That’s all for today. Here’s our main stories:

Goodnight. GW

The governor of the Bank of England, Andrew Bailey, has warned Britain’s economic recovery from Covid-19 is slowing amid supply chain disruption and staff shortages.

Answering questions from MPs on the commons Treasury committee, Bailey said there was evidence of the recovery “levelling off” despite the easing of pandemic restrictions earlier in the summer.

He said the economic fallout from the disease had “attenuated a lot” over recent months, helping growth to rebound.

“But it’s still within the context of this imbalance in demand for goods and services. At the moment we’re seeing some levelling off of the recovery, the short-term indicators are suggesting that,”.

The Bank’s governor suggested that Covid disruption to global supply chains, which have upended industries from car making to hospitality, had proved more persistent than expected by Threadneedle Street earlier this year, as higher rates of coronavirus infections and heightened demand for manufactured goods put pressure on shipments.

He said there had been an expectation that consumer demand for goods would increasingly switch to services as pandemic restrictions were relaxed, but that had so far not happened as much as expected. “There’s this underlying story of imbalanced demand, which we thought would by now have been well on the way to correcting itself,” he said.

Bailey said much of the inflationary pressure caused by the pandemic would eventually fade, saying that current high levels of global commodity prices – such as steel, agricultural goods and oil – were likely to fall because market prices typically tend to revert back to average levels over time.

“We expect the bottlenecks to sort themselves out.”

However, he expressed concern about a continued shortage of workers, which could last longer than material shortages and push up inflation.

He told the committee:

“For me, others will speak for themselves, but I have a bit more concern about persistence in the labour market story,”

My colleague Nils Pratley has analysed the UK’s social care tax hike, and explains that small businesses - rather than rich savers - will suffer most from the 1.25% percentage point increase in tax on dividend income.

A wealthy individual who has been Isa-ed up to the max for a couple of decades may well now have a very valuable portfolio of shares that lies, and will continue to lie, entirely outside the reach of dividend taxes. Isa millionaires genuinely exist.

So the bulk of the £600m that the government expects to raise via the change is very likely to come from sole traders, self-employed individuals and directors of very small companies who pay themselves primarily through dividends. Should they also be regarded as a suitable target?

Maybe some should be. But the howls of protest from the likes of the Federation of Small Business “anti-small business, anti-startup” measure deserve sympathy. Many of the affected individuals will be those who got through lockdown without furlough or equivalent support. Their position seems to have been ignored by ministers because talk of taxing dividends conjures a different image.

The measure seems to have been tacked on to the main national insurance proposal at the 11th hour in a desperate attempt to deflect the criticism about the distributional unfairness of hiking national insurance rates. Small businesses and sole traders have been treated as collateral damage in the manoeuvre. If it were a Labour administration making this move, Tories would be screaming blue murder.

And in the last few minutes, MPs have voted in favour of the plan to hike national insurance contributions (NICs) to fund £12bn for the NHS and social care, with Boris Johnson spared a mass Tory rebellion.

European stock markets ended today sharply in the red, as anxiety over the recovery hit stocks.

The pan-European Stoxx 600 index shed 1%, with every major index in the red.

Germany’s DAX lost 1.5% - with Siemens Energy (-8%) and Siemens (-3.5%) leading the fallers, followed by major auto makers like Volkswagen (-3.2%) and Daimler (-2.3%).

The UK’s FTSE 100 fell to its lowest level in over two weeks, down 54 points or 0.75% at 7,095.

Housebuilders and commercial property firms were the biggest fallers, with healthcare, consumer cyclical and miners also lower.

Worries about the health of the US recovery, the global slowdown, and the impact of the supply chain disruption which Andrew Bailey touched on are all weighing on markets.

Danni Hewson, AJ Bell financial analyst, says:

“Just exactly how are investors expected to deal with the barrage of conflicting jobs data coming out of the US? On Friday markets shuddered on the news that the US economy had added far, far fewer jobs than anyone had expected in August, and today the latest JOLTS numbers job openings far outstripped the number of people looking for work.

But wait, today’s figures are a little behind the Delta curve giving the far rosier July picture than that painted in August. But markets are antsy, they feel the headwinds picking up and for the most part the expectation that the Fed’s taper won’t cause tantrums till much later down the line has now been fairly well priced in.

“In the UK housebuilders have provided a big drag on markets with Taylor Wimpey, Persimmon, Barratt and The Berkley Group all in the FTSE 100 red zone. Supply issues and labour shortages are impeding construction plans and there’s a real sense that the hot air provided by the stamp duty holiday has cooled and the market with it. People who’d managed to amass lockdown deposits thanks to a lack of anything else to spend their cash on have probably already hung curtains in their new abodes and this week’s mega office return will be watched carefully. Home working gave some workers an opportunity to move further from the office, others have been waiting to take the plunge, unsure if hybrid will be a passing fad or a long-term shift.

“And supply issues are front and centre as the Bank of England’s governor answers questions from the Treasury Committee. Consumers might have jumped right back into spending mode, but those massive global supply juggernauts are taking a little more time to power back up. It’s like a global game of Jenga with countries trying to tease blocks out from the centre of a precarious heap which keeps getting bigger. Bottlenecks are causing frustration, frustration’s leading to good old capitalistic price rises and the feeling that inflation might not have sung its last high note of this particular song.”

Intriguingly, the Bank of England was split last month on whether the basic conditions for an interest rate rise had been met.

Andrew Bailey told MPs that he was among four Monetary Policy Committee members who felt the minimum conditions had been reached, but they were not yet sufficient to justify a hike.

Another four thought the recovery was not strong enough to meet this threshold.

In the event, the MPC voted unanimously to keep interest rates at an all-time low of 0.1% in August, with one member (the hawkish Michael Saunders) voting to cut the size of its bond-buying programme.

Bailey told the Treasury Committee:

“Let me condition this by the fact that it was an unusual meeting because there were only eight members of the committee - so it actually was four-all,”

That’s because the Bank experienced its own short term labour shortage - chief economist Andy Haldane left at the end of June, with his successor Huw Pill only appointed last week.

On the outlook for the economy....

Q: The latest retail sales and consumer borrowing data points to a slowdown in spending - are you concerned that the recovery could be faltering, because of the persistence of the Delta variant?

Governor Andrew Bailey says we are seeing “some flattening out of the rate of recovery” across a broad range of indicators -- he cites mobility data from Google and Apple, and payments data (which were flat in mid-August).

The Bank doesn’t have a “precise story” to explain it, but the rise in cases of the Delta variant of Covid-19 may have something to do with it.

Certainly over the summer, when we got into the ‘pinging’ period, that was quite possible.

Bailey then reiterates that the impact of Covid has attenuated -- compared to the early days of the pandemic, when the UK went into lockdown. That’s thanks to the vaccination programme.

The economies who have a lower rate of vaccination, and therefore resort to more of the lockdown procedures as their mitigation for the Delta variant are seeing some further weakening in activity.

That’s an issue for the UK, particularly if it hits trade with Asia-Pacific countries, he adds.

[China’s factories, for example, fell into contraction in August for the first time in nearly a year and a half].

BoE governor Andrew Bailey tells MPs that the overall economic impact of Covid in the UK has “attenuated” over time, but still causing imbalances in demand for goods and services.

At the moment we’re seeing some levelling off of the recovery, the short term indicators are suggesting that.

In Asia, though, the appearance of the delta variant is affecting activity, especially in places where vaccination rates are low. There, the response can be to shut activity down.

That accentuates the bottlenecks in the economy, Bailey explains to the Treasury Committee.

Q: What are the chances that these bottlenecks last longer than expected?

Bailey says the Bank believes they won’t be persistent.

In history, commodity prices tend to revert to their mean levels over time (and they’d need to keep going ever-higher to keep pushing the inflation rate up).

Transport supply chain bottlenecks ought to sort themselves out.

And world sales of semiconductors have risen, suggesting that supply is coming back after recent disruption.

But, Bailey then voices concern over the UK labour market - and the struggle to fill job openings amid the supply chain crisis.

We’ve talked before at hearings about the concerns about higher unemployment. In many ways now the concern is getting jobs filled.

We’ve got a high level of vacancies in this country, obviously it’s in the news every day.

We think the end of the furlough scheme on 30 September should lead to more supply of labour onto the jobs markets, so again we think should correct itself, Bailey says.

But Bailey says he personally has “a bit more concern” about persistence in the labour market.

Over in parliament, the Treasury committee is questioning senior policymakers from the Bank of England.

And they kick off on the Bank’s latest forecast that inflation could hit 4% by the end of the year, double its target. Back in May they were forecasting CPI would reach 2.5% at the end of 2021.

Q: Could this undermine confidence in the Bank’s ability to forecast inflation?

Governor Andrew Bailey says two factors are pushing up inflation:

First, an increase in global demand for goods, pushing up commodity prices, oil, metals and some agricultural prices.

Second, there is an imbalance of goods and services due to the pandemic - particularly goods. That’s creating bottlenecks around the world, pushing up goods prices.

Bailey also points out that the pandemic continues to affect the global economy.

The persistence of Covid means we haven’t seen the rebalancing of demand between goods and services that the Bank expected to see, he says.

Instead, there is still much stronger demand for goods than supply of goods, which is pushing up goods prices.

Bailey also points to the ongoing shortage of semiconductor chips, which has hit car production in the UK to its lowest in a long time - and pushed up second-hand car prices.

The committee are also hearing from deputy governors Dave Ramsden and Ben Broadbent, Silvana Tenreyro, an external member of the Monetary Policy Committee, and Jonathan Hall, external member of the Financial Policy Committee.

The number of job openings in the US has raced to a fresh record high in July.

There were 10.934m positions available in the US economy in July, the Labor Department report, up from 10.2m in June.

This highlights that US companies are still struggling to fill positions -- either due to a shortage of candidates, a skills mismatch, or unattractive wages.

Job openings increased in several industries, with the largest increases in health care and social assistance (+294,000); finance and insurance (+116,000); and accommodation and food services (+115,000).

The number of job openings increased in the Northeast, South, and West regions, the JOLTS report shows.

However, this data obviously won’t catch the impact of the Delta variant on the US economy in August, when rising cases may have made employers more cautious....

Reaction to follow...

The Bank of Canada has warned that rising cases of Covid-19, and supply chain problems, are both threatening the recovery.

After its latest policy meeting, the BoC says:

The global economic recovery continued through the second quarter, led by strong US growth, and had solid momentum heading into the third quarter.

However, supply chain disruptions are restraining activity in some sectors and rising cases of COVID-19 in many regions pose a risk to the strength of the global recovery. Financial conditions remain highly accommodative.

The BoC also left its key interest rate unchanged at 0.25%, as expected, and said it would maintain its current policy of quantitative easing.

It also stuck to its guidance that rates will remain at record lows until the second half of 2022.

Facebook has pushed back against the UK competition watchdog’s call that it could be forced to sell Giphy, its GIF website, to address competition concerns.

In a punchy response to the Competition and Markets Authority, Facebook insists that its purchase of Giphy isn’t causing a substantial lessening of competition, and bluntly accuses the CMS of applying the wrong legal test, disregarding relevant considerations and considering irrelevant factors.

Facebook also claims that the CMA’s proposed remedy of complete divestiture is “grossly unreasonable and disproportionate”.

Last month, the CMA said its investigation into the Giphy takeover had concluded it could harm competition among social media companies and the digital advertising market. Its initial view was that the only effective way to address these competition issues was for Facebook to sell Giphy, in its entirety, to a suitable buyer.

Giphy is the largest supplier of animated gifs to social networks such as Snapchat, TikTok and Twitter, and was bought by Facebook for $400m last year.

Facebook argues that regulators should carefully weigh “the intrusive step of ordering the sale of a company which does not carry on business in the U.K.”, and also questioned whether a global divestment can be enforced by the British authority.

Wall Street has opened cautiously, with the benchmark S&P 500 index dipping by 5 points or 0.13% to 4,514.

Energy, utilities and industrial are up, while the miners, healthcare and technology sectors are lower.

The tech-focused Nasdaq has slipped from last night’s record high, down 52 points or 0.34% at 15,322.

But the Dow Jones industrial average is slightly higher, gaining 17 points or 0.05% to 35,117.

Oil producer Chevron is among the Dow risers, up 1.1%, following the jump in oil prices today, along with fast food chain McDonald’s (+0.9%), entertainment giant Walt Disney (+1.3%) and industrial conglomerate 3M (+0.8%).

Halfords has blamed “considerable disruption” in global supply chains for a 26% dive in bike sales during spring and summer.

The retailer, which has 404 stores selling cycling and motoring kit, said availability of adult bikes had been particularly low as the industry “continues to experience considerable capacity constraints”.

Those constraints include difficulties in recruiting sufficient numbers of HGV drivers and service technicians, disruption to freight transport and raw material inflation, as well as limits on factory production, with makers struggling to adapt to a global surge in demand prompted by the coronavirus pandemic.

The company said in a trading update that it expected many of the problems to continue “for some time”.

The record energy market surge has claimed its first casualties after two UK suppliers collapsed, leaving almost 100,000 customers without an energy supplier.

PfP Energy and MoneyPlus Energy both ceased trading as the UK’s gas market reached a fresh record high on Tuesday while electricity market prices surged to levels not seen since 2008.

A string of similarly small suppliers are expected to collapse this winter as the companies shoulder the heavy costs of higher market prices before the cap on standard energy tariffs lifts from October.

On Tuesday, UK gas prices reached a record high of 136.68 pence per therm, according to commodity market experts at ICIS. Meanwhile, electricity prices climbed to £128.13 per megawatt-hour, for the first time in 13 years.

More here:

And....Bloomberg reports that the price of UK electricity for the next day has surged to a record for a second time this week.

An auction for power for Thursday cleared at 277.30 pounds ($381.55) per megawatt-hour on N2EX, up more than 100% from Wednesday’s price.

Several unplanned halts are crimping supply, including units at Drax Plc’s biomass plant, RWE AG’s Didcot B, EPUKI’s South Humber all halting unexpectedly. Electricite de France SA’s Heysham 1.1 nuclear reactor is due back on Thursday after an extended outage.

Boeing’s board of directors must face a lawsuit from the planemaker’s shareholders over two fatal crashes of its 737 Max aircraft, which killed 346 people in less than six months, a US judge has ruled.

Delaware judge vice-chancellor Morgan Zurn found that the company had ignored “red flags” about the safety of the new aircraft and its anti-stall system, which the board “should have heeded but instead ignored”, following the crash of Lion Air flight 610 in October 2018.

The first incident occurred when the plane, which has an onboard system known as MCAS (manoeuvering characteristics augmentation system), crashed into the sea shortly after takeoff from Jakarta, killing all 189 passengers and crew on board.

Less than five months later, in March 2019, all 157 people on board Ethiopian Airlines flight 302 died when it crashed minutes after taking off from Addis Ababa, triggering a global grounding of the 737 Max fleet which lasted for almost two years.

“The Lion Air crash was a red flag about MCAS that the board should have heeded but instead ignored,” Zurn wrote in his ruling.

“The board did not request any information about it from management, and did not receive any until November 5, 2018, over one week after it happened.”

More here:

We would like to hear from small business owners on their reaction to the new health and social care levy, and how they will be affected.

You can get in touch by filling in the form here. Your responses are secure as the form is encrypted and only the Guardian has access to your contributions.

In the tech sector, Apple has lost the executive in charge of its below-the-radar car project to Ford, dealing a further blow to the iPhone maker’s automotive ambitions.

Doug Field, Apple’s vice-president of special projects, had also worked on Tesla’s Model 3 vehicle under Elon Musk. Field, who rejoined Apple in 2018 after a previous stint at the business, is the fourth senior member of the company’s car team to leave since February.

He will become Ford’s chief advanced technology and embedded systems officer with immediate effect, a critical post as the auto industry moves to adopt vehicles powered by electricity and guided by computers. This year Ford signed a six-year deal with Google that includes using Android software in the Michigan carmaker’s vehicles.

Field said:

“I’m thrilled to be joining Ford as it embraces a transition to a new, complex and fascinating period in the auto industry.

“It will be a privilege to help Ford deliver a new generation of experiences built on the shift to electrification, software and digital experiences, and autonomy.”

Field will also oversee the integration of Ford products with other pieces of technology, such as a smartphone or watch. More here.

Global stock markets have dropped back from their recent record highs, on concerns that the pandemic could undermine the global recovery.

MSCI’s world equity index has dropped 0.24% after hitting record highs for seven consecutive sessions, on some caution over the pace of economic recovery.

European stock markets hit their lowest levels in over two weeks this morning, but have since recovered a little - with the Stoxx 600 down 0.7% today. Germany’s DAX is still down almost 1%, with carmakers weaker.

The FTSE 100 index is now down around 40 points, having been 80 points lower earlier, amid choppy trading. Housebuilders and commercial property firms are still among the major fallers, with healthcare, industrials and mining stocks also weaker.

Neil Wilson of Markets.com says growth worries are weighing on the markets, although the US Nasdaq index hit another record high last night.

There is a slow growth feel to the stock market – things that don’t need cyclical economic growth doing well like Netflix – new all-time high – and Tesla. Cruise liners, casinos and Disney were the best performers though – signs that it’s all doom and gloom with regards Delta and vaccines.

Industrials were weak but so too some of the bond proxies like real estate and utilities as bond yields rose. The Dow fell 270pts to 35,100, while the S&P 500 declined 0.34% to 4,520. It seems like the kind of uptick in consumer spend and consumption into the back end of the year will not be as strong as thought due to delta.

The US dollar has strengthened a little, indicating that investors could be cutting their exposure to riskier assets.

Concern has been growing about the Delta variant after US payroll growth hit a seven-month low in August, with just 235,000 new hires.

St. Louis Federal Reserve Bank president James Bullard’s call for tapering to start soon may create fears that the Fed tightens too quickly, hurting growth.

Oliver Blackbourn, multi-asset portfolio manager at Janus Henderson Investors, says Bullard’s comments may have caused investors some confusion:

Even the Federal Reserve doesn’t seem to know what link there should be between quantitative easing and interest rates. At Jackson Hole, Chair Powell tried to explicitly separate tapering and when US interest rates may start rising, but James Bullard seems to have skipped that particular slot at the conference. The St Louis Fed President again connected the end of quantitative easing to the earliest that interest rates could be hiked. Markets could be forgiven for being confused by the differing communications, but clearly there is a difference of opinion inside the world’s foremost central bank as to the implications of any policy changes.

Bullard’s comments also illustrated one of the ways that the Fed could still deliver a hawkish surprise in a couple of weeks’ time, if it announces a rapid taper plan. Bullard indicated that he would like to see asset purchases wound down by the end of the first quarter next year; that would be a quick six-month taper at presumably $20bn per month. This would probably be quicker than many investors have assumed, given the Fed’s reluctance so far to begin the process of reducing stimulus despite the surge in both realized and forecast inflation.

Bloomberg has spotted that Chinese consumers cut back on buying cars and apartments in August as stronger regulation of the property market and a broad Covid outbreak in the country further undercut the economy’s already slowing recovery.

Property sales in the four first-tier cities declined 16% in August from a year ago, according to Bloomberg calculations based on weekly data.

Total automobile sales including to companies likely dropped about 22% over the same period, the biggest decline since last March when the nation was still in lockdown to control the initial Covid cases, they say (more here).

China’s exports were stronger than expected in August, lifted by robust overseas demand, but Bloomberg’s data suggests the domestic economy took a hit from lockdowns [as last Friday’s Services PMI showed too].

Back in retail, discount store chain B&M have lifted their profit forecasts for this year after stronger-than-expected trading in the UK.

B&M say profit margins in the UK have been higher than expected in the last six months.

The company, which sells everything from cleaning products, drinks and stationary to furniture, garden kit and DIY products, says sales of general merchandise and seasonal stocks have been “particularly encouraging”. So, it’s needed fewer discounts to shift stock at the end of the season.

B&M now expects adjusted earnings of £275m to £285m for the six months to 25th September 2021 -- up from City forecasts of approximately £235m.

B&M’s shares have jumped 5.5%, dislodging Smiths Group from the top of the FTSE 100 risers.

But B&M also strikes a cautious note:

Although the Group is well positioned for the upcoming Golden Quarter, trading patterns and strength of customer demand remain highly uncertain for the balance of FY22.

St. Louis Federal Reserve Bank President James Bullard has declared the Fed should move forward with a plan to taper its massive asset purchase programme despite the slowdown in job growth last month.

Bullard told the Financial Times that August’s weak payroll report shouldn’t prevent the Fed starting to slow its $120bn-per-month bond buying scheme.

The FT explains:

James Bullard, president of the St Louis Fed, dismissed concerns the labour market recovery was faltering, even after just 235,000 jobs were created in the month of August, and reiterated his call for the central bank to begin scaling back or “tapering” its massive $120bn-a-month bond-buying programme soon.

“There is plenty of demand for workers and there are more job openings than there are unemployed workers,” Bullard said in an interview with the Financial Times.

“If we can get the workers matched up and bring the pandemic under better control, it certainly looks like we’ll have a very strong labour market going into next year.”

He added: “The big picture is that the taper will get going this year and will end sometime by the first half of next year.”

Rather than taking his cue from a single strong or weak jobs report, Bullard said he was instead looking for job gains to average out around 500,000 a month this year. That is still roughly the current pace of hiring following August’s report.

When you’re in a crisis, you have to be prepared for twists and turns,” he said. “These numbers are going to bounce up and down.”

FT: Top Fed official pushes for quick ‘taper’ despite weak US jobs growth

Bullard, one of the more hawkish voices at the Fed, also warned that inflation could be more persistent than policymakers hope next year. The Delta variant could cause further global supply chain disruption and drive prices higher, he said.

European stock markets have fallen 1% in early trading, on concerns that the rise in cases of the Delta variant are hitting the global recovery.

In London, the FTSE 100 index has dropped by 63 points to 7085, while Germany’s DAX has shed 1.2%, with similar losses in France, Italy and Spain.

Housebuilders are among the fallers in London, with Taylor Wimpey down 2%, Persimmon down 1.8%, while commercial property developer Land Securities is off 1.7%, and conference operator Informa has lost 1.9%.

This follows a weak session on Wall Street, where investors are fretting that the slowdown in hiring in August shows the Delta variant is hurting the US recovery.

Naeem Aslam of Avatrade explains:

The possibility of economic growth slowing down, as hinted by a lower labor market report and rising coronavirus cases, amid tapering discussions among central bank officials, is having a major toll on investor confidence. Moreover, isolated hindrances in combatting the spread of the delta variant may likely dampen hopes of a strong global economic rebound and contribute to higher volatility in stock markets.

Having said that, equity indices are still near all-time highs and, thanks to effective management by the Biden administration and the Federal Reserve, the repercussions of the pandemic have broadly been contained.

September can also be a choppy month for the markets, he adds:

Historically speaking, investors usually witness weaker stock market performance in September. Stock markets have been consistently strong and posting gains, with the S&P 500 up nearly 20% in 2021 without even a 5% retracement. Furthermore, there is a lot of uncertainty related to the expected economic recovery and the expected change in Fed policies. This means that investors should brace themselves for some volatility as markets go through a correction phase.

The future of Morrisons could be decided in a dramatic auction battle between the two private equity firms vying for the supermarket.

Morrisons has told the City it is in discussions with the stock market’s Takeover Panel to launch an auction process for the chain.

This would resolve the battle for the business between two private equity firms, Clayton Dubilier & Rice (CD&R) and Fortress, which began almost three months ago with neither firm having declared a final offer.

My colleague Joanna Partridge explains:

Last month, the board of the grocer recommended that shareholders back an offer by Clayton, Dubilier & Rice (CD&R) that would value the supermarket chain at £7bn (or £9.7bn including debt).

However, it is thought that the rival private equity firm Fortress, owned by the Japanese investment bank SoftBank and which has had its offers of £6.5bn and £6.7bn trumped by CD&R, could still come out with an improved bid.

Morrisons said in a statement that it was working on the basis that neither firm had declared its offer to be final, and “such that either offer may be further increased or otherwise revised, a competitive situation continues to exist”.

It added that it was beginning “discussions around an orderly framework for the resolution of this competitive situation” through an auction, which will take place before 18 October on a date yet to be announced by the Takeover Panel. The supermarket chain will then decide whether to recommend the CD&R or Fortress offer to its shareholders.

Such an auction process is rare. It was going to be used to decide the takeover battle for UK asthma treatment firm Vectura -- before private equity firm Carlyle stepped away for a bidding war with Philip Morris.

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

Bicycles have joined the lengthy list of products caught up in this summer’s supply chain problems.

Car-to-cycles firm Halfords has reported this morning that its bicycle operation has been dragged back in recent weeks by disruption in the global cycling supply chain, with sales sharply lower than last year.

With factories struggling to meet demand, rising commodity prices, transport disruption, and a shortage of drivers and technicians, the company was left facing low availability of some bikes, and recruitment challenges at its Autocentres business.

And it warns that the situation won’t be resolved fast.

Availability of adult mechanical bikes was particularly low over the last 20 weeks, Halford says, leading to “materially lower growth rates towards the end of the period” as it struggled to get hold of stock.

Kids and Electric bikes have fared better, though.

Halfords says it faced three challenges, which will be familiar to anyone following the supply chain problems building up in the economy:

• Factory production constraints and raw material inflation.
• General freight disruption, capacity constraints and cost inflation.
• Supply and recruitment challenges in respect of service technicians and HGV drivers.

Halfords explains:

We expect many of the cycling supply chain issues referred to above to continue for some time albeit, as the UK’s largest cycling retailer, we are well positioned to navigate these challenges

Conversely, we are targeting strong growth in our Services and B2B businesses, alongside an improved Retail Motoring performance.

Like-for-like sales in cycling were down almost 23% in the 20-week period to August 20th compared with last year -- when there was a boom in cycling in the pandemic. They’re still 24% higher than two years ago.

Conversely, the motoring business has bounced back, with sales 52.1% higher than a year ago.

Bicycles join a long list of products affected by the supply chain woes -- from aluminium cans at Coca-Cola to mattresses at IKEA -- while the labour shortages have left Wagamama struggling to find chefs.

In other news...

Business groups are criticising the government’s national insurance hike and surcharge on dividend income to boost health and social care spending from next April, calling it a tax on jobs and a blow to the economic recovery.

The British Chamber of Commerce (BCC) said the extra financial burden from higher tax charges ignored the damage suffered by thousands of small businesses over the last 18 months.

In a separate attack on the tax increases, the Institute of Directors accused the government of an opportunistic ambush, “exploiting public sentiment at the expense of some of the most productive and entrepreneurial segments of the economy”.

Bitcoin is under pressure, down around 3% today after tumbling on Tuesday on the first day of El Salvador adopting Bitcoin as legal tender, and suffering some technical glitches.

European markets look subdued, after dropping yesterday as investors worried that the US economy could be slowing.

The agenda

• Noon BST: US weekly mortgage approval figures
• 3pm BST: Bank of Canada interest rate decision
• 3pm BST: JOLTS survey of US vacancies
• 4pm BST: Treasury Committee hearing with the Bank of England over its July Financial Stability Report and August Monetary Policy Report