UK consumer confidence slides; less than half of fuel duty cut passed on – business live

UK consumer confidence slides; less than half of fuel duty cut passed on – business live

World News

Moscow stock market slides on second day after reopening

A board with the logo of the Moscow Exchange in downtown Moscow, Russia
Photograph: Yuri Kochetkov/EPA

The Russian stock market fell back today, wiping out much of Thursday’s rally when the exchange reopened for the first time in almost a month.

The Moex share index slid by 3.66% today, with every sector in the red, having gained 4.4% yesterday.

Limited stock trading resumed yesterday with several restrictions to prop up shares, including a ban on short-selling, and on foreign investors selling stocks. That helped to spark a rally yesterday, when oil and commodity stocks jumped.

Analysts have pointed out that these curbs meant Moscow’s market wasn’t operating properly, while the US dubbed it a “Potemkin market opening”.

Russia’s MOEX stock index
Russia’s MOEX stock index this year Photograph: Refinitiv

But despite these measures, airline Aeroflot shed another 18% today, on top of Thursday’s 16% drop. Sanctions have barred its jets from EU and UK airspace.

Gas giant Gazprom fell 12%, after the US and EC agreed a deal to cut Europe’s dependency on Russian gas.

Steel giant Severstal fell 9%, with reports that sanctions were holding up a loan payment to ite creditors, putting it on the verge of default.

Before Thursday, stocks had not traded on Moscow’s exchange since February 25, the day after Putin sent thousands of troops into Ukraine.

The move prompted Western sanctions aimed at isolating Russia economically, which are driving the country into a deep recession.

The rouble-denominated Moex is now down 34% so far this year, having plunged when the invasion began in February before trading was suspended. In dollar terms, it’s almost halved.

Even after Russia took extreme measures to limit damage to their stock market and made billions available to prop it up, the Russian market is down on day 2 & after accounting for ruble depreciation, has lost *halfof its value year-to-date. https://t.co/n9TDFSQ0uw

— Lily Adams (@adamslily) March 25, 2022n”,”url”:”https://twitter.com/adamslily/status/1507355920321372161″,”id”:”1507355920321372161″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”422e4bac-0aa8-4bb6-b3d5-9187efe53072″}}”>

Even after Russia took extreme measures to limit damage to their stock market and made billions available to prop it up, the Russian market is down on day 2 & after accounting for ruble depreciation, has lost *halfof its value year-to-date. https://t.co/n9TDFSQ0uw

— Lily Adams (@adamslily) March 25, 2022

Dmitry Polevoy, an analyst at Locko-Invest in Moscow, told Bloomberg:

“Yesterday, the main theme was hot money searching for tactical buying.

Today, we see some selling plus more activity from people who stayed aside yesterday seem to be driving the move.”

“Price-discovery will take time as it is hard to correctly assess new fair prices. The sanctions story is still open-ended.”

With the slump in the rouble driving up prices, some investors may be looking to stocks as a hedge against inflation.

Closing post

Time to wrap up – here are today’s main stories:

Goodnight. GW

Back on the cost of living crisis, UK farmers are warning that milk production is starting to fall as sharp rises in cost of fuel, feed, and fertiliser outstrip increases in farm-gate prices.

My colleague Zoe Wood reports:

“Something has to give and if the milk price doesn’t give, then the producers will,” says Oxfordshire dairy farmer David Christensen in a stark assessment of the peril his industry is facing as soaring costs push farm finances into the red.

Christensen, whose family business manages a herd of about 1,000 cows, says costs were already going up as a result of the upheaval caused by the pandemic and Brexit, but the war in Ukraine has “turbocharged inflation to levels the like of which I’ve never seen in 30 years of farming”.

He is a member of Arla, Britain’s largest dairy co-operative, which has sounded the alarm as the financial squeeze forces UK milk production to fall – a trend that could threaten future milk supplies.

Ash Amirahmadi, the managing director of Arla Foods UK, said producing fresh milk had for some time been delivering “little to no profitability for farmers” but the situation was now acute as the Ukraine crisis stoked farm cost inflation.

Rolls-Royce shares jumps in late trading

Shares in UK engineeering group Rolls-Royce surged in late trading in London, finishing 19% higher as the top FTSE 100 riser.

The late rally in Rolls-Royce shares came after the Betaville website, which covers deals news and gossip, reported speculation that the aerospace and defence group could soon be involved in a significant corporate transaction – such as a merger or even a takeover offer.

As Seeking Alpha explains:

Rolls-Royce spikes after a Betaville “uncooked alert” says the company may be involved in a “significant corporate transaction” that could include a merger or takeover deal.

According to the Betaville blog post, an unidentified suitor may be in the early stages of considering a combination with Rolls-Royce.

$RYCEY $RYCEF – Rolls-Royce could be poised for ‘significant transaction’ – Betaville https://t.co/lhWjm3ZnX0

— Breaking News (@MarketCurrents) March 25, 2022n”,”url”:”https://twitter.com/MarketCurrents/status/1507423169891643397″,”id”:”1507423169891643397″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”c05c98db-d2d0-4d2b-87b4-26fb2d87a1ee”}}”>

The post is billed as an ‘uncooked alert’, which is defined as “Market gossip as Betaville receives it”.

It seems to have been the catalyst for the share price jump into the close of trading.

The Rolls-Royce share price today
The Rolls-Royce share price today Photograph: Refinitiv

Closed at 110p surge in final minutes today. What a day for #rr #rollsroyce and all the patient holders. Still so cheap though at 110p. 91.7p what a gift! Happy weekend holders of this great British company. 🙏🍺 https://t.co/0VbhXfB2gU

— Ronnie (@Ronniemarkets) March 25, 2022n”,”url”:”https://twitter.com/Ronniemarkets/status/1507403509523697667″,”id”:”1507403509523697667″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”1d3c612e-77eb-4fb5-bbb7-f88f52fdf080″}}”>

Closed at 110p surge in final minutes today. What a day for #rr #rollsroyce and all the patient holders. Still so cheap though at 110p. 91.7p what a gift! Happy weekend holders of this great British company. 🙏🍺 https://t.co/0VbhXfB2gU

— Ronnie (@Ronniemarkets) March 25, 2022

A Rolls-Royce spokesperson tells us: “we do not comment on rumour and speculation”.

The FTSE 100 ended 16 points higher, up 0.2% at 7483 points.

Market close

European stock markets have ended a choppy week with some modest gains.

The pan-European Stoxx 600 closed 0.1% higher, but was 0.2% lower for the week.

Germany’s DAX gained 0.2%, and Italy’s FISE MIB rose 0.6%, wi th the US-EU deal to cut dependency on Russian gas providing some relief.

European market closing – March 25, 2022:
🇬🇧FTSE 100 (London): +0.21%
🇩🇪DAX (Frankfurt): +0.22%
🇫🇷CAC (Paris): -0.03%
🇮🇹FTSE MIB (Milan): +0.64%
🇪🇸IBEX35 ( Madrid): +0.31%
🇵🇹PSI20 (Lisbon): +0.80%
➡️ Stoxx 600: +0.11%#fechamentomercadoeuropeu #itaucorretora

— Itaú Corretora (@itaucorretora) March 25, 2022n”, “url”:”https://twitter.com/itaucorretora/status/1507416740489318405″,”id”:”1507416740489318405″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source “:”Twitter”,”elementId”:”1c416c7d-d779-4800-9b39-7e0c1c07e34f”}}”>

Closing of the European market – March 25, 2022: 🇬🇧FTSE 100 (London): +0.21%

🇩🇪DAX (Frankfurt): +0.22%

🇫🇷CAC (Paris): -0.03%

🇮🇹 FTSE MIB (Milan): +0.64%

🇪🇸IBEX35 (Madrid): +0.31%

🇵🇹PSI20 (Lisbon): +0 .80%

➡️ Stoxx 600: +0.11%#closuremercadoeuropeu

#itaucorretora— Itaú Corretora (@itaucorretora)March 25, 2022

Craig ErlamRussia’s MOEX stock index, senior market analyst at

OANDA , Russia’s MOEX stock indexsays the markets are “broadly in consolidation” at present. Russia’s MOEX stock index

We appear to have hit a point in which the initial shock of the Ukraine invasion has passed and markets have corrected back to a point where the economic risks are deemed to be priced in. In the absence of any significant developments, equity markets have come to a relative standstill and could remain that way until we see some progress.

Volatility remains in the commodity space which is contributing to the day-to-day fluctuations in equity markets. Higher commodity prices mean a further squeeze on the global economy this year and more inflation at a time when central banks are already accelerating tightening plans after falling behind the curve.

Oil has reversed its losses earlier after an attack on one of Saudi Arabia’s state losses -run oil company Aramco’s storage facilities.Russia’s MOEX stock indexAP explains :

A raging fire erupted Friday at an oil depot in Jiddah ahead of a Formula One race in the Saudi city. Yemen’s Houthi rebels claimed it was an attack by the group among a barrage of others. Russia’s MOEX stock indexWhile Saudi Arabia and its state-run oil behemoth Saudi Aramco did not immediately acknowledge the blaze, it was centered on the same fuel depot that the Houthis had attacked in recent days.

Brent crude is now up 1% at $120 per barrel, having dipped towards $115 earlier.Russia’s MOEX stock index

#UPDATE Smoke billows from an oil storage facility in Saudi Arabia’s Red Sea coastal city of Jeddah — shortly before the F1 #SaudiArabianGP is set to begin@AFPphoto pic.twitter.com/fnUjTXccaj

— AFP News Agency (@AFP) March 25, 2022n” ,”url”:”https://twitter.com/AFP/status/1507394634867220482″,”id”:”1507394634867220482″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,” source”:”Twitter”,”elementId”:”95f87dd3-e0f3-4820-941c-74835e4d4782″}}”>

#BREAKING Yemen rebels say they attacked Saudi Aramco facility in Jeddah: statement pic.twitter.com/BoFQOxIfWh

— AFP News Agency (@AFP) March 25, 2022n” ,”url”:”https://twitter.com/AFP/status/1507396009235783690″,”id”:”1507396009235783690″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,” source”:”Twitter”,”elementId”:”81ebb9b3-8313-48ed-a54c-a6f4aa3d7ce8″}}”>

Jewellery group Tiffany’s has said it will stop buying new diamonds mined in Russia.

The move follows pressure on the jewelry industry to cut ties with Russia following the Ukraine war.

But, as Bloomberg’sJeannetteNeumannA board with the logo of the Moscow Exchange in downtown Moscow, Russia , explains here, there are some caveats.

1/ Tiffany & Co. will stop buying new diamonds mined in Russia. The owner of Zales and Kay Jewelers did the same earlier this month. w/ @tbiesheuvel

There are a few caveats, though …https://t.co/qU90BlL1RQ

— Jeannette Neumann (@JENeumann) March 25, 2022n”, “url”:”https://twitter.com/JENeumann/status/1507341183156211720″,”id”:”1507341183156211720″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source “:”Twitter”,”elementId”:”c51a7607-1673-4de9-8bdc-5471556d0185″}}”>

1/ Tiffany & Co. will stop buying new diamonds mined in Russia. The owner of Zales and Kay Jewelers did the same earlier this month. w/ @tbiesheuvel

There are a few caveats, though …

— Jeannette Neumann (@JENeumann)March 25, 2022

2/ The companies’ bans apply only to newly mined gems. So Russian diamonds will still be available at Tiffany & Co., Zales and Kay stores for at least several months as the chains sell the jewelry they already had before Russia’s war on Ukraine began.

— Jeannette Neumann (@JENeumann) March 25, 2022n”,”url”:”https://twitter.com/JENeumann/status/1507341184779407382″,”id”:”1507341184779407382″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”dad41070-e955-4a1b-b011-55d62ef43188″}}”>

2/ The companies’ bans apply only to newly mined gems. So Russian diamonds will still be available at Tiffany & Co., Zales and Kay stores for at least several months as the chains sell the jewelry they already had before Russia’s war on Ukraine began.

— Jeannette Neumann (@JENeumann) March 25, 2022

3/ And while the restrictions announced by Tiffany and Zales’ owner mean that, in theory, the companies aren’t adding recently mined Russian diamonds to their existing stock of gems. In practice, that’s quite difficult to enforce.

— Jeannette Neumann (@JENeumann) March 25, 2022n”,”url”:”https://twitter.com/JENeumann/status/1507341186096324608″,”id”:”1507341186096324608″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”86e38b6d-8fd5-4b0e-b8ca-51b7a4c6f63b”}}”>

3/ And while the restrictions announced by Tiffany and Zales’ owner mean that, in theory, the companies aren’t adding recently mined Russian diamonds to their existing stock of gems. In practice, that’s quite difficult to enforce.

— Jeannette Neumann (@JENeumann) March 25, 2022

Moscow stock market slides on second day after reopening

A board with the logo of the Moscow Exchange in downtown Moscow, Russia
Photograph: Yuri Kochetkov/EPA

The Russian stock market fell back today, wiping out much of Thursday’s rally when the exchange reopened for the first time in almost a month.

The Moex share index slid by 3.66% today, with every sector in the red, having gained 4.4% yesterday.

Limited stock trading resumed yesterday with several restrictions to prop up shares, including a ban on short-selling, and on foreign investors selling stocks. That helped to spark a rally yesterday, when oil and commodity stocks jumped.

Analysts have pointed out that these curbs meant Moscow’s market wasn’t operating properly, while the US dubbed it a “Potemkin market opening”.

Russia’s MOEX stock index
Russia’s MOEX stock index this year Photograph: Refinitiv

But despite these measures, airline Aeroflot shed another 18% today, on top of Thursday’s 16% drop. Sanctions have barred its jets from EU and UK airspace.

Gas giant Gazprom fell 12%, after the US and EC agreed a deal to cut Europe’s dependency on Russian gas.

Steel giant Severstal fell 9%, with reports that sanctions were holding up a loan payment to ite creditors, putting it on the verge of default.

Before Thursday, stocks had not traded on Moscow’s exchange since February 25, the day after Putin sent thousands of troops into Ukraine.

The move prompted Western sanctions aimed at isolating Russia economically, which are driving the country into a deep recession.

The rouble-denominated Moex is now down 34% so far this year, having plunged when the invasion began in February before trading was suspended. In dollar terms, it’s almost halved.

Even after Russia took extreme measures to limit damage to their stock market and made billions available to prop it up, the Russian market is down on day 2 & after accounting for ruble depreciation, has lost *halfof its value year-to-date. https://t.co/n9TDFSQ0uw

— Lily Adams (@adamslily) March 25, 2022n”,”url”:”https://twitter.com/adamslily/status/1507355920321372161″,”id”:”1507355920321372161″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”929f235d-e231-445d-a6f5-172c87ac438f”}}”>

Even after Russia took extreme measures to limit damage to their stock market and made billions available to prop it up, the Russian market is down on day 2 & after accounting for ruble depreciation, has lost *halfof its value year-to-date. https://t.co/n9TDFSQ0uw

— Lily Adams (@adamslily) March 25, 2022

Dmitry Polevoy, an analyst at Locko-Invest in Moscow, told Bloomberg:

“Yesterday, the main theme was hot money searching for tactical buying.

Today, we see some selling plus more activity from people who stayed aside yesterday seem to be driving the move.”

“Price-discovery will take time as it is hard to correctly assess new fair prices. The sanctions story is still open-ended.”

With the slump in the rouble driving up prices, some investors may be looking to stocks as a hedge against inflation.

Inflation worries drive US consumer confidence to 11-year low

US consumer confidence has fallen to its lowest level in 11 years, as worries about inflation and the Ukraine war mount.

The University of Michigan’s consumer sentiment report found that confidence declined in March due to falling real incomes, which recently accelerated as fuel prices rose sharply.

The index fell to 59.4 this month, down from 62.8 in February and 84.9 last March. That’s slightly worse than the preliminary estimate of 59.7 earlier this month.

The @UMich Index of Consumer Sentiment was 59.4 in Mar, down -5.4% MoM. The Current Economic Conditions index fell -1.5% MoM to 67.2, and the Index of Consumer Expectations fell -8.6% MoM to 54.3. #consumer #sentiment https://t.co/eSqBsVn5pg pic.twitter.com/akEZTJ5p13

— MTS Insights (@MTSInsights) March 25, 2022n”,”url”:”https://twitter.com/MTSInsights/status/1507358932242935813″,”id”:”1507358932242935813″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”b9e302d2-0643-4d36-9250-4be0afb81412″}}”>

The year-ahead expected inflation rate rose to its highest level since 1981 and expected gasoline prices posted their largest monthly upward surge in decades. Personal finances were expected to worsen in the year ahead by the largest proportion since the surveys started in the mid-1940s.

University of Michigan economist Richard Curtin, director of the surveys, says:

Just when difficult decisions need to be made about monetary and fiscal policies, consumers have expressed loss in confidence in government economic policies.

Moreover, most consumers are uncertain about the ultimate impact Putin’s war will have on their personal economic situation.

“When asked to explain changes in their finances in their own words, more consumers mentioned reduced living standards due to rising inflation than any other time except during the two worst recessions in the past fifty years”

Decade low UMich consumer sentiment pic.twitter.com/fWDSjVgltr

— Jonathan Ferro (@FerroTV) March 25, 2022n”,”url”:”https://twitter.com/FerroTV/status/1507358178471727105″,”id”:”1507358178471727105″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”1fd4d038-b856-423e-9df8-f303cebfa051″}}”>

“When asked to explain changes in their finances in their own words, more consumers mentioned reduced living standards due to rising inflation than any other time except during the two worst recessions in the past fifty years”

Decade low UMich consumer sentiment pic.twitter.com/fWDSjVgltr

— Jonathan Ferro (@FerroTV) March 25, 2022

US home sales fell last month, as rising mortgage rates and low availability of properties hit the sector.

Pending home sales (signed contracts to buy existing homes), fell 4.1% in February, the fourth monthly drop in a row.

That suggests the market has cooled ahead of the spring sellin season, with mortgage rates have risen as the markets anticipated a flurry of interest rate rises this year.

Pending home sales fell in February, setting a grim tone as the housing market enters its crucial spring selling season https://t.co/OGww889fo8

— CNBC International (@CNBCi) March 25, 2022n”,”url”:”https://twitter.com/CNBCi/status/1507357776527376390″,”id”:”1507357776527376390″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”9610d1fc-5a61-433e-8a68-65907b4f14a6″}}”>

Pending home sales fell in February, setting a grim tone as the housing market enters its crucial spring selling season https://t.co/OGww889fo8

— CNBC International (@CNBCi) March 25, 2022

US pending home sales fell for a 4th straight month in Feb. The slide is “mainly due to the low number of homes for sale,” says the chief economist at Nat’l Assoc of Realtors, which publishes the data: https://t.co/OpalIlLe3D Another headwind: mortgage rates are at a 3yr high. pic.twitter.com/yazfWDiq2q

— James Picerno (@jpicerno) March 25, 2022n”,”url”:”https://twitter.com/jpicerno/status/1507359091299127298″,”id”:”1507359091299127298″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”b620d16e-ecee-42a8-9be7-9c83ba2cd6bc”}}”>

US pending home sales fell for a 4th straight month in Feb. The slide is “mainly due to the low number of homes for sale,” says the chief economist at Nat’l Assoc of Realtors, which publishes the data: https://t.co/OpalIlLe3D Another headwind: mortgage rates are at a 3yr high. pic.twitter.com/yazfWDiq2q

— James Picerno (@jpicerno) March 25, 2022

In New York, stocks have opened a little higher with the benchmark S&P 500 gaining 0.2%, or 9 points, to 4,529.

U.S. stocks were mostly higher after the opening bell Friday, while oil prices pulled back. https://t.co/IzgzS1Pw3t pic.twitter.com/2aRz99kdUY

— MarketWatch (@MarketWatch) March 25, 2022n”,”url”:”https://twitter.com/MarketWatch/status/1507353424450494470″,”id”:”1507353424450494470″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”e4692d6e-f926-4732-b65b-0d39396da97d”}}”>

There’s more action in the bond market, where the yield (or interest rate) on 10-year U.S. Treasury bonds have hit a fresh two-year high.

That shows investors are anticipating a more aggressive path of interest rate rises from the Federal Reserve, to try to curb inflation.

The 10-year yield has hit 2.475%, its highest level since May 2019, as traders sell the bond (yields rise when bond prices fall).

The current surge in bond yields has taken the 10-year #bond to extreme oversold levels. The 10-year rate is now 4-std dev above its 52-week moving average. It is also approaching the top of the long-term downtrend channel from 1980.https://t.co/ydlXTnLwhD pic.twitter.com/Bf0lUzs2x5

— Lance Roberts (@LanceRoberts) March 25, 2022n”,”url”:”https://twitter.com/LanceRoberts/status/1507330692048474116″,”id”:”1507330692048474116″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”68329aa8-35e9-4314-b44e-bbde62e5d7de”}}”>

Berenberg: UK and eurozone heading for bad Q2 after Ukraine war shock

German bank Berenberg has predicted that the UK economy will stagnate over the next quarter, or worse, as the shock of the Ukraine invasion hits growth.

Berenberg have also cut their forecast for eurozone growth, pointing to the tumble in UK consumer confidence and business expectations.

Although initial measures of activity for March, such as the PMI reports, have been stronger than expected, forward-looking confidence indicators point to trouble ahead, Berenberg says:

Due to the shock of a major European war and a surge in inflation, consumer confidence and business expectations are flashing red, having plunged to levels only witnessed during the great financial and euro crises, and the early phase of the pandemic.

Amid unusually high uncertainty, we now expect UK real GDP to flatline in Q2, instead of growing by 0.1% qoq, and Eurozone GDP to expand by just 0.2% qoq, instead of 0.6%.

The risks to our new Q2 calls remain tilted to the downside.

Consumer confidence and business expectations
Photograph: Berenberg Bank

Berenberg predict that the shock to confidence will lessen from May, when we may have more clarity about the outcome of the Ukraine war and any further sanctions on Russia.

But inflation is expected to stay very elevated until late-2022 as rising food prices initially offset a gradual fall in oil prices – from $120 per barrel, towards $90 by early 2023.

And there is also a danger that Europe’s economy could suffer stagnation, or even a modest contraction, that lasts beyond the initial shock in Q2.

Berenberg say this scenario is unlikely, but clearly not impossible.

As any EU embargo on imports of Russian oil and gas would probably hurt more in winter when energy demand peaks, any rebound in economic activity during Q3 could be short-lived.

In a worst-case scenario (15% risk), Europe could face a period of de facto stagflation during 2022, where real GDP stagnates, or even falls modestly, and inflation surges by even more than expected.

That could delay any robust rebound until early 2023 when energy demand starts to moderate and Europe manages to secure sufficient energy supplies from non-Russian producers

Full story: Biden and EU agree landmark gas deal to break Kremlin’s hold

Rob Davies

Rob Davies

Joe Biden has agreed a landmark energy supply deal with the EU under which the US will increase transatlantic gas deliveries, in the hope of weakening the power the Kremlin wields thanks to its natural resources.

Speaking in Brussels after the deal was agreed on Friday, the US president said Vladimir Putin exploited Russia’s status as Europe’s main supplier of gas to “coerce and manipulate his neighbours” and that the proceeds of gas and oil sales “drive his war machine”.

He said the partnership with the EU (see earlier post) would strip Putin of that weapon by reducing Europe’s dependence on Russian energy, as well as the continent’s overall gas demand.

Under the plan, the US and other nations will increase exports of seaborne liquefied natural gas (LNG) to Europe by 15bn cubic metres this year. Even larger shipment volumes would be delivered in the future, he promised.

Reuters: Gazprom has 4 days to work out rouble payments for gas exports, Kremlin says

Russian President Vladimir Putin has ordered Gazprom to accept payment in roubles for its natural gas exports to Europe, Reuters reports.

The gas behemoth has four days left to work out how to move over billions of dollars in sales, the Kremlin said.

After the West imposed sanctions on Russia over the conflict in Ukraine, Putin on Wednesday fired the first major salvo of Moscow’s response to what the Kremlin casts as a declaration of economic war against the world’s biggest nuclear power.

ASKED ABOUT REFUSAL OF SOME EUROPEAN COUNTRIES TO START PAYING FOR RUSSIAN GAS IN ROUBLES, KREMLIN SAYS PUTIN HAS ORDERED GAZPROM TO ACCEPT PAYMENT IN ROUBLES

— Guy Faulconbridge (@GuyReuters) March 25, 2022n”,”url”:”https://twitter.com/GuyReuters/status/1507297514025885701″,”id”:”1507297514025885701″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”93bc1f6d-2ef7-415e-9001-1a2d402acfe7″}}”>

ASKED ABOUT REFUSAL OF SOME EUROPEAN COUNTRIES TO START PAYING FOR RUSSIAN GAS IN ROUBLES, KREMLIN SAYS PUTIN HAS ORDERED GAZPROM TO ACCEPT PAYMENT IN ROUBLES

— Guy Faulconbridge (@GuyReuters) March 25, 2022

Putin said that Russia, which supplies 40% of Europe’s gas, would expect payment for natural gas in roubles, one of the sharpest turns in Russian energy politics since the Soviets built gas pipelines to Europe from Siberia in the early 1970s.

It is also a potential headache for Gazprom, the world’s biggest natural gas company by reserves.

“There is an instruction to Gazprom from the president of the Russian Federation to accept payments in roubles,” Kremlin spokesperson Dmitry Peskov told reporters.

Peskov said that Gazprom, a company so powerful in Russia that it is considered to be “a state within a state”, had four days left to work out a system for rouble payment.

“This information will be brought to the purchasers of Gazprom products,” Peskov said.

Here’s the full story: Gazprom has 4 days to work out rouble payments for gas exports – Kremlin says

Yesterday, the leaders of Germany and Italy said that Russia’s demand that “unfriendly” countries use roubles to buy its oil and gas could breach supply contracts. The executive director of the IEA, Fatih Birol, called a “security threat”.

The UK car sector had a tough February, with shortages of semiconductors continuing to limit production of cars and engines.

UK engine production fell by over 30% year-on-year last month, to 117,551 units, trade body SMMT reports, taking engine output so far this year down almost a quarter.

Mike Hawes, SMMT Chief Executive, said,

“February’s engine production figures further highlight the challenging start to the year for manufacturers. With new pressures arising from soaring energy costs, as well as the continued impact of the global semiconductor shortage, the UK’s competitiveness is at risk.

We need urgent action to alleviate business costs for manufacturers and encourage the investment needed to futureproof the sector and the skilled jobs it creates as the industry transitions to new technologies.”

Overall UK car production was down 41% year-on-year, the eighth monthly fall in a row.

UK car production falls -41.3% in February to 61,657 units as global chip shortage persists.https://t.co/9g23X5E5u8 pic.twitter.com/nFlMVo7UC8

— SMMT (@SMMT) March 25, 2022n”,”url”:”https://twitter.com/SMMT/status/1507248163844808705″,”id”:”1507248163844808705″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”09407858-9ec9-411d-8785-43c90907b01d”}}”>

Output of commercial vehicles jumped 92%, but that was compared to the worst February on record last year, when supply chain shortages, new customs processes and prolonged lockdown measures all hit the sector.

UK commercial vehicle production rises 92.2% in February but still below pre-pandemic levelshttps://t.co/793Sj5maR7 pic.twitter.com/1G6bwRmCfM

— SMMT (@SMMT) March 25, 2022n”,”url”:”https://twitter.com/SMMT/status/1507296482596208640″,”id”:”1507296482596208640″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”82850f53-d471-4a3d-a365-30354fd89fc5″}}”>

Here’s a round-up of reaction to the unexpected 0.3% drop in UK retail sales last month:

Karl Thompson, Economist at CEBR:

Retail sales volumes unexpectedly fell in February, despite the easing of the Omicron wave and the lifting of all remaining restrictions at the end of the month. Non-store retailing saw the sharpest monthly fall, with a contraction also seen in food store sales volumes.

Despite some evidence of consumer activity shifting away from online shopping and toward in-person retail and non-retail environments, price rises in excess of earnings growth are now eroding consumer spending power overall. The squeeze on household budgets is set to worsen over the coming months, exerting further downward pressure on retail sales.”

Bethany Beckett of Capital Economics:

The small fall in retail sales in February probably had more to do with the shift back towards non-retail spending and the impact of Storm Eunice than it did the cost of living crisis.

But, with further rises in inflation and interest rates looking likely, we are downbeat on the outlook for overall spending this year.

Karen Johnson, Head of Retail & Wholesale at Barclays Corporate Banking:

“February saw Covid restrictions lifted and the mass return of workers to their offices. This led to notable increases in spending on clothing (as people kitted out their new wardrobes), and furniture (as customers returned to showrooms with the confidence to both try products and make purchases).

It also led to a reduction in the proportion of sales being made online versus last year, and suggests the industry has now come to the other side of its pandemic-driven ‘bounce’ in online spend.”

In the markets, European stock are ending the week with gains.

In London, the FTSE 100 is up 0.3% at 7491 points, around its levels before the Ukraine invasion began.

The blue-chip index is on track for its third weekly rise in a row, as it continued to recover from its plunge early in the war. But housebuilders are down around 3%, after JP Morgan lowered its price targets.

Germany’s DAX and France’s CAC are both up around 0.8%. Oil prices have dropped around 2%, after the EU didn’t agree any new sanctions on Russian oil this week.

European stock markets, March 25 2022
European stock markets, March 25 2022 Photograph: Refinitiv

Raffi Boyadjian, lead investment analyst at XM, explains:

With inflation rates around the world skyrocketing amid the surge in most key commodity and raw material prices, the EU’s decision not to add to its long list of sanctions against Moscow has offered some respite to the markets. There is a growing fear of recession, not just in the euro area but globally too, the longer these price spikes last and the more amplified they become.

NATO is doing everything it can to support Ukraine without getting itself entangled in a direct military confrontation with Russia. But the downside of that is a potentially long drawn-out war and subsequently, a prolonged market fallout.

Oil prices pulled back yesterday after hitting two-week highs as no new significant economic measures were announced by the US or the EU. WTI and Brent futures were extending their declines today, sliding by more than 2%.

Helena Horton

Billionaire Sir Christopher Hohn has urged shareholders to vote against bank directors who lobby against climate action while making net-zero promises, saying this was greenwashing”

Our environment reporter Helena Horton explains:

The hedge fund manager, who once had Britain’s highest salary at £1m a day, made headlines when he donated £50,000 to climate activist group Extinction Rebellion.

Hohn, who was once Rishi Sunak’s boss at hedge fund TCI, is also one of the nation’s biggest philanthropists, and has pumped billions into his own charity, The Children’s Investment Fund Foundation.

He said: “Any bank making a net zero promise while actively lobbying against necessary climate regulatio n – such as mandatory disclosure of borrowers’ emissions and climate action plans – is greenwashing. Shareholders should vote against the directors of banks who are hiding their exposure to climate risk.”

AA: less than half of fuel duty cut passed on at the pumps so far

Less than half of the 5p per litre cut to fuel duty announced in Wednesday’s spring statement had been passed onto motorists yesterday.

The AA reports that petrol prices at the pumps were down just 2.71p per litre on average on Thursday, with diesel only 1.59p cheaper.

On Tuesday, petrol and diesel pump prices had jumped to new records yet again, at 167.30p and 179.72p a litre respectively. Yesterday, petrol averaged 164.59p a litre and diesel 178.13p.

The fuel duty cut (which is worth 6p/litre once you include VAT) began at 6pm on Wednesday night, just a few hours after Rishi Sunak’s statement

Luke Bosdet, the AA’s fuel price spokesman, says it’s ‘very disappointing’ that prices didn’t drop faster.

“The Chancellor rode to the rescue of drivers on Wednesday and even before the 6pm start of the fuel duty cut drivers were reporting the price cut at some Asda forecourts.

“Although we have to accept that, for many forecourts, the duty cut comes through with the next delivery of fuel, the size of the fall is very disappointing. I expect the Government will be watching very closely to see if pump prices reflect more of the fuel duty cut over the weekend.”

“The truth is that, while diesel wholesale costs have been climbing, petrol’s have fallen substantially since the peaks of 7/8 March. That should have brought a further 6p-a-litre cut in pump prices, effectively doubling the saving from the fuel duty cut.

“For now, the message to drivers is clear: head to the cheaper forecourts – you can’t miss them.”

BREAKING: Less than half of fuel duty cut passed on average at pumps so far, AA says

⛽️ Petrol down 2.71p nationwide on Thursday. Diesel down 1.59p
⛽️ Sunak cut duty by 5p (worth 6p once VAT is added) on Wednesday#CostOfLivingCrisis #FuelPriceHike #SpringStatement2022

— Ben Clatworthy (@benclatworthy) March 25, 2022n”,”url”:”https://twitter.com/benclatworthy/status/1507296456104988678″,”id”:”1507296456104988678″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”bd81f017-f180-4af0-888a-3f5f68bea509″}}”>

The Petrol Retailers Association warned on Wednesday that retailers’ current petrol and diesel stocks had been purchased before the duty cut came in.

Gordon Balmer, Executive Director of the PRA, explained:

Retailers are holding duty-paid stock which will be sold before the fuel duty cuts come in. To give the motorist an immediate discount at the pumps, the Chancellor would have to backdate the fuel duty cut to 1 March,”

German business confidence tumbles as Ukraine war hits economy

Business confidence in Germany has tumbled this month, as the Ukraine war hammers the economic outlook for Europe’s largest economy.

The Ifo research institute reports that “sentiment in the German economy has collapsed” since the war in Ukraine began. Its Business Climate Index has fallen to 90.8 points in March, down from 98.5 points in February.

Ther was a record collapse in expectations of 13.3 points (even worse than the 11.8 drop in March 2020, when the pandemic hit), as companies face the economic implications of the conflict, such as high energy prices and supply chain problems.

Contrary to the #PMI data, #Germany‘s #ifo index did collapse due to the #war in #Ukraine. The subindex for expectations fell to #recession-like levels. pic.twitter.com/eUMRDtKmyg

— True Insights (@true_insights_) March 25, 2022n”,”url”:”https://twitter.com/true_insights_/status/1507285720423145472″,”id”:”1507285720423145472″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”51ceedda-34e2-41f8-955f-21f2cc1df200″}}”>

🇩🇪 Still. Not. Good. pic.twitter.com/sC9xziktbQ

— Frederik Ducrozet (@fwred) March 25, 2022n”,”url”:”https://twitter.com/fwred/status/1507287315667992584″,”id”:”1507287315667992584″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”25a9de56-fb62-4520-a940-6c42723ac1d7″}}”>

Here’s the details:

In manufacturing, the index fell faster than ever before. Companies’ expectations also saw a record drop, fl ipping from optimism to pronounced pessimism. Moreover, companies now rated their business outlook as extremely uncertain. Assessments of the current situation were also lower.

In the service sector, too, the business climate worsened notably. This was due to a conspicuous drop in expectations. The outlook for the coming months is particularly bleak in the logistics industry. In contrast, service providers left their assessments of the current situation practically unchanged.

In trade, the Business Climate Index crashed. The expectations indicator saw a record collapse. Assessments of the current situation, however, were almost unchanged and remain positive.

In construction, the business climate deteriorated significantly. This, too, was driven by considerably more pessimistic expectations. Assessments of the current situation also worsened, but a majority of construction companies are still satisfied with their current business.

There was this saying, during the euro crisis, that bad news for Germany could be good news for the euro area, forcing hard decisions about fiscal easing and integration. This time is different, although a German recession should indeed lead to a more supportive policy-mix.

— Frederik Ducrozet (@fwred) March 25, 2022n”,”url”:”https://twitter.com/fwred/status/1507287710695841800″,”id”:”1507287710695841800″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”ea3830dd-dd16-4e98-ab6c-c3e8eced0434″}}”>

There was this saying, during the euro crisis, that bad news for Germany could be good news for the euro area, forcing hard decisions about fiscal easing and integration. This time is different, although a German recession should indeed lead to a more supportive policy-mix.

— Frederik Ducrozet (@fwred) March 25, 2022

IFO: 80% of German firms are facing supply side issues.

— Frederik Ducrozet (@fwred) March 25, 2022n”,”url”:”https://twitter.com/fwred/status/1507290007639367682″,”id”:”1507290007639367682″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”7cf64e59-361a-455c-9e42-d09e09a781f2″}}”>

IFO: 80% of German firms are facing supply side issues.

— Frederik Ducrozet (@fwred) March 25, 2022

Carsten Brzeski of ING says:

The risk is high that the economic implications of the war are much more of a structural game-changer for the European and particularly the German economy than the pandemic has ever been.

With high energy and commodity prices for a protracted period, possibly even energy supply interruptions, and an acceleration of deglobalisation, possibly Cold War 2.0, an export-oriented economy highly dependent on energy imports will suffer.

The risk of another contraction in the first quarter of the year and hence a technical recession is high, Brzeski adds.

IFO, though, suggest Germany could avoid recession this quarter (the economy shrank in Q4 2021).

Ifo economist Klaus Wohlrabe said that Germany is not facing a recession in the first quarter as a result of the war in Ukraine, but he warned industry supply chain bottlenecks had become worse for many companies. https://t.co/3FqqKdD1Rb

— RTÉ Business (@RTEbusiness) March 25, 2022n”,”url”:”https://twitter.com/RTEbusiness/status/1507293120987283460″,”id”:”1507293120987283460″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”2bdedee7-7df9-497a-b889-65c213339c2f”}}”>

Ifo economist Klaus Wohlrabe said that Germany is not facing a recession in the first quarter as a result of the war in Ukraine, but he warned industry supply chain bottlenecks had become worse for many companies. https://t.co/3FqqKdD1Rb

— RTÉ Business (@RTEbusiness) March 25, 2022

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