Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the UK’s supply chain crisis and business.
The US has warned Russia not to exploit the current gas crisis. The US national security adviser Jake Sullivan has told the BBC that any attempts to exploit the crisis would backfire.
President Vladimir Putin has indicated that Russia might boost supplies, but some analysts doubt that this will ever happen. Russia appeared to use the crisis as leverage to get its controversial Nord Stream 2 pipeline approved.
Adeline Van Houtte, Europe analyst at the Economist Intelligence Unit, says:
Comments from Mr Putin appear to have provided some comfort to the market. However, whether these additional gas supplies depend on a quick approval of Nord Stream 2 or not may not be the main issue.
Currently, the Russian domestic gas market remains tight, with its inventories running low, output already near its peak and winter looming in Russia as well, limiting gas export capacity.
There is also little sign that Gazprom — the Russian gas export pipeline monopoly, which supplies 35% of European gas needs — is attempting to pump more gas to Europe’s spot buyers via existing routes, and overall given its small room for manoeuvre, it is unlikely that Gazprom could deliver more than around 190bcm (billion cubic meters) to Europe this year. European prices are unlikely to cool substantially in 2021.
More than a million extra British households won’t be able to afford to heat and power their homes next spring, as energy bills are expected to rise again in April, according to a charity.
National Energy Action says 1.2 million to 1.5 million additional households will be plunged into fuel poverty, the BBC reported. About 4 million are already in fuel poverty, so this would take the total to up to 5.5 million. Ofgem, the regulator, said the price cap would have to rise again next year if wholesale gas prices continue to go up.
Analysts are forecasting that this could push a typical annual bill by a further £400 to £600 next April, which would mean a 20% increase in households experiencing fuel poverty.
Clare Moriarty, chief executive of Citizens Advice, said fuel poverty definitions vary across the UK, but it’s essentially people facing a choice between heating and eating. She told BBC radio 4 Today programme that the government needs to plan ahead:
It’s really important the government thinks now about what may need to be put in place come next spring when we’re going to see even more problems with people’s energy bills.
She doesn’t think the energy price cap is “broken,” though, saying the situation would be even worse without it.
Those struggling can get some help: there’s the Warm Home Discount (£140 towards your fuel bill if you qualify); winter fuel payments for older people, schemes to make homes more energy efficient, and a £500m household support fund to help people who are in hardship, which runs out in March. But these are winter schemes, Moriarty said, and people will need more support next spring.
In the meantime, a key survey showed that China’s service sector returned to growth last month, as a major Covid-19 outbreak in the eastern province of Jiangsu receded, offering some support to a slowing economy.
Asian shares have risen, and are set to snap four weeks of losses, with Chinese markets coming back after a long holiday. Japan’s Nikkei is 1.3% ahead while China’s CSI 300 made a similar gain and the Shanghei Composite Index rose 0.5%.
- 11am BST: Ireland inflation for September
- 12.00pm BST: Bank of England quarterly bulletin
- 1.30pm BST: US Non-farm payrolls for September (forecast: 500,000)