Closing summary
EU leaders are set to agree on an international fund to finance the post-war reconstruction of Ukraine at this week’s summit, according to a draft of the statement seen by Reuters. The EU will invite others to contribute to the fund.
Rishi Sunak has been handed a boost from figures showing lower UK government borrowing than official estimates on the eve of the spring statement.
The figures come despite a sharp rise in debt interest payments last month amid soaring inflation. The Office for National Statistics said borrowing over the first 11 months of the financial year 2021-22 was £138.4bn, less than half the sum borrowed a year earlier and almost £26bn less than estimated by the Office for Budget Responsibility in October.
Analysts say this gives the chancellor wriggle room for a support package of measures aimed at helping struggling households during the cost of living crisis. Several economists are expected a giveaway worth £10bn to £11bn.
Record numbers of UK manufacturers are raising prices as the war in Ukraine gives an added twist to inflationary pressures, the latest snapshot of industry by the CBI has shown.
Stock markets have moved higher. The FTSE 100 index in London is 30 points ahead at 7,472, a 0.4% gain. The German, French and Italian markets have all climbed more than 1%.
Crude oil prices have fallen back after earlier gains. Brent crude is down 1.1% at $114.30 a barrel while US light crude is 2.5% lower at $109.65 a barrel.
Natural gas prices are rising, but are far below the record highs reached at the start of this month. The British April wholesale gas contract is up 5.8% at 236.75p per therm.
The cruise operator Carnival Corporation, which owns the Cunard and Holland America cruise lines, is forecasting a loss this year because of surging fuel prices. Analysts at Jefferies reckon costs could be 8%-10% higher than previously estimated in the first half of the year, and 10%-11% higher in the second half.
Our other top stories today:
Thank you for reading. Take care – JK
Swiss prosecutors set up taskforce to pursue sanctions-busting
Swiss federal prosecutors have set up a taskforce to go pursue potential sanctions-busting and gather evidence of war crimes connected to Russia’s invasion of Ukraine.
Switzerland, a popular destination for Moscow’s elite and home for Russian wealth, is under mounting pressure to act faster in identifying and freezing assets of hundreds of sanctioned Russians.
The Office of the Attorney General said it had established a Taskforce to examine potential violations of sanctions and to help pursue other potential crimes. It said:
At present, the focus is primarily on the areas of international criminal law and the Embargo Act.
The Ukrainian president, Volodymyr Zelenskiy has urged Switzerland to crack down on Russian oligarchs he said were helping Putin wage war against Ukraine.
Carnival Corporation, the British-American cruise ship operator, has reported worse-than-expected quarterly revenues.
A rise in Covid-19 infections due to the highly contagious Omicron variant held back cruise bookings during the first three months of this year.
Several infections were identified among passengers on board ships owned by Carnival in December and January.
The company said the Omicron wave of infections had an impact on bookings for its near-term sailings in the first quarter, including higher cancellations as more people tested positive for Covid-19 before they were able to go on their cruise.
Carnival’s revenues rose to $1.6bn between January and March, compared with $26m a year earlier when few people travelled because of the pandemic. Analysts on Wall Street had forecast $2.3bn. The company managed to shrink its net loss to $1.89bn from $1.97bn a year earlier.
Updated
NatWest is to join the booming but controversial “buy now, pay later” market this summer, becoming the first UK high street bank to announce a move into the multibillion-pound sector, reports my colleague Rupert Jones.
The bank is still majority taxpayer-owned – though only just, as the government stake is now about 51% – after a state bailout during the financial crisis. Its 18 million-plus customers may be surprised to learn it is to offer this form of unregulated credit, which lets people delay payment for items ranging from clothes to pet food.
However, NatWest said there was “a clear demand” for buy now, pay later (BNPL), and it was determined “to make it better and safer”.
And here’s our full take on the CBI manufacturing survey, which shows record numbers of UK manufacturers are raising prices as the war in Ukraine gives an added twist to inflationary pressures.
The employers’ lobby group, the CBI, said 82% of firms were expecting to raise prices in the coming months against just 2% predicting a fall.
Here’s our full story on the Russian oligarchs’ superyachts:
And here’s the latest in the P&O saga.
P&O Ferries could face prosecution over the sacking of 800 workers, the UK business minister, Paul Scully, warned before a government ultimatum to the company.
The transport secretary, Grant Shapps, has said he will review all government contracts and dealings with the company and its owners, DP World.
On Tuesday, the RMT union said seafarers from abroad had been brought in to replace the 800 sacked British crew and were being paid as little as £1.80 an hour.
P&O Ferries disputes the figures but it declined to discuss the rates or give alternative rates and would not confirm whether it paid the minimum wage.
Russian oligarch superyacht seized in Gibraltar, as two of Abramovich's superyachts docked in Turkey
A superyacht belonging to a sanctioned Russian oligarch has been seized in Gibraltar, becoming the latest vessel to be impounded by authorities, reports our senior reporter Joanna Partridge.
The $75m (£57m) Axioma belonging to billionaire Dmitry Pumpyansky – owner and chairman of steel pipe manufacturer OAO TMK, which is a supplier to Russian state-owned energy company Gazprom – was seized by authorities in the British overseas territory on Monday.
The news emerged as two of Roman Abramovich’s superyachts were spotted docked in ports in Turkey, having cruised to new locations following the extension of sanctions to include the Chelsea FC owner.
Yachts belonging to several Russian oligarchs have hastily arranged unplanned sailings, apparently moving them to avoid seizure by governments enforcing sanctions following Russia’s invasion of Ukraine. Turkey has not yet joined western economic sanctions against Russia.
The latest in our Russian asset tracker series:
Alisher Usmanov, the Russian oligarch once said to be the UK’s richest person, claims to have placed hundreds of millions of pounds of his assets into an irrevocable trust, potentially leaving them outside the sanctions regime established by western governments, reports my colleague Simon Goodley.
The tycoon – a former 30% shareholder in Arsenal football club who has also ploughed millions into sponsoring Everton and is subject to sanctions – can today be revealed as connected to at least six luxury UK properties and one central London office building, collectively worth more than £170m and held via a complex web of offshore companies and family members.
EasyJet has become the latest airline to announce a relaxation of its mask-wearing policy.
From Sunday, passengers and crew will no longer need to wear masks onboard if this is not legally required at either end of the route.
This means mandatory mask-wearing will be dropped on UK domestic flights – excluding routes to and from Scotland, where face covering rules remain in place – and on flights between the UK and Denmark, Gibraltar, Iceland and Hungary.
The Luton-based airline said:
As a pan-European airline operating between over 30 countries, we must continue to ensure that we and our customers follow the legal requirements of all the countries we fly to.
This means when flying to or from countries where mask requirements remain in place, we will follow the relevant legal requirements.
We urge European governments to have a coordinated approach on the removal of the requirement where possible, to make it easy and clear for customers. We will aim to provide clear information to customers, including while onboard, detailing the specific mask requirements on their flight.
Several other airlines have relaxed their mask-wearing rules in recent weeks, including British Airways, Jet2.com and Tui Airways.
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Barclays: Ukraine war could hamper climate progress
Barclays said the disruption in energy markets since Russia’s invasion of Ukraine (which began nearly four weeks ago) could hamper its ability to meet its carbon emission reduction targets, while it toughened its climate commitments.
In a notice ahead of its annual investor meeting, the UK bank also said it was planning more restrictive polices on coal, including final exit dates on a “progressive phase-out” of thermal coal financing.
Other banks, such as HSBC, have also firmed up their climate commitments, under pressure from climate activists, who are often supported by major shareholders. Last week, HSBC said it would further reduce the financing it provides to the fossil fuel industry, publish more data on how it is implementing its goals, and link executive pay to progress made on that front.
Barclays said it would phase out financing of thermal coal mining by 2030 in 38 OECD countries and by 2035 in the rest of the world. The lender will also no longer take on new financing clients that generate more than 5% of their revenue from thermal coal mining from the start of next year.
However, Barclays also warned that the Ukraine crisis could undermine its efforts.
We should recognise that the conflict currently taking place in Ukraine has greatly exacerbated existing supply pressures on energy systems, particularly in the UK and the EU.
In the near term, the current disruptions may increase volatility in our progress towards our 2025 and 2030 emission reduction targets.
The bank said shareholders will be given a “Say on Climate” vote at its annual meeting in Manchester on 4 May.
As part of our Russian asset tracker series, an ongoing project, Simon Goodley has taken a look at Roman Abramovich’s £250m property portfolio.
The sanctioned Chelsea FC club owner, Roman Abramovich, and his family have amassed a UK property collection worth more than £250m, numbering about 70 homes, buildings and pieces of land.
And David Conn has looked at how the Russian businessman made his money: From poor orphan to billionaire oligarch.
Roman Abramovich’s journey from an impoverished, orphaned childhood to Chelsea-owning billionaire was forged in the chaotic transformation of Russia itself, in the years after the iron curtain fell.
His elevation into an oligarch is unusually well documented, chronicled in painstaking detail in an English high court judgment of Lady Justice Gloster in 2012, when Abramovich succeeded in defending a lawsuit brought by his former mentor, Boris Berezovsky.
In the case, both men described their careers, and routes to becoming billionaires, as “a uniquely Russian story”.
The owner of B&Q and Screwfix is handing workers a pay rise as the company’s boss forecast that demand for energy-saving kit and the shift to working from home would keep fuelling the DIY boom, reports our retail correspondent, Sarah Butler.
Pay for B&Q workers will increase by 6.5% to £9.80 an hour while Screwfix is increasing minimum staff pay by 5.4% to £9.70 an hour from 1 April, putting both chains just ahead of the new legal minimum of £9.50 which starts next month.
In other news, the national lottery operator, Camelot, has been fined £3.15m for three errors on its mobile app, which affected tens of thousands of players.
The first involved up to 20,000 users who were told their winning tickets had lost when they scanned a QR code between November 2016 and September 2020, the Gambling Commission said.
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CBI: record number of manufacturers to lift prices
The proportion of British manufacturers expecting to raise their prices over the next three months has hit its highest level since records began in 1975, according to a monthly survey from the CBI, Britain’s biggest business lobby group.
This underlines the scale of fast-growing inflation pressures. The balance of manufacturers expecting to put up prices rose to a record high in March (+80% from +77% in February), a question first asked in Jan 1975. The measure deducts the number of firms saying they will raise prices from those saying they will lower them.
Manufacturers also reported higher order books this month, with the net balance matching November’s all-time high of +26%.
CBI deputy chief economist Anna Leach said:
This survey highlights strong order books and output growth, but the cost pressures facing manufacturers have been amplified by the conflict in Ukraine.
The government must use tomorrow’s Spring Statement to provide relief to both energy-intensive industries and vulnerable consumer.
The survey of 229 manufacturers was conducted between 24 February and 14 March.
Updated
Market summary
Oil prices have slipped back, with Brent now just over $115 a barrel while US light crude is just above $111, as European Union members are split on whether to join the United States in banning Russian oil.
Some, such as Germany, say the bloc is too reliant on Russian supplies, while the Baltic states and Poland have been urging a Russian oil embargo, as part of sanctions on Moscow.
European shares have moved cautiously higher. The FTSE 100 index in London has risen 39 points, or 0.5%, to 7,481. The German market has advanced 0.8% while France is up 0.7% and Italy is nearly 1% higher.
On the stock markets, shares are pushing cautiously higher. The UK’s FTSE 100 has gained 39 points, or 0.5%, to 7,482 while Germany’s Dax is 1% ahead, France’s CAC has risen 0.76% and Italy’s FTSE MiB is up nearly 1%.
The pan-European Stoxx 600 index has edged 0.5% higher, after posting its biggest weekly gain since November 2020 last week.
Crude oil has given up earlier price gains and is trading lower on the day in a volatile market. Brent crude has lost 1.3% to $114.09 a barrel while US light crude is off 2% at $109.8 a barrel.
While British and European natural gas prices are up a bit again today, they remain far below the record highs hit at the start of this month, when the British gas contract soared above 500p a therm and Dutch gas hit €200 per megawatt hour.
Panmure Gordon’s chief economist Simon French says this means the UK energy price cap would rise by 13% in October, rather than 50% as feared – but this will obviously depend on where gas prices go from here.
Quietly UK natural gas prices have pulled back from more than 500p/therm in early March to close to 200p/therm today. Taking the fwd curve, the October price cap increase would be ~+13% rather than +50% speculated. This is backdrop to policy intervention: a v fast moving target!
— Simon French (@shjfrench) March 22, 2022
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UK fuel prices slip – RAC
Yesterday was the first day this month when fuel prices did not rise to new record highs, according to the RAC motoring group.
RAC fuel spokesman Simon Williams said:
Monday marked the first day this month where average fuel prices didn’t reach new record heights. Prices steadied with very slight reductions in both petrol and diesel perhaps indicating that retailers may have finished passing on their increased wholesale costs for the time being.
To put things in perspective for drivers the delivered wholesale price of petrol currently stands at £1.30 and diesel at £1.48. With prices this high before retailer margin and 20% VAT are added, it’s clear we are in a tough place when it comes to being able to afford to drive.
This is why it’s crucial the chancellor takes decisive and meaningful action in his spring statement that helps hard-pressed drivers and businesses.
Rishi Sunak is expected to announce a fuel duty cut, among other things.
Updated
Parents already feeling the squeeze from higher food and energy bills could soon be facing higher childcare costs as nurseries struggle to stay open amid their own surging energy bills and higher staff costs, writes Jenn Selby.
Research found 95% of nurseries in England do not have enough funding to cover basic costs after Covid hit.
Hundreds of thousands of people of colour may be paying an “ethnicity penalty” of at least £280 a year each in higher car insurance costs, an investigation by Citizens Advice has claimed.
The national charity said its year-long investigation had uncovered a “shocking trend” of people of colour paying a lot more for motor cover than white people, and that the penalty was up to £950 in some locations, writes my colleague Rupert Jones on the Money desk.
Updated
Here’s our full story on Shell’s reported U-turn on its exit from a controversial oil field off the Shetlands.
Climate activists have reacted with concern to reports that Shell is reconsidering its decision to abandon development of the Cambo oilfield, warning that such a reversal would further threaten emissions reductions targets, writes my colleague Jasper Jolly.
The fossil fuel producer could U-turn on a decision to pull out of the North Sea project because the “economic, political and regulatory environment had changed enormously since the decision was announced just three months ago”, according to sources cited by the BBC.
Mark van Baal, the leader of the campaign group Follow This, said a decision to develop Cambo would contravene guidance by the International Energy Agency, a respected global body. Last year the IEA said the exploration and development of new oil and gas must stop immediately if the world is to have any chance of limiting global heating to 1.5C, the target set at the 2015 UN climate talks in Paris. Shell has itself pledged to reach net zero emissions by 2050, but has not outlined detailed steps of how it will reduce its fossil fuel output.
“Any new fields will be stranded if we are to meet the Paris climate targets,” van Baal said, adding that Shell’s pledge to reach net zero by 2050 would be “really empty without action this decade”.
“We know this is a response to the Ukraine war,” he said. “The only good response to the Ukraine war is to replace Russian fossil fuels with renewables.”
British and Dutch gas prices are rising again today in a volatile market, amid forecasts for colder weather.
The British gas for day-ahead delivery rose 10p to 219p per therm this morning, while the Dutch contract increased €1.88, or 2%, to €94.28 per megawatt hour.
Analysts at Refinitiv said:
The cold snap expected next week [in Europe] may lift residential consumption and provide a bullish signal to the prompt [prices].
However, fears over supply disruption have waned, as gas flows from Russia have remained steady, despite the escalating war in Ukraine.
EU leaders to jointly buy gas, LNG, hydrogen for next winter – draft statement
Leaders from EU countries will agree at a summit this week to jointly buy gas, liquefied natural gas and hydrogen ahead of next week, according to a draft summit statement, seen by Reuters.
The invasion of Ukraine by Russia, Europe’s top gas supplier, has sent energy prices surging and left the EU scrambling to cut Russian gas use this year – which will require higher imports from other countries such as Qatar and the United States.
The draft statement for the EU leaders’ summit on Thursday and Friday reads:
With a view to next winter, member states and the Commission will urgently... work together on the joint purchase of gas, LNG and hydrogen.
The draft statement said countries agreed to coordinate measures to fill gas storage and start doing so “as soon as possible”.
The European Commission last year had already proposed a system for EU countries to jointly buy strategic stocks of gas to provide a buffer against potential supply disruptions.
Investec economist Sandra Horsfield said:
The bigger question is, however, how resilient the economy will be to the indirect consequences of the war in Ukraine, which is hard to gauge accurately in such a fluid situation. This will influence how much support the government will have to offer, and also have important consequences for the outlook for public finances by shaping likely tax receipts.
Perhaps the most encouraging news from today’s report, from the chancellor’s perspective, will have been the sizeable downward revisions to back data, which lowered reported borrowing for the fiscal year-to-date by £13.2bn and also saw 2020/21 borrowing down by £4.1bn relative to previous estimates.
This leaves a fiscal-year deficit for 2021/22 of £150bn or perhaps even less entirely within play, far below the £183bn the OBR had pencilled in at the time of the Budget. Such a material undershoot will add to room for manoeuvre for Mr Sunak to help buffer some of the cost-of-living crisis at tomorrow’s spring statement.
Bethany Beckett, UK economist at Capital Economics, has looked at what the chancellor might do tomorrow.
Notwithstanding the deterioration in the public finances in February, large revisions to the back data mean that borrowing in 2021/22 is on track to undershoot the OBR’s October 2021 forecast by a huge £23bn.
Even so, we suspect the sharper rise in debt interest costs in February than many expected may embolden the chancellor to keep a fairly tight grip on the public finances in tomorrow’s spring statement.
While the Chancellor may still have at least £23bn of headroom against his main fiscal rule for the underlying debt ratio to be falling in three years’ time, we expect hopes of a big handout at the spring statement tomorrow to be dashed.
The Chancellor will try to balance the near-term benefits of supporting households with the medium-term goal of fiscal restraint, allowing him to loosen policy ahead of the 2024 election. We have pencilled a £10bn support package, with roughly half aimed at easing the cost of living crisis for households.
Consumer confidence in the UK economy and future household finances has plummeted to the lowest levels since 2020, according to research from the consumer group Which?.
It urged businesses and government to do more to support the most financially vulnerable ahead of tomorrow’s spring statement.
Just one in 10 consumers think the economy will improve over the next 12 months, and three quarters think things will get worse - giving a net confidence score in the economy of -64. This compares to -19 just last month and is the lowest since October 2020.
Confidence in future household finances also dropped significantly, with consumers clearly anticipating that the worsening state of the economy will affect their own finances. This measure dropped to -40 compared to -21 in February, the lowest figure since the first national lockdown was announced in March 2020.
Financial difficulty has continued to grow among households, with more than half (54%) of consumers saying their household has had to make an adjustment – such as cutting back on essentials or dipping into savings – to cover essential spending in the past month.
Worryingly, an estimated 2.1 million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill in the last month. Rent and bills were the most common types of missed payment, with 6% of renters missing their rent payment and 5% of all consumers saying their household had missed a bill payment, typically on energy, phone or water bills.
Six in 10 (61%) of those who said they’d missed a bill payment said they had missed more than one - highlighting the extreme pressure that some households are under during the cost of living crisis.
Julian Jessop, economics fellow at free-market think tank the Institute of Economic Affairs, said the chancellor has room to ease the pressure on households and businesses in tomorrow’s spring statement.
The UK government borrowed about £5bn more than expected in February, as higher debt interest costs offset a rise in tax revenues. Nonetheless, favourable revisions to past months mean that borrowing is still on track to undershoot the OBR’s forecast for the fiscal year 2021-22 by about £24bn.
Looking forward, rising inflation will keep debt servicing costs high. But OBR analysis (published in last October’s Economic and Fiscal Outlook) has already shown that an inflation shock is likely to reduce borrowing overall, thanks to the boost to revenues, even with much larger hikes in official interest rates.
Inflation will surely reduce the burden of debt relative to national income, especially with real interest rates likely to remain low – even negative – for the foreseeable future. Indeed, debt has already fallen to 94.7 per cent of GDP, from a recent peak of more than 100 per cent.
In short, there is nothing in these numbers to prevent the chancellor from easing the pressure on households and businesses in tomorrow’s spring statement.
Here is our full story on the government borrowing figures.
Shell reconsiders exit from oil field off Shetlands – BBC
Energy giant Shell is reconsidering its recent decision to withdraw from a controversial large new UK oil field off the Shetland Islands, the BBC is reporting.
In December, Shell, which was planning to exploit the Cambo field along with the private equity-backed fossil fuel explorer Siccar Point, cited a weak economic case, along with potential regulatory delays, as its reason for deciding not to go ahead with the project.
However, the company appears to have made a U-turn. At the time, the price of crude oil was below $70 a barrel, which has since risen to $115 a barrel follow Russia’s invasion of Ukraine, which has raised fears over disruption to Russian oil supplies. Oil prices tend to be volatile, but could well remain high for a while as there is little hope of an imminent end to the war.
The BBC reported:
Shell has not yet sold its interests in the field. Sources close to the matter said that, while the company’s official position had not changed, it did acknowledge that the economic, political and regulatory environment had changed enormously since the decision was announced just three months ago.
Updated
European stocks have opened cautiously higher. The FTSE 100 index in London is 0.2% ahead at 7,459, a 16 point gain. Germany’s Dax is up 0.3%, France’s CAC edged up 0.1% and Italy’s FTSE MiB has posted the biggest gain, of 0.6%.
On the VAT front, the pub chain Wetherspoon has criticised the government’s plans to increase VAT to its pre-pandemic level of 20% for food sold in pubs, restaurants and cafes in April. VAT was cut to 5% in July 2020 to help struggling businesses.
Wetherspoon founder and chairman, Tim Martin, claims it’s not fair to charge VAT on food sold in pubs and restaurants, but not in supermarkets.
It doesn’t make economic sense that food bought in pubs, restaurants and cafes attracts VAT of 20%, when food is VAT-free in supermarkets.
Pubs, restaurants and cafes form integral parts of high streets, whereas supermarkets are often in edge-of-town or out-of-town locations. Favouring supermarkets over pubs is bad for high streets and town centres.
It is also an accepted principle of taxation that it should be fair and equitable, treating businesses that sell similar products in a similar way.
The hospitality industry understands that governments need tax – but there should be a sensible rebalancing, so that all businesses selling similar products are treated in the same way.
While public sector net borrowing was higher than expected last month, borrowing in the first 11 months of this fiscal year amounted to £138.4bn – less than half the sum borrowed a year earlier and almost £30bn less than estimated by the Office for Budget Responsibility in October.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, has looked at the data in detail.
Government expenditure on goods and services also appears to have been much higher than expected, perhaps due to unexpected Covid-related spending linked to Omicron. Meanwhile, central government tax receipts of £71.9bn in February were £3.2bn above the OBR’s forecast, primarily due to strength in VAT receipts, which have benefited from rising prices. But the margin of outperformance has declined since the autumn. GDP no longer is tracking a much higher path than the OBR expected, while households appear to have paid self-assessment taxes on a more timely basis this year than last.
Nonetheless, the substantial downward revision to borrowing in previous months leaves the full-year figure on track to greatly undershoot the OBR’s £183bn forecast; a figure between £150bn and £155bn now seems likely.
We expect the chancellor to tread cautiously tomorrow, and to announce a limited package of measures, amounting to a net giveaway in 2022/23 of about £13bn, or 0.5% of GDP. That probably would mean that households still will experience this year the biggest annual decline in their real disposable income since the Second World War.
Updated
The chancellor’s response to the higher-than-expected government borrowing was:
The ongoing uncertainty caused by global shocks means it’s more important than ever to take a responsible approach to the public finances.
With inflation and interest rates still on the rise, it’s crucial that we don’t allow debt to spiral and burden future generations with further debt.”
Look at our record, we have supported people - and our fiscal rules mean we have helped households while also investing in the economy for the longer term.
Sunak is expected to announce a fuel duty cut tomorrow to help struggling households, for example.
Public sector net debt excluding public sector banks was £2,326.8 billion at the end of Feb 2022.
— Office for National Statistics (ONS) (@ONS) March 22, 2022
At around 94.7% of gross domestic product, this maintained a level not seen since the early 1960s https://t.co/4jY1ciKEwo pic.twitter.com/dgIl1416XM
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Introduction: UK government borrowing higher than expected ahead of mini-budget
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
UK government borrowing rose more than expected last month, as rising inflation pushed up debt interest payments, handing Rishi Sunak disappointing news the day before he presents his spring statement in the Commons (a kind of mini budget).
The Office for National Statistics said the government’s budget deficit – the gap between spending and income – was £13.1bn in February, the second-highest borrowing figure for that month since records began in 1993. Economists had forecast a shortfall of £8.1bn.
Soaring inflation pushed up interest payments on government debt by more than 50% to £8.2bn, the highest February on record, reports our economics correspondent Richard Partington.
Public sector net borrowing excluding public sector banks was £13.1 billion in Feb 2022.
— Office for National Statistics (ONS) (@ONS) March 22, 2022
This was the second-highest Feb borrowing since monthly records began in 1993 - £2.4 billion less than the record set in Feb 2021 https://t.co/4jY1ciKEwo pic.twitter.com/uqQIKV8AS5
Over in the US, Federal Reserve chair Jerome Powell wants interest rates to rise faster, saying the Fed must move “expeditiously” to raise rates and possibly “more aggressively” to stop an upward price spiral from becoming entrenched. Goldman Sachs thinks this is a signal that a 50 basis point rate hike is coming, and is forecasting one at the May meeting, and another one in June.
Oil prices are climbing again, with Brent crude up 2.8% to $118.44 a barrel while US light crude is at $114.32 a barrel. EU foreign ministers discussed a potential oil embargo on Russia at a meeting in Brussels yesterday, and hopes of a breakthrough in the ceasefire talks between Ukraine and Russia are receding. However, EU members are split on whether to join the US in adding Russian oil to the sanctions.
Asian shares were lifted by energy and mining stocks, with Japan’s Nikkei closing 1.5% higher while Hong Kong’s Hang Seng gained 2.1% and the Shanghai Composite was little changed. Chinese markets are braced for policy easing, after it was flagged by authorities last week.
The Guardian has launched its new Russian asset tracker, in partnership with the Organized Crime and Corruption Reporting Project and other international news organisations. More than $17bn (£13bn) of global assets – including offshore bank accounts, yachts, private jets and luxury properties in London, Tuscany and the French Riviera – have been linked to 35 oligarchs and Russian officials alleged to have close ties to Vladimir Putin. It’s an ongoing project to track the wealth of Russia’s most powerful operators.
The Agenda
- 10.30am GMT: UK business committee hearing on energy market
- 11am GMT: UK CBI industrial trends survey for March
- 1.15pm GMT: European Central Bank president Christine Lagarde speaks
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