Ggood morning. Germany faces an industrial shutdown unless Russia’s gas supply improves, one of its top ministers warned today.
In an interview, Economics Secretary Robert Habeck said: “Companies should shut down production, lay off their workers, supply chains would collapse, people would go into debt to pay their heating bills, people would get poorer”.
The head of German utility group RWE also warned that the continent would be in for “chaos” if the Kremlin cuts its power supply.
“The real fear I have is that European solidarity will be under a lot of pressure if we don’t resolve it before the situation arises,” Markus Krebber told the Financial Times.
Meanwhile, retail sales fell by 0.5 pc in May. as Brits cut food spending amid the fastest price hikes in more than a decade.
Overall, sales volumes are still above pre-Covid levels, but have been declining steadily since last summer.
It came as the mounting crisis in the cost of living pushed household confidence to a new all-time low in June, sparking warnings that Britain “is facing a grim new economic reality”.
GfK’s closely watched confidence tracker fell for the sixth straight month, falling from minus 40 to a new low of minus 41.
5 things to start your day with
1) Employers across the country are preparing to cut wages for homeworkers One in ten companies plan to cut wages or benefits for employees who work from home
2) Debt time bomb a disaster for Tory hopes for economic recovery The country’s finances are at risk of running away from Sunak as the economy is about to turn around
3) Oil executives turn against chancellor in closed meeting over windfalls Rishi Sunak warned tariff will make UK less attractive prospect
4) Retired public sector workers get £2,000 pension increase if inflation rises Former civil servants’ incomes rise 10 percent as ministers call for workers to accept pay cuts in real terms
5) Klarna and Barclays argue over buy now, pay later It comes as the government prepares to hit the fast-growing sector with stricter regulations
What happened overnight?
Stocks and bonds were both headed for their first weekly gains in a month on Friday, as investors bet on central banks chasing inflation as growth fears dragged commodities.
Copper, a measure of economic output with its wide range of industrial and construction applications, is down 3 percent in Shanghai and is down more than 7 percent this week — the sharpest weekly decline since the pandemic-driven financial markets in March 2020.
Oil also fell overnight, with Brent oil futures falling 2 percent weekly to $110.62 a barrel, while benchmark grain prices fell with Chicago wheat falling nearly 9 percent for the week and at the end of the day. lowest since March at $9.42 per bushel.
The price declines provided some relief in equities, as energy and food were the drivers of inflation. After some heavy recent losses, the MSCI World Equities Index is up 2 percent this week.
MSCI’s broadest index of Asia-Pacific stocks outside of Japan rose one percent Friday, flattered by short sellers pulling out of Alibaba — which rose 5 percent — amid hints that China’s tech crackdown is waning.
Japan’s Nikkei rose 0.8 percent before a weekly gain of 1.6 percent and S&P 500 futures were flat after the index rose about one percent overnight.
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