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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Motorists urged not to panic buy fuel; ‘10 days’ to save Christmas – as it happened

A signs show that unleaded petrol had run out at a fuel station, in Newcastle-under-Lyme, earlier today.
A signs show that unleaded petrol had run out at a fuel station, in Newcastle-under-Lyme, earlier today. Photograph: Carl Recine/Reuters

Retailer EG Group to impose £30 limit on fuel in UK

Some late news on the fuel situation.... British retailer EG Group is setting a purchase limit of £30 per customer buying fuel at its petrol stations.

The limit on all fuel grades is meant to ensure sites keep “running smoothly” at a time of “unprecedented” demand and supply challenges, the Blackburn-based company says, after a day that saw queues at some petrol stations.

But it won’t apply to heavy goods drivers, or emergency services vehicles.

An EG Group spokesperson said:

“Due to the current unprecedented customer demand for fuel and associated supply challenges we have taken the decision to introduce a limit of £30 per customer on all of our grades of fuel.

This excludes HGV drivers and emergency services due to their vital role at this time.

“This is a company decision to ensure all our customers have a fair chance to refuel and to enable our sites to carry on running smoothly. We kindly ask everyone visiting our sites to treat our colleagues, supply chain partners and customers with respect during these very challenging times. All of EG Group’s UK sites remain open and operational to serve customers.”

Closing post

Queues at a petrol station in Harleston, Norfolk, today
Queues at a petrol station in Harleston, Norfolk, today Photograph: Nils Jorgensen/REX/Shutterstock

Time to wrap up.

Here are our latest stories on the supply chain crisis that is gripping the UK tighter by the day, leading to problems delaying fuel, queues at the pumps, and warnings that prices in the shops will rise this autumn... with just 10 days to save Christmas....

Goodnight. GW

Hauliers in the UK: how are the staff shortages affecting you?

We would like to hear from new and experienced hauliers about the problems in the UK supply chains.

We’d also like to hear views from other parts of the haulage industry, including employers about how they’re coping with the staffing crisis.

The Licensed Taxi Drivers Association, which represents black cab drivers in London, says they’re seeking confirmation that taxis will still be able to access fuel set aside for essential services.

Reminder: the fuel suppliers say they’re adapting their delivery schedules to ensure sufficient supplies, and prioritising deliveries to stations with high demand, to limit disruption.

Updated

Shelter: gas crisis is a perfect storm for homelessness

The housing charity Shelter has warned that its helpline is being inundated with calls from people who are terrified of being evicted, as the gas price spike helps create a “perfect storm for homelessness”.

A survey carried out by YouGov on behalf of Shelter found that 26% of renters already couldn’t keep their homes warm in winter, equivalent to 5.3 million people in England – even before the latest jump in bills.

With energy prices rising, the furlough scheme ending on Thursday and Universal Credit being cut a week later, the charity has called for urgent action to protect renters from the threat of eviction and homelessness.

Polly Neate, Shelter’s chief executive, said:

“The triple whammy of the furlough scheme ending, cuts to Universal Credit and rocketing fuel prices may be the final straw for many renters barely hanging on to their homes.

“We are facing a perfect storm for homelessness to rise, and the new housing secretary must get a handle on the situation before winter arrives.”

Updated

Here’s our Q&A on the causes of the crisis in petrol supplies, the possible solutions, and why the wider HGV driver shortage could last for a while....

Supply chain crisis: Tories poised to U-turn on foreign worker visas

A petrol tankers leaving the Navigator Terminal in Essex today
A petrol tankers leaving the Navigator Terminal in Essex today Photograph: Martin Dalton/REX/Shutterstock

Ministers are poised to agree an extraordinary post-Brexit U-turn that would see foreign lorry drivers allowed back into the UK to stave off shortages threatening fuel and food supplies, my colleagues Rowena Mason and Rob Davies write:

Boris Johnson ordered a rapid fix on Friday to prevent the crisis escalating. Ministers met in a bid to agree a short-term visa scheme permitting potentially thousands more lorry drivers from abroad to come to the UK.

The prime minister is understood to have weighed in to demand a compromise from his warring cabinet, which was split over the issue, following scenes of chaotic queues at some petrol stations and warnings from suppliers that the shortage of fuel on forecourts could worsen.

The shortage of up 100,000 heavy goods vehicle (HGV) drivers – exacerbated by the pandemic and Brexit – has also impacted the food sector and other industries. The British Retail Consortium warned on Friday that significant disruption to Christmas was “inevitable” unless the problem is contained in the next 10 days.

The prime minister and his cabinet have publicly played down the extent of the problem. A senior government source said some ministers appeared keen to avoid the perception that Brexit was to blame, and were therefore reluctant to relax immigration rules.

However, the Office of National Statistics revealed that millions of people were already facing empty supermarket shelves, with one in six struggling to find “essential” items.

Amid growing alarm within government about the threat to supermarket and fuel supplies, ministers are poised to allow lorry drivers to come to the UK on short-term visas, probably for a number of months.

On Friday night, cabinet sources insisted that discussions were still ongoing, but the plan was expected to be signed off over the weekend....

More here:

Here’s another example of a petrol station out of action today:

A closed Tesco petrol station at Eastbourne, East Sussex, UK.
A closed Tesco petrol station at Eastbourne, East Sussex, UK. Photograph: Jon Santa Cruz/REX/Shutterstock
A closed Tesco petrol station at Eastbourne, East Sussex, UK.
A closed Tesco petrol station at Eastbourne, East Sussex, UK. Photograph: Jon Santa Cruz/REX/Shutterstock

Meanwhile in the markets...stocks finished lower in London and across Europe, as investors awaited developments in the Evergrande debt crisis.

China’s heavily indebted property developer moved closer to default today, after appearing to miss a deadline to pay $83.5m in bond interest to overseas investors.

The uncertainty knocked almost 1% off European stocks, while the UK’s FTSE 100 dipped by 0.4% or 27 points. The pound also slipped

Evergrande is now in uncharted waters and enters a 30-day grace period. It will default if that passes without payment.

“These are periods of eerie silence as no one wants to take massive risks at this stage,” said Howe Chung Wan, head of Asia fixed income at Principal Global Investors in Singapore.

“There’s no precedent to this at the size of Evergrande … We have to see in the next 10 days or so, before China goes into holiday, how this is going to play out.”

And on Wall Street, Nike’s shares have fallen 6% after it also warned of delays during the holiday shopping season, blaming a supply chain crunch, and also flagged higher freight prices and rising input costs.

Hand written signs stuck to a petrol pump with no fuel available at a Shell filling station in Manchester today
Hand written signs stuck to a petrol pump with no fuel available at a Shell filling station in Manchester today Photograph: Phil Noble/Reuters

Car leasing provider LeaseCar.uk is also urging motorists not to panic buy fuel.

A spokesman explains:

“We’re urging our customers not to fill up unless they have to. As we understand the situation there is no need to panic buy petrol or diesel.

If the local fuel station doesn’t have fuel you should be able to find one nearby that does. Drivers should carry on as usual and not panic as filling up unnecessarily will only worsen the supply problem.”

Updated

Motorists queuing for diesel and unleaded fuel at Tesco in Penarth, South Wales today
Motorists queuing for diesel and unleaded fuel at Tesco in Penarth, South Wales today Photograph: Ben Evans/Huw Evans/REX/Shutterstock

A petrol station in Sheffield, which was closed today
A petrol station in Sheffield, which was closed today Photograph: Danny Lawson/PA
A petrol station in Sheffield, which was closed today

Jonathan Freedland has written about how Brexit – and the specific deal Boris Johnson negotiated with the European Union – is the central cause of the problems at petrol stations and in the shops.

Here’s a flavour:

Where once a haulier from Łódź might do a trip that took in Leicester and Lyon, the British leg is now so tangled in red tape as to be not worth the bother. We should hardly be surprised. As Sam Lowe, trade sage at the Centre for European Reform, puts it drily: “We did make a big decision to differentiate ourselves from our neighbours.”

Or listen to Paul Kelly, a major and now struggling turkey supplier in Essex: “The reason we’re having all these issues is entirely because of Brexit and nothing else.” The issue in question is the shortage of labour: “The people who we used to have coming into the country to pluck and pack our turkeys: they’re no longer allowed in.”

It’s as simple as that. And yet few dare say it so baldly. Note the words of Becton, Dickinson, the NHS’s main supplier of blood collection tubes, when asked to explain the shortage of sample bottles that led GPs to be told to stop performing blood tests for most of this month. The company blamed “transportation challenges” and “UK border challenges”. Hmm, border challenges. I wonder what those might be.

It’s tempting for remainers to look at the forecourt queues or depleted supermarket shelves and say, “we told you so” – though if anything, “project fear” painted a rather less apocalyptic picture. Still, that tells only half the story. For one thing, as Lowe says, it was not “baked in” to the act of leaving the EU that, for example, we’d make it so much more difficult for hauliers to operate here. Instead, we are living with the consequences of the specific deal Boris Johnson chose to do with Europe. There were other options that would have kept us closer....

Here’s the full piece:

The RAC warns that motorists may face higher prices at the pumps soon, due to increasing oil prices rather than shortages.

RAC fuel spokesman Simon Williams said:

“The supply issues affecting a small number of petrol forecourts shouldn’t impact the prices drivers pay to fill up.

“But unfortunately the price of oil, which has the biggest influence on what drivers pay the pumps, is continuing to rise at the moment. This may lead to fuel prices going up in the coming days which would be yet more bad news for drivers as a litre of unleaded is already over 21p a litre more expensive than a year ago.”

Brent crude, the international benchmark, rose 0.75% to hit $77.87 per barrel today - its highest level since October 2018.

In mid-August it dropped to around $65/barrel, but has rallied since, settling at a three-year high last night.

Delays at UK airports as IT failure hits biometric passport gates

Passengers arriving at airports across the UK faced major queues on Friday after an IT failure hit the electronic passport gates operated by Border Force.

Heathrow, Manchester and Edinburgh airports all reported problems with the gates, which allow travellers with biometric passports to pass through border control without a manual inspection.

Passengers also reported problems at East Midlands airport.

Edinburgh airport said:

“The UK Border Force (UKBF) IT issue is nationwide and UKBF teams are working to resolve this.

“All available UKBF staff are in the arrivals hall to carry out necessary checks and allow passengers to pass through the border as quickly as possible. Thank you for your patience.”

Arundel and South Downs MP Andrew Griffith tweets that the UK has plenty of fuel to go round, so there’s no need to buy more than normal:

(It was Lance Corporal Jones who urged Dad’s Army members not to panic, rather than Captain Mainwaring, but you get the point...)

A delivery of fuel at a Shell garage in Clapham, London, today.
A delivery of fuel at a Shell garage in Clapham, London, today. Photograph: Yui Mok/PA

A sign at a fuel station in Newcastle-under-Lyme, Britain, today.
A sign at a fuel station in Newcastle-under-Lyme, Britain, today. Photograph: Carl Recine/Reuters

Long queues for petrol in Harlow

In Harlow, there are long queues of cars outside petrol stations, with many customers apparently panic buying, my colleague Luke Harding reports.

The city centre is badly clogged with traffic.

And there are no taxis available from Harlow railway station because – I was told by Metro, the resident cab firm – of the worsening “fuel crisis”.

The jams are having a knock-on effect. Some patients travelling to the local Princess Alexandra Hospital were late for appointments, with others facing long waits for
transport home.

Anglo-Dutch oil group Shell has said it was seeing increased demand for fuel at some of its petrol stations, and is changing delivery schedules in response.

A spokesperson said (via Reuters):

“We are seeing an increased demand today for fuel at some of our stations, which may in some instances result in larger queues.

We are adapting our delivery schedules to ensure sufficient supplies for our customers.”

Back on the fuel situation, BP says it is prioritising deliveries of fuel to British sites with the largest demand and seeking to minimise the amount of time when its petrol and diesel pumps are empty.

The oil company explained:

“We continue to work with our haulier supplier to minimise any future disruption and to ensure efficient and effective deliveries to serve our customers.

We are prioritising deliveries to sites with largest demand and seeking to minimise the duration of stock outs.”

Here’s our news story on the warning that supermarket prices will soon rise, meaning a pre-Christmas cost of living squeeze.

FT: Boris Johnson agrees to relax visa rules for foreign truck drivers

In a sign that ‘moving heaven and earth’ could be happening, the Financial Times is reporting that Boris Johnson has given the go-ahead to ministers to relax UK immigration rules to allow more foreign truck drivers into the country.

The move is intended to ease shortages at petrol stations and wider economic disruption (and is something which retailers have been urging for several weeks now).

The FT says:

One person close to the situation said the prime minister had issued instructions to fix the escalating problem. “Boris wants this solved,” he said.

Meanwhile an ally of Johnson said: “Boris is completely fed up with bad headlines on this and wants it sorted and doesn’t care about visa limits any more.”

Home secretary Priti Patel was previously the strongest opponent of giving temporary visas to foreign HGV drivers, arguing it would lead to a stampede of different industries demanding similar preferential treatment.

But with fears of panic buying at petrol stations, Patel has dropped her resistance and now agrees with transport secretary Grant Shapps that the proposal is worth pursuing, government insiders said.

More here.

It’s a month since the managing director of Iceland warned that the supply chain crisis could ruin Christmas, unless the UK government allow retailers to recruit HGV drivers from abroad.

Although, as Shapps pointed out this morning, there are shortages in other countries too, it’s not clear how many drivers can be quickly recruited....

BRC: ten days to save Christmas

The lobby group that represents Britain’s retail industry has warned that unless more lorry drivers are found in 10 days to alleviate an acute shortage then significant disruption in the run-up to Christmas is inevitable.

“HGV drivers are the glue which hold our supply chains together. Without them, we are unable to move goods from farms to warehouses to shops,” said Andrew Opie, director of food & sustainability at the British Retail Consortium.

“Unless new drivers are found in the next ten days, it is inevitable that we will see significant disruption in the run up to Christmas.”

(via Reuters)

CBI: UK could face shortages of key goods unless government acts

The CBI is urging the government to add HGV drivers to the shortage occupation list, after reporting a slowdown in retail sales and order growth, and worryingly low stockpiles of goods.

Retail sales were poor for the time of year this month for the first time since March 2021 (just before Covid-19 restrictions were relaxed), according to the latest CBI monthly Distributive Trades Survey.

Retail distributors reported that stock volumes, in relation to anticipated demand, hit a new survey record low for the sixth consecutive month, and are expected to get worse.

Ben Jones, CBI Principal Economist, warned that the UK could face shortages of key goods unless the government takes action:

“Demand cooled for retailers in the year to September after running red hot over the summer, pushing sales below seasonal norms for the first time since March. But volumes are expected to return to more typical levels for the time of year next month.

“Low stock adequacy remains a concern across the distribution sector. Respondents to our survey have told us that they do not expect the transport and production issues that are causing these shortages to ease significantly until at least next year and, in some cases, beyond.

“The Government should take steps to relieve some of the pressure on the distribution sector to ensure we don’t face shortages of key goods in the coming months. This should start with immediately reviewing and updating the Shortage Occupation List, including adding HGV drivers.”

British people report gaps in the shops

One in six people couldn’t buy some essential food items earlier this month, as the UK’s supply chain problems worsened.

A survey by the Office for National Statistics found that 61% of people said that everything they needed had been available to buy in the last two weeks.

Around 18% said they couldn’t buy essential food items as they were not available, and a quarter (25%) said they had not been able to buy non-essential food items.

The survey, conducted from 8 to 19 September, also found that 4% hadn’t been able to buy fuel, and 4% weren’t able to obtain medicine.

Almost six in ten people reported some problems when food shopping -- such as less variety on the shelves, or having to visit more shops in search of produce, as well as simple shortages.

The most commonly reported were that there was less variety in the shops than usual (40%), that items they needed were not available but they could find a replacement (20%), that items they needed were not available and they could not find a replacement (20%), or that they had to go to more shops than usual to get what they needed (13%).

The ONS’s latest Coronavirus and the social impacts on Great Britain survey also found that 22% of adults who had tried to buy medicine or get a prescription reported experiencing some differences compared with the usual:

The most commonly reported were that they had to wait longer for their prescriptions (13%), that items they needed were not available but they could find a replacement (5%), that items needed were not available and they could not find a replacement (4%), or that they had to go to more pharmacies than usual to find what they needed (4%).

Back in the financial markets, bitcoin has plunged 7% after China’s central bank intensified its crackdown, by calling all digital currency activities illegal.

CNBC has the story:

In a Q&A posted to its website, the People’s Bank of China said services offering trading, order matching, token issuance and derivatives for virtual currencies are strictly prohibited.

Overseas crypto exchanges providing services in mainland China are also illegal, the PBOC said.

“Overseas virtual currency exchanges that use the internet to offer services to domestic residents is also considered illegal financial activity,” the PBOC said, according to a CNBC translation of the comments. Workers of foreign crypto exchanges will be investigated, it added.

This has knocked bitcoin down to around $41,600, from around $44,700 last night.

There are also electricity supply problems in China, Bloomberg explains, with high fuel prices and a crackdown on pollution leading to power cuts:

Power rationing and forced cuts to factory production in China are widening amid electricity supply issues and a push to enforce environmental regulations.

The curbs have expanded to more than 10 provinces, including economic powerhouses Jiangsu, Zhejiang and Guangdong, the 21st Century Business Herald reported Friday. Several companies have reported the impacts of power curbs in filings on mainland stock exchanges.

Local governments are ordering the power cuts as they try to avoid missing targets for reducing energy and emissions intensity. The country’s top economic planner last month flagged nine provinces for increasing intensity over the first half of the year amid a strong economic rebound from the pandemic.

Meanwhile record high coal prices are making it unprofitable for many power plants to operate, creating supply gaps in some provinces, the Business Herald reported. If those gaps expand the impact could be worse than power curtailments that hit parts of the country during the summer.

Last night, HGV driver Tom Reddy wrote an informative Twitter thread explaining why fuel tanker drivers are in short supply (and also advising against panic buying...):

AA: no shortage of fuel

Motoring body the AA has insisted that there’s no shortage of fuel, and that most forecourts are operating as normal.

Edmund King, the AA’s president says:

“There is no shortage of fuel and thousands of forecourts are operating normally with just a few suffering temporary supply chain problems.

“Fridays and the weekend always tend to be busier on forecourts as drivers either combine filling up with shopping runs, prepare for weekend trips or refuel for the start of the new working week.

King insists there’s no need for drivers to fill their tank specially -- as the shortage of fuel tanker drivers was ‘a manageable’ problem:

“Drivers should not fill up outside their normal routines because, even if the occasional petrol station is temporarily closed, others just down the road will be open.

“It is now clear that there have been occasional delays over recent weeks that have been managed with hardly anyone noticing. This was a manageable problem.

“Meanwhile road fuel demand is down to 92% of pre-pandemic levels according to monitoring by the Government.

“Also, the average pump price of petrol has risen half a penny in the past two days when it should be 2.5p lower after cheaper E10 (10% ethanol) became the standard petrol on forecourts on 1 September.”

Motorists queue for petrol at the Morrisons petrol Station in Belle Vale, Liverpool this morning
Motorists queue for petrol at the Morrisons petrol Station in Belle Vale, Liverpool this morning Photograph: Peter Byrne/PA

Grant Shapps insisted this morning that motorists should carry on as normal, saying:

“The advice would be to carry on as normal, and that is what BP is saying as well.”

Asked about the Petrol Retailers Association warning that drivers should keep a quarter of a tank of fuel in their car in case forecourts ran out, Shapps downplayed the issue and said motorists should “carry on as normal” and not panic buy,

“I’m not saying there is no issue. There has been an issue. Although there are stresses and strains in the system, by and large it has not impacted on people’s everyday life when it comes to filling up with petrol.

There is not a shortage of fuel at the refineries.”

But there are some reports this morning of longer than usual queues at some petrol stations, after BP closed “a handful of sites temporarily” due to fuel supply issues

Reuters says:

Queues formed at some petrol stations in London and the southern English county of Kent on Friday as motorists rushed to fill up, Reuters reporters said.

This is from the BBC’s Sonja McLaughlan:

Here’s journalist Polly Curtis:

But other people are reporting that there are no queues in the area:

Full story: Grant Shapps will do ‘whatever it takes’ to fix lorry driver shortage

The UK transport secretary, Grant Shapps, said he would “move heaven and earth” to solve the nationwide shortage of truck drivers that threatens fuel supplies at some petrol stations, adding that motorists should not panic as the problem would be “smoothed out relatively quickly”.

Shapps said he would consider all options, including the possibility of issuing short-term skilled worker visas to tap mainland Europe’s pool of potential HGV drivers.

“I’ll look at everything,” he told Sky News.

“I wouldn’t rule anything out. We will move heaven and earth to do whatever it takes to make sure shortages are alleviated with HGV drivers.”

Boris Johnson asked for ‘emergency’ food deal, says Bolsonaro

The Brazilian president, Jair Bolsonaro, has claimed Boris Johnson asked him for an “emergency” deal to ease shortages of an unspecified food product, amid concerns about further disruption to supermarket supplies.

A lack of drivers and food pickers, as well as carbon dioxide used to stun animals for slaughter and create dry ice to keep food fresh, has led to fears that some goods will be missing from shelves in the run-up to Christmas.

Downing Street has urged people not to panic-buy, after the announcement by BP that there may be a lack of fuel at some petrol stations and the managing director of Iceland supermarket warned food supplies could come under threat within days, not weeks.

Government insiders worry about a return to the days leading up to the first coronavirus lockdown, where shelves were left bare as people stockpiled items such as toilet roll.

Bolsonaro made the claim about Johnson’s request after a meeting between them in New York earlier this week at the UN general assembly. The prime minister had stressed the benefits of the Covid-19 vaccine to his Brazilian counterpart.

However, speaking in his weekly webcast to supporters, Bolsonaro recalled that Johnson “wants an emergency agreement with us to import some kind of food that is lacking in England”, according to Reuters, though he did not specify what the product was.

It is understood the UK government regards the claim as untrue. More here.

The HGV driver shortage means consumers face longer waits, and rising prices for goods.

London-based digital freight forwarding company Zencargo CEO Alex Hersham explains:

“We have actually been experiencing a shortfall in hauliers in the UK for a number of years, but this has intensified because of Brexit, which is making it more difficult for hauliers to recruit from mainland Europe, and COVID-19, which is continuing to force drivers to self-isolate. We believe there’s currently a shortage of between 40,000 and 70,000 drivers. Earlier this year some sources are saying 100,000 and there is limited evidence to suggest the situation has changed substantially. This means the available pool of drivers are getting booked up extremely quickly, and prices are naturally starting to increase.

“The upshot is that consumers could potentially face weeks of delays when ordering products online, whether it be furniture, cosmetics, clothes, or bicycles. On top of this, the unprecedented driver demand is increasingly leading to rising bids for those who are available. This additional cost could ultimately end up being passed onto customers. We are hearing that some drivers are switching jobs at the last minute in order to take higher-paid work from companies desperate to get their goods moved from A to B, which is causing even more disruption.

“Despite the UK Government announcing certain measures designed to alleviate the shortage, we are very likely going to experience significant delays, meaning consumers are going to be waiting a while to receive their items.”

Yesterday, home furnishings retailer DFS predicted that furniture prices will rise next year because of production and supply chain bottlenecks.

Labour Party chair Anneliese Dodds has said the UK Government’s handling of Brexit was partly to blame for the crisis, by putting extra pressure on the HGV sector.

Speaking to Sky News, Dodds said:

“There are shortages of HGV drivers in other countries.

“I have to say, however, that there have been big failures in planning for this situation and the additional red tape that has been created, which was not inevitable, it was not an inevitable result of Brexit in many cases, but that hasn’t been tackled by Government.

“I talk to advanced manufacturers in my patch for example, and they tell me that now they have got to fill in dozens of pages of paperwork and that is quite a tall order for a HGV driver if they have got to be dealing with all of that, as well as getting goods from one place to another.

“So undoubtedly the Government’s method of implementing Brexit has had an impact overall on the system, but there are other factors that are in play here.

Data released yesterday by the Office for National Statistics showed that additional paperwork and transportation costs remain the top challenges for UK firms exporting and importing.

The ONS said there was a large increase in companies who “experienced a challenge in importing or exporting” in January 2021 [the first month after the UK-EU Brexit deal] with levels “broadly stable” since.

ONS survey of import and export challenges

Dodds also urges ministers to listen to businesses who say HGV drivers should be eligible for skilled worker visas.

“And I think their failure to consider whether they need to ask that Migration Advisory Committee about a different approach to shortage occupations - I really do think they should be engaging with business on this and listening to them.”

Supermarket prices "to rise within weeks" as costs passed on

Shelves at a supermarket in Manchester, Britain, earlier this week.
Shelves at a supermarket in Manchester, Britain, earlier this week. Photograph: Xinhua/REX/Shutterstock

Consumers have been warned to expect higher prices in the supermarkets within weeks, as the supply chain problems drive up costs.

David Sables, CEO of consultancy Sentinal which advises suppliers to supermarkets, told Radio 4 this morning that the sector face cost pressures across the board.

Shortages of labour in production, the driver shortage, and higher costs for shipping, commodities and raw materials are all pushing up costs, putting pressure on suppliers and retailers to pass those costs on.

Sables explains:

We’ve never seen this level of suppliers coming to us and speaking about planned cost price increases.

Sables explains that ten or 12 weeks ago (a typical lead time that suppliers give retailers) people were looking at an eight to ten percent cost price increase.

That doesn’t all go onto the shelf -- typically retailers will absorb some of the costs, as will suppliers to a certain extent.

But consumers will see an impact, Sables predicts:

I would expect to see, across the next six to eight weeks, something like five percent of that going across the board onto the prices on shelves.

Shoppers will see those price rises on the shelves “certainly before we start to get into the Christmas period”, Sables adds, so over the next six weeks or so.

Q: So it could well be a more expensive Christmas?

Sables says Christmas is a project ‘all on its own’, as prices tend to be agreed with suppliers earlier in the year, around June.

But that creates problems for suppliers, who have to bear any price pressures that build up after an agreement is reached.

So with fuel prices rising, and CO2 prices also expected to increase sharply, suppliers may need to “go a second time on pricing”, with another wave after Christmas, he adds.

German manufacturers hit by 'bottleneck recession'

Supply chain problems are also hammering German factories, as voters prepare to head to the polls this weekend.

Ifo, a thinktank based in Munich, has reported that manufacturers are suffering a ‘bottleneck’ recession, as they simply can’t get the components and commodities they need.

This has knocked business morale in Europe’s largest economy, for the third month running.

Ifo President Clemens Fuest says:

“Problems in the procurement of raw materials and intermediate products are putting the brakes on the German economy,”

“Manufacturing is experiencing a bottleneck recession.”

Improving conditions for HGV drivers needs to be part of the long-term solution, hauliers say, but a short-term visa scheme for overseas lorry drivers would help tackle the immediate crisis.

Reuters explains:

The trucking industry body, the Road Haulage Association, has called on the government to allow short-term visas for international drivers to enter Britain and fill the gap, while British drivers are being trained for the future.

“It’s an enormous challenge,” Rod McKenzie, head of policy at the RHA, told Reuters. In the short-term he said international drivers could help, even if it may be too late to help Christmas, and in the longer term the industry needed better pay and conditions to attract workers.

“It’s a tough job. We the British do not help truckers in the way that Europeans and Americans do by giving them decent facilities,” he said.

The British haulage industry says it currently needs around 100,000 more drivers after some 25,000 returned to Europe before Brexit and the pandemic halted the qualification process for new workers.

Grant Shapps, though, is arguing that it’s a wider problem than just the UK:

The transport secretary has told Times Radio:

“It’s a bit of a global problem so it’s not immediately obvious that opening up visas would actually resolve the problem but we’ll move heaven and earth on this.”

Our financial editor Nils Pratley argues this morning that the government should heed calls for visa rules to be relaxed temporarily for HGV drivers.

Having failed to be swayed by earlier warnings for retailers, the petrol delivery problems should trigger a rethink, he writes:

Higher wages and signing-on bonuses for drivers (well deserved after years of seeing their skills under-priced) can’t alter the basic lack of qualified individuals. Pragmatism is required.

Nobody would pretend that relaxing visa rules is a cure-all, and certainly not one that would come in time for Christmas: EU countries have their own shortages.

And, yes, the long-term answer is obviously more training and permanently higher wages. But the shortage of drivers looks likely to last well into 2022. Tweaking visa rules in preparation would be a minor act of common sense.

Challenged on how Brexit has made the lorry driver shortage worse, Grant Shapps replies that it’s a global problem, with shortages in other European countries too.

He argues that Brexit provided ‘part of the solution’; leaving the EU allowed the UK to change driving tests and double testing capacity.

But...Road Haulage Association warned earlier this month that those streamlined tests are a risk to road safety,

The BBC explained:

Andrew Malcolm, chief executive of the Malcolm Group, was also sceptical, saying the new regulations would result in people who had sat a single test being allowed to drive the largest articulated lorries.

Mr Malcolm told the BBC: “In principle, I can understand what they’ve done, to try to unlock test dates.

“However, I am seriously concerned about the safety aspect. I think they’ve cut far too much out the process of the test - that’s my biggest worry.”

Road haulage firms have also warned that Brexit exacerbated the UK’s existing problems with a shortfall in lorry drivers.

Shapps doesn't rule out using army drivers

Q: Does ‘moving heaven and earth’ include having a standby plan to deploy army drivers using army tankers to deliver fuel if necessary (as has been reported)?

Shapps doesn’t rule it out:

I’ll look at anything that’s reasonable.

But it’s probably not the solution in “terms of sheer numbers”, Shapps adds.

He says we’re not in a position where drivers have stopped driving, as has happened previously (a nod to the 2000 crisis when protest over petrol duties led to pumps running dry).

Q: So you might, but you hope not to have to do it?

We will always look at all the different things which are required.

Grant Shapps has also spoken to Radio 4’s Today Programme, and also arguing that more testing, higher pay and better conditions should fix the HGV driver shortage.

Q: Long-term fixes won’t get petrol to the forecourt now. How bad must things get before you allow, at least temporarily, more drivers from abroad?

The transport secretary repeats his line about moving heaven and earth, and doing “anything required” to make sure lorries carry on moving goods, services and petrol around the country.

Q: So does moving heaven and earth including allowing foreign drivers come in?

I’ll do anything that actually helps, Shapps replies.

A lot of people have an HGV license, but it’s lapsed in the years since they left the market - often because of cheaper European labour, he claims.

We want to get those people back in, so testing is a very big block on it.

Q: Can that be done in time to avoid shortages?

A lot of people are coming back into the market, Shapps insists, due to higher wages.

He says a UK milk distributor are offering £78,000 to drive a lorry.

The principle bottleneck is getting drivers tested and onto the roads.

Q: So are you ruling out adding EU drivers to the shortage occupation for now, while we hold our nerve [and try to recruit more UK drivers]?

Shapps doesn’t say whether this is going to happen or not, saying just that:

“We will do whatever is required in order to make sure there are sufficient drivers”.

Shapps adds that some of the six million Europeans with settled and pre-settled status to live and work in the UK are lorry drivers -- they could be enticed back to the country.

But he argues that bringing in drivers from overseas ‘undercuts’ the marketplace and weakens conditions, creating a systemic long-term problem where salaries become unattractive.

Updated

Introduction: Government says we'll move heaven and earth as HGV crisis deepens

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

Pressure is mounting on the UK government today as a severe lack of lorry drivers nationwide disrupts fuel supplies to some petrol stations across the country.

Ministers are being urged to ease immigration rules as an emergency measure to attract HGV drivers from overseas, as the industry warns that around 100,000 are needed to fix the supply chain crisis.

Speaking on Sky News this morning, transport secretary Grant Shapps says he won’t rule anything out, but insists the real problem is the bottleneck in getting drivers tested, on top of a systemic shortage of drivers over many years.

Asked if the government will add lorry drivers to the list of shortage occupations, meaning overseas drivers could receive skilled visas to operate in the UK, Shapps says:

We’re absolutely not ruling anything out at all. We want to see this problem resolved, but we also want to see it resolved in the long term.

Q: A quick term fix would be short-term visas for drivers in Europe to come and work...

Shapps pledges to look at all possibilities:

I’ll look at everything, and we’ll move heaven and earth to do whatever we can to make sure that shortages are alleviated with HGV drivers.

But we need to look at the things that are going to make a difference, and the big problem is the testing of drivers.

The transport secretary also insists that the pandemic is the principle cause of the problem, as Covid-19 prevented people getting tested to replace people leaving the industry.

He also argues that the short term shortage should be resolved quickly, as there are twice as many tests on offer now.

“Many more tests are being made available now so we should see it smooth out fairly quickly.”

But can it be resolved fast enough to save Christmas?

Last night, Rod McKenzie of the Road Haulage Association trade body accused ministers of “government by inertia”, allowing the situation to get “gradually worse” in recent months.

He told BBC’s Newsnight.

“We have got a shortage of 100,000 (drivers),

“When you think that everything we get in Britain comes on the back of a lorry - whether it’s fuel or food or clothes or whatever it is - at some point, if there are no drivers to drive those trucks, the trucks aren’t moving and we’re not getting our stuff.”

Mr McKenzie insisted at people shouldn’t race out to panic buy fuel or food:

“I don’t think we are talking about absolutely no fuel or food or anything like that, people shouldn’t panic buy food or fuel or anything else, that’s not what this is about.

“This is about stock outs, it’s about shortages, it’s about a normal supply chain being disrupted.”

Speaking on Sky News, Grant Shapps also argues that the UK has relied on importing cheap labour from overseas, and need to make trucking more attractive and better paid - so he very much welcomes salaries going up, attracting people back to the sector.

It also needs to become more diverse, he argues, with most drivers white, male, often over 55, so offering better conditions should help being more people in.

Yesterday, BP said that up to 100 of its forecourts were short of at least one grade of fuel, with several forced to close entirely due to problems with supplies. Esso said that a handful of its petrol stations operated alongside Tesco Express stores were affected, while some of the supermarket chain’s own-branded sites are also suffering outages.

The fuel supply problems are the latest blow to the economy, as the energy crisis, rising inflation, workers shortages and a cost of living squeeze raise fears of a winter, or even an autumn, of discontent.

Britain’s farmers are warning that supermarket shelves will go empty and consumers will panic buy to try and get through the winter unless the Government takes urgent action to alleviate labour shortages.

The National Farmers’ Union (NFU) yesterday called for an urgent Covid Recovery Visa to allow firms to recruit from outside the UK to alleviate “crippling” labour shortages across the supply chain.

The head of the NFU, Minette Batters, wrote to Prime Minister Boris Johnson warning that the food and farming sector is on a “knife edge” due to a shortage of workers across the entire supply chain.... More here.

Also coming up today:

Financial markets are on edge as uncertainty over China’s indebted property group Evergrande weighs on investors.

Evergrande was due to pay an interest payment on an offshore bond at midnight in New York (5am UK time) - but there’s no official word as to whether it’s paid, leaving investors in the dark.

Evergrande, which owes around $300bn, is caught up in an unfolding storm as Beijing tries to crack down on excessive debt in its property sector...and a default could knock China’s property and banking sectors, weakening growth:

The agenda

  • 9am BST: Ifo survey of German business climate in September
  • 11am BST: CBI survey of UK retail sales (distributive trades) in September
  • 3pm BST: US new home sales for August

Updated

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