Business

By Olivier Devos 
Agence France-Presse

LONDON - Britain's furlough scheme that has kept millions of private-sector workers in jobs during the coronavirus pandemic ends on Thursday, with predictions of a spike in unemployment and a slump in living standards. 

Prime Minister Boris Johnson's Conservative government has spent almost £70 billion ($96 billion, 82 billion euros) on paying the bulk of wages for staff stuck at home, helping to keep the official unemployment rate relatively low.

"Despite this success, significant challenges remain in the labour market," the Institute for Fiscal Studies (IFS) said in a report on Thursday. 

"These include additional job losses when the furlough scheme ends, low re-employment rates for those made redundant, and high levels of vacancies in some sectors."

Some 12 million people have been on furlough, with some one million workers still supported up until its end.

Of those remaining, more than 25 per cent work in construction and manufacturing. 

 'Low-living standards' 

"These people are susceptible to persistently low living standards should they be made unemployed," the IFS said, citing the fact that many were the only adult wage-earner in their household.

Also among those hit hardest by the end of the scheme will be Londoners and older workers, the IFS added.

While workers in the British capital make up 14 per cent of all UK employees, they accounted for almost 20 per cent of those still accessing the scheme in July, it noted.

The emergency jobs package "initially helped younger workers weather the pandemic... (but) it is older workers who are now more likely to be furloughed", according to Daniel Tomlinson, senior economist at the Resolution Foundation think-tank that lobbies for better living standards.

Compounding the situation will be the government's plan to cut unemployment benefit by £20 per week from next month, Tomlinson added in a separate assessment of the 18-month furlough scheme.

Amid high UK inflation caused in part by surging energy prices, the "cut to Universal Credit... will return the real value of unemployment benefit to its lowest level since the early 1990s", he argued.

Britain's main opposition Labour party has led the charge against the cut to universal credit, calling it "morally and economically wrong" at a time of hardship for many. 

Staff shortages 

Rishi Sunak, who unveiled the furlough scheme just weeks after being appointed finance minister, said he was "immensely proud" of the initiative, workers and businesses.

"With the (economic) recovery well under way, and more than one million job vacancies, now is the right time for the scheme to draw to a close," he said.

Capital Economics analyst Paul Dales said the end of furlough could help to fill some of the many job vacancies in Britain.

"The end of the furlough scheme may help ease some of the UK's current labour shortages," he said.

"This probably won't happen immediately, but some of those people who have been kept on the furlough and who will lose their jobs will be free to look for and start work elsewhere."

Britain has seen more than 136,000 people die from Covid-19 during the pandemic but some 82 per cent of people aged 16 and over have now been jabbed with two doses of vaccine.

That has allowed shuttered businesses to reopen after months of lockdown and social distancing restrictions, even if case numbers remain stubbornly high.

Staff shortages, though, have hit several sectors due to a combined effect of the global health crisis and Brexit, which saw many foreign workers leave.

Britain has record job vacancies at more than one million, while the unemployment rate stands at 4.6 per cent, down from a pandemic-peak of 5.2 per cent at the end of last year.

A significant shortage of lorry drivers has left empty supermarket shelves and fuel supply issues, which has seen long queues of motorists at filling stations for a week.

British troops have been drafted in to help delivery fuel to forecourts because of a lack of tanker drivers, and to ease panic-buying.

The government maintains the pandemic is to blame but critics accuse ministers of a lack of foresight in replacing thousands of foreign drivers who left the country.

Last weekend the government reversed post-Brexit entry rules to offer foreign truckers a three-month visa waiver to help improve supply chain issues.

But industry leaders have argued that this alone will not solve the problem.

LONDON — US and European stock markets rebounded on Wednesday, a day after a selloff over a slew of concerns including high energy prices, rising bond yields and the threat of a US debt crisis.

Investors were back in a buying mood as oil prices dipped back under $80 while pressure on US and European borrowing costs eased on Wednesday.

Markets have also fretted over a US Congress deadlock over raising the debt ceiling, which could cause the world's top economy to go into default for the first time.

Wall Street opened higher on Wednesday following a rout a day earlier.

London's FTSE 100, the DAX in Frankfurt and the Paris CAC 40 were all up in afternoon trading, though they eased off earlier gains.

Tech stocks, which tend to suffer when bond yields rise, "are finding some reprieve from the stabilisation in rates," said Charles Schwab analysts in a note.

"Volatility is likely to persist due to growing expectations of tightening global monetary policy and the continued debt ceiling stalemate in Washington, which has accompanied the rise in Treasury yields," they said.

London shares were buoyed partly by a weak British pound, which hit a January-low at $1.35 on fears of stagflation, or a vicious mix of high inflation and low economic growth.

The dollar also strengthened against the euro and the yen.

Oil prices dipped one day after Brent had surged close to a three-year peak above $80 on tight global supplies.

"European stock prices have become cheaper, given the sell off we have seen during the past few days, and this has brought some bargain hunters into the markets," AvaTrade analyst Naeem Aslam said.

Europe's bourses had stumbled earlier this week on high oil prices, political impasse in Germany and US debt concerns.

Wednesday's rebound was also driven by hopes of a deal to avert a potentially catastrophic US debt default, according to Swissquote analyst Ipek Ozkardeskaya.

"The rebound we see is a correction of the latest selloff, and is certainly fuelled by the expectation (of) an eventual deal on the US debt ceiling," she said.

Tokyo ends 'strong run' 

However, Asian markets mostly fell Wednesday following the rout on Wall Street as investors fret over surging inflation, the end of the Federal Reserve's financial support and the US debt standoff.

Ongoing worries about the potential collapse of Chinese property giant Evergrande, an energy crunch in China and the ever-present spectre of the Delta coronavirus variant also soured the mood.

Tokyo's main stocks index tanked more than two percent, having enjoyed a strong run in recent weeks on hopes for more stimulus from a new Japanese prime minister.

The ruling party elected former foreign minister Fumio Kishida its new leader Wednesday, putting him on course to take the mantle of Yoshihide Suga.

However, Hong Kong, Singapore, Manila and Jakarta rose.

Oil prices sagged after data pointed to a drop in US stockpiles, though analysts expect the commodity to maintain its strength for the foreseeable future.

LONDON — Stock markets tumbled on Tuesday as traders tracked a strengthening dollar, high oil prices, political impasse in Germany and US debt concerns.

Brent crude oil briefly jumped above $80 per barrel for the first time in almost three years on expectations for surging demand and concerns about tight supplies as the world slowly emerges from the pandemic crisis.

Wall Street drifted lower, with tech shares hit hard as Treasury Secretary Janet Yellen urged Congress to quickly raise the debt ceiling to keep the US government operating.

"A combination of fears that China is cooling, and rising government yields have prompted traders to sell stocks," said David Madden, market analyst at Equiti Capital, as the Dow Jones index lost two per cent mid-session and the tech-heavy Nasdaq shed 2.5 per cent.

"The prospect of higher energy prices, fuelling inflation, and rises in bond yields that appear to be pre-empting tighter monetary policy by central banks, have prompted widespread selling across global stock markets," said Chris Beauchamp, analyst at IG. 

There were "few safe havens", he said.

Analysts attributed disproportionate declines in tech stocks to rising treasury yields, as higher interest rates generally hit tech companies because of their greater reliance on debt to fund growth.

"Technology stocks came under heavy selling pressure early Tuesday as investors looked at a combination of uncertainty on Capitol Hill, coupled with all but certainty that borrowing costs will increase," said JJ Kinahan, chief market strategist at TD Ameritrade.

Republicans in Washington have blocked a Democrat move to raise the US borrowing limit, meaning the government will likely run out of cash at the end of the week.

The crisis comes as Democrats fight to pass US President Joe Biden's multitrillion-dollar infrastructure and social spending bills, with party infighting fuelling concerns that the president's agenda could end up stillborn.

Germany, Europe's biggest economy, was in focus as it headed for weeks, if not months, of protracted coalition haggling following weekend elections. 

Both the German DAX and French CAC indexes were down by about two per cent, while London was off 0.5 per cent.

Chancellor Angela Merkel's conservatives have insisted on trying to form a government even after losing to the Social Democrats in a tight race.

In Britain, army tanker drivers were put on standby to deliver petrol as the country battles a fuel crisis.

The British pound dipped more than one per cent against the dollar to $1.3531, the lowest level since January.

BEIJING — Goldman Sachs on Tuesday lowered its annual economic growth forecast for China as nationwide power cuts hit millions of homes and halted production at factories, including some supplying Apple and Tesla.

At least 17 provinces and regions — accounting for 66 per cent of the country's gross domestic product (GDP) — have announced some form of power cuts in recent months, mainly targeting heavy industrial users, according to Bloomberg Intelligence.

Nearly 60 per cent of the Chinese economy is powered by coal, but supply has been disrupted by the pandemic, put under pressure by tough emissions targets and squeezed by a drop in coal imports amid a trade tiff with Australia.

Earlier this month, coal prices hit a record high, with restrictions imposed on businesses and homes amid the supply crunch.

Still, China's power demand in the first half of the year exceeded pre-pandemic levels, according to the National Energy Administration. 

Goldman Sachs said on Tuesday it expects growth to come in at 7.8 per cent, down from 8.2 per cent, citing power cuts that led heavy industries to cut output, leading to "significant downside pressures".

It is the second bank to downgrade forecasts in as many days. 

Analysts at Nomura said on Monday a surging number of factories had been forced to cease operations due to either government mandates to meet carbon targets or surging prices and coal shortages.

It cut its annual GDP growth forecast to 7.7 per cent.

Apple supplier Unimicron Technology said factories in two regions were told to stop production from midday Sunday through Thursday.

Dozens of other companies, including a parts supplier to carmaker Tesla, were told to halt production this week, according to stock exchange filings.

In Beijing, utility giant State Grid said that a series of upcoming power outages in the capital — which will last nearly 10 hours at times — are part of a "planned maintenance", a statement that appeared to downplay state media reports that they are due to the nationwide power crunch.

The north-eastern rust belt, with thousands of power-hungry cement kilns and steel smelters, has been among the areas worst affected.

A factory in northeast Liaoning had to rush 23 workers to hospital due to carbon monoxide poisoning after ventilators suddenly stopped working during a blackout, state broadcaster CCTV reported.

Footage on local media Beijing News showed cars travelling a busy highway in the city of Shenyang in complete darkness without traffic lights or street lamps. 

"Power cuts eight times a day, four days in a row... I'm speechless," wrote one frustrated user from Liaoning. 

Another complained that malls were shutting early and a convenience store was using candlelight.

"It's like living in North Korea," they wrote.

LONDON — Fuel pumps ran dry in parts of Britain on Monday as panic-buying drained tanks at filling stations, while the government tries to tackle a shortage of lorry drivers with a dramatic post-Brexit immigration policy U-turn.

A queue 50 cars-long was seen at one petrol station in east London, with some drivers having waited since before dawn to fill up their vehicles, an AFP photographer said. 

Other stations across the British capital and southeast England simply posted signs stating that "no fuel" was available and apologised for pumps being out of use.

The Petrol Retailers Association claimed that almost half of the UK's 8,000 fuel pumps had run out of petrol on Sunday, as desperate drivers — including key workers — formed long queues to fill up.

London's Mayor Sadiq Khan said public transport and emergency services had stocks in reserve but hospital and care workers, as well as taxi drivers, were struggling to find fuel to go to work.

The government maintains it has enough fuel in stock but not enough lorry drivers to deliver it, with critics blaming an exodus of truckers from Europe after Brexit.

Ministers, though, insist the situation mirrors driver shortages across the EU, which have been exacerbated by the coronavirus pandemic, leaving some supermarket shelves empty and raising fears about deliveries for Christmas. 

PRA Chairman Brian Madderson told the BBC that shortages were down to "panic buying, pure and simple", as the government triggered emergency measures.

Business Secretary Kwasi Kwarteng said he had suspended oil industry competition laws to ensure suppliers "can share vital information and work together more effectively to ensure disruption is minimised".

Army help?

Prime Minister Boris Johnson is considering whether to call upon soldiers to deliver fuel to petrol stations across the country, according to newspaper reports.

Environment Secretary George Eustice confirmed that the government is using ministry of defence personnel to help train new lorry drivers.

But he insisted there were "no plans at the moment" to draft in troops to drive petrol tankers, and is instead banking on a new short-term visa waiver scheme to entice foreign truckers.

"The most important thing is that people buy petrol as they normally would," he told reporters. "The only reason we don't have petrol... is that people are buying petrol they don't need."

Johnson's spokesman said the government, though, did not rule calling up troops. "As a responsible government, we are taking the preparatory steps necessary should further measures be needed," he told reporters.

Britain's lorry drivers shortage is affecting many sectors including the food industry, although German supermarket Aldi on Monday insisted it was coping well regarding deliveries to its many UK stores.

On Saturday, the government — which campaigned for an end to European free movement — said it will issue up to 10,500 temporary work visas to lorry drivers and poultry workers to ease chronic staff shortages.

The short-term visas are to run from October until late December.

Driver shortage 

The situation has evoked the dark days of the 1970s, when energy supply problems led to a three-day working week and fuel rationing in Britain.

It is reminiscent also of late 2000, when people protesting over high fuel prices blockaded oil refineries, bringing the country to a virtual standstill for weeks.

Britain's government insists it is not alone in suffering from a shortage of lorry drivers — pointing to a lack of heavy goods vehicles (HGV) also in Poland and Germany — a situation it blames on workers taking up different jobs during COVID.

The UK has an estimated shortage of about 100,000 HGV drivers amid warnings from various sectors that supplies will continue to run short.

Oil giant Shell on Monday said it was "working hard to ensure supplies for customers".

It added: "Since Friday we have been seeing a higher than normal demand across our network which is resulting in some sites running low on some [petrol] grades." 

"We are replenishing these quickly, usually within 24 hours."

LONDON — Britain will issue up to 10,500 temporary work visas to lorry drivers and poultry workers to ease chronic staff shortages, the government announced on Saturday, in a U-turn on post-Brexit immigration policy.

The short-term visas, to run from next month until late December, come as ministers grapple with a huge shortfall in drivers and some other key workers that has hit fuel supplies and additional industries.

A tanker drivers shortage has caused large queues at petrol stations in recent days, as people ignore government pleas not to panic-buy fuel after some garages closed due to the lack of deliveries. 

The decision to expand the critical worker visa scheme is a reversal by Prime Minister Boris Johnson, whose government had tightened post-Brexit immigration rules insisting that Britain's reliance on foreign labour must end.

It had resisted the move for months, despite an estimated shortage of around 100,000 heavy goods vehicle (HGV) drivers and warnings from various sectors that supplies would run short.

Transport Secretary Grant Shapps nevertheless insisted he was taking action "at the earliest opportunity" and that a broader package of measures announced would ensure pre-Christmas preparations "remain on track".

"The industries must also play their part with working conditions continuing to improve and the deserved salary increases continuing to be maintained in order for companies to retain new drivers," he added.

Millions of pounds for 'skills bootcamps' 

The new measures will focus on rapidly expanding the number of new domestic drivers, and include deploying ministry of defence driving examiners to help provide thousands of extra tests over the next 12 weeks.

Meanwhile, the education ministry and partner agencies will spend millions of pounds training 4,000 people to become HGV drivers, creating new so-called "skills bootcamps" to speed up the process.

Nearly 1 million letters will also be sent to all drivers who currently hold an HGV licence, asking any not currently driving to come back to work.

Johnson has been under increasing pressure to act, after the pandemic and Brexit combined to worsen the haulier shortage and other crises emerged, including escalating energy prices.

As well as threatening timely fuel supplies, the lack of lorry drivers has hit British factories, restaurants and supermarkets in recent weeks and months.

US burger chain McDonald's ran out of milkshakes and bottled drinks last month, fast-food giant KFC was forced to remove some items from its menu, while restaurant chain Nando's temporarily shut dozens of outlets due to a lack of chicken. 

Supermarkets are also feeling the heat, with frozen-food group Iceland and retail king Tesco warning of Christmas product shortages.

This week it was the turn of the fuel sector, with growing lines of cars clogging the approaches to petrol stations following some closures and panic-buying, particularly in southeast England.

Drivers appeared less than reassured on Saturday, as queues again formed for fuel.

Mike Davey, 56, had been waiting more than half an hour to fill up at a petrol station run by the supermarket chain Tesco in Kent, southeast of London.

"I just want to get some fuel to get to work. People are just like filling up jerry cans — it's ridiculous," he said. 

"Maybe they need to bring some army drivers in," Davey added.

The government has so far resisted calls to deploy soldiers to help deliver petrol directly.

As part of the measures announced, taxpayers will also help pay for some adult HGV license applications in the next academic year — which can cost thousands of pounds — through an adult education budget fund.

KHARTOUM — Sudan's transitional government on Sunday sent a senior delegation to the Red Sea trade hub of Port Sudan to negotiate with demonstrators threatening the country's fuel supplies and revenue.

Information Minister Hamza Baloul confirmed the team's arrival while another senior official, who preferred to remain anonymous, said "the delegation won't come back [to the capital Khartoum] before solving the crisis".

A protest leader announced on September 20 that dozens of demonstrators, objecting to parts of a peace deal with rebel groups, had blocked the main container and oil export terminals in Port Sudan.

By Saturday, Sudan's Oil Minister Gadein Ali Obeid warned of "an extremely grave situation" with two pipelines blocked by the protesters.

One transports oil exports from South Sudan while the other handles Sudanese crude imports.

Sudan had reserves to last only for 10 days, Obeid's ministry said.

Neighbouring South Sudan produces around 162,000 barrels of oil per day, which are transported by pipeline to Port Sudan and then shipped to global markets.

The Khartoum government receives around $25 for every barrel of oil sold from the South, according to official figures. 

The delegation to Port Sudan, the country's main seaport, is headed by sovereign council member Shams Al Din Kabashi and other ministers.

Sudan formed the joint civilian-military sovereign ruling council months after the ouster of Omar Al Bashir, Sudan’s authoritarian ruler for 30 years, in April 2019.

It serves alongside a transitional government, headed by civilian Prime Minister Abdalla Hamdok, which last October signed a peace agreement with several rebel groups.

But the eastern protesters, from Sudan's Beja minority, say that the deal with rebels from the Darfur region, Blue Nile and South Kordofan states ignored their interests. 

Speaking in Khartoum on Sunday, sovereign council chief Abdel Fattah Al Burhan described the protesters' demands as "a political matter that must be dealt with politically".

While impeding access to Port Sudan, the protesters late last week also blocked the entrance to the city's airport and a bridge linking Kassala with the rest of the country.

WASHINGTON — After an investigation found she used her senior role at the World Bank to manipulate data in favour of China, IMF Managing Director Kristalina Georgieva on Friday issued a statement again denying misconduct and rejecting the report.

"Let me be clear: the conclusions are wrong. I did not pressure anyone to alter any reports. There was absolutely no quid pro quo related to funding for the World Bank of any kind," Georgieva wrote in a statement. 

An independent investigation released last week found that during her time as World Bank CEO, Georgieva was among top officials who pressured staff into changing data to China's benefit in the 2018 edition of its closely watched Doing Business report.

The bank has since scrapped the report, while the US Treasury called the findings "serious".

In a statement released through US strategic communications firm SKDK rather than through the IMF, Georgieva, who took the top job at the Washington-based crisis lender in 2019, pledged changes to her management style.

"As much as I have strived to be open and inclusive, I was very sorry to learn that some staffers felt their concerns were not heard. Moving forward, I will make sure to be even more attentive to hearing staff views," she wrote.

The probe from an outside law firm found that Georgieva along with her associate Simeon Djankov, a former Bulgarian finance minister who created the report, and Jim Yong-kim, then-president of the bank, pressured staff to change the calculation of China's ranking to avoid angering Beijing.

The push came while bank leadership was engaged in sensitive negotiations with Beijing over increasing the bank's lending capital.

Nobel Laureate Paul Romer, who was chief economist for the World Bank during her time there and later resigned after raising separate concerns about the Doing Business rankings, said "the kind of intimidation this report describes was real" and said Georgieva arranged a "whitewash" of his criticisms.

Shanta Devarajan, a former acting chief economist of the World Bank, defended Georgieva, writing on Twitter that she specified that China's data should be verified without compromising the rankings' integrity.

"The changes to China's score were either correcting coding errors or judgment calls on questions where judgment was required," he said on Thursday.

"At no point did I feel I was being pressured," he said, adding the allegation Georgieva tampered with the data "is beyond credulity".