Wearden

The GuardianTramp

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