The UK fuel crisis could run another week, fuel retailers have warned, as military tanker drivers took to the roads to relieve pressure on petrol stations.

One in five forecourts in London and the south-east of England were still out of fuel on Monday, according to the Petrol Retailers Association, compared with just 8% across the rest of the country, where the shortage appears to be almost over.

Gordon Balmer, executive director of the PRA, said national fuel supplies were improving. But the situation is still challenging in south-east England and the capital, where about 62% of forecourts had both petrol and diesel on offer on Monday, compared with 86% in the rest of the country.

Balmer said the continued shortages in the south-east were because of the higher population and lower number of fuel stations per head. He told Sky News it could take a week to 10 days for local forecourts to restock, even with the help of the armed forces, who have been deployed to deliver fuel amid a national shortage of HGV drivers.

Almost 200 military personnel, including 100 drivers, began to be deployed from Monday, after being trained at haulier sites across the country over the past week. They will be used to ship fuel to forecourts that are still struggling to meet demand or are dry after the increase in buying.

Balmer said many of his members had been out of fuel since the panic buying began, including BP forecourts. “Some of our members tell us they have been without fuel for a number of days – some over a week now,” he said. “One of the situations seems to be worse with BP but we do know that they are rectifying that.”

He added that extending visas for foreign HGV drivers until March would also help, as would improving terms and conditions to attract new recruits and unblocking the backlog of driver applications and return to work applications at the DVLA.

EG Group announced on Monday afternoon that it was removing its £30 cap on buying fuel as the situation on its forecourts has improved, although there were still challenges at its locations in the south and the south-east of England.

More here:

Goodnight. GW

Back in the City, the blue-chip FTSE 100 ended the day down 16 points or 0.23% at 7011 points.

Sainsbury led the risers (+3.4%) , on speculation that it could be the next supermarket chain to receive takeover interest, while Morrisons fell 3.7% after US private equity group CD&R’s winning takeover bid was lower than some expected.

Oil companies rallied, lifted by the jump in crude prices, while some multinationals were dragged down by a stronger pound.

European markets were pulled down by worries about inflation and the growth outlook, with the Stoxx 600 index dipping 0.5%.

And Wall Street is in the red, as investors ditch big tech companies - sending the Nasdaq down over 2% so far today.

The International Air Transport Association (Iata) has said the airline industry is now over the worst of the Covid pandemic, but urged governments to simplify travel rules and open borders to help the aviation sector operate within a now “endemic” phase of the virus.

Total industry losses are expected to fall to $11.6bn (£8.5bn) in 2022, according to Iata forecasts, which would mean a cumulative loss of just over $200bn in three years as a result of Covid.

Iata’s director general, Willie Walsh, said:

“We are past the deepest point of the crisis. While serious issues remain, the path to recovery is coming into view.”

Walsh called for harmonisation of travel restrictions. Given the improved data, knowledge, vaccines and testing, he said, “the idea that the measures we put in place in February 2020 are relevant today is a nonsense”.

He said:

“Travel restrictions are a complex and confusing web of rules with very little consistency among them. And there is little evidence to support ongoing border restrictions and the economic havoc they create.”

“Where people are fully vaccinated, they should be allowed to travel without restriction or testing.”

The prime minister has confirmed plans to eliminate fossil fuels from UK electricity generation by 2035.

Speaking during the Conservative party conference, Boris Johnson said the proposed shift would help the UK decarbonise, while softening the impact of the kind of gas price fluctuations that have prompted fears of a winter energy crisis in recent weeks.

“What I’m saying is we can do for our entire energy production by 2035 what we’re doing with internal combustion engines in vehicles by 2030,” he said, during a visit to a Network Rail site in Manchester.

“And what we’re also saying is that by 2035, looking at the progress we’re making in wind power, where we lead the world now in offshore wind, looking at what we can do with other renewable sources, carbon capture and storage with hydrogen potentially, we think that we can get to complete clean energy production by 2035.”

The UK generated 43% of its electricity from renewable sources in 2020 but gas-fired power plants still account for a significant proportion.

As the prime minister confirmed plans to decarbonise the electricity grid, gas was providing just under a third of the UK’s electricity demand, at 11.4GW, according to National Grid data.

Britain’s reliance on gas, for heating as well as electricity, has been highlighted by price increases that have prompted warnings of a winter energy crisis, with families facing “desperate choices” as bills go up.

Here’s the full story:

Petrol retailer EG Group is removing the £30 cap on buying fuel which it introduced at the start of the panic buying, 10 days ago.

EG said that fuel availability had improved -- which is another sign that the crisis is easing.

However the Blackburn-based firm, which runs almost 400 petrol stations in the UK, also warned that forecourts in the South and South East of England are find it harder to keep stocked up.

An EG Group spokesperson said:

“Following a significant improvement in fuel availability at our sites, with customer purchasing behaviour returning to normal levels in the majority of locations, we are pleased to confirm that we can now remove the £30 cap on buying fuel.“

“That said, we still continue to experience some challenges, primarily in our locations in the south and the south east, but following the actions from the government to secure additional drivers from the military this week, we expect availability issues easing in the coming days. We will continue to work with our partners and stakeholders to monitor the situation and take action to support our customers as required.”

The South East of England and London are still suffering from the fuel shortages, but the situation has improved in the rest of the country.

That’s according to the latest daily poll of members by the Petrol Retailers Association, which represents independent fuel vendors (who make up two-thirds of forecourts).

It found that one in five petrol stations in London and the South East was out of fuel today, compared to just 8% in the rest of the country.

PRA executive director Gordon Balmer said:

“Today’s figures show the situation is still challenging around London and the South East despite a marginal improvement: 62% of the sites surveyed have both grades of fuel available, 18% have only one grade and 20% are dry. [UPDATED WITH NEW FIGURES].

Yesterday, the PRA reported that 22% of forecourts across the South East and London had no fuel available and 60% had both types available, more than a week after the fuel panic began.

But there has been a “marked improvement” across the rest of the country since yesterday, Balmer added; where 86% of fuel stations have both diesel and petrol on offer, 6% have only one grade and just 8% are dry.

Balmer added that petrol retailers are grateful that the military are now involved, but warns that more help will be needed.

“We are grateful for the support lent by the Government through their provision of military drivers, although further action must be taken to address the needs of disproportionately affected areas”.

The price of US oil has jumped to the highest level since 2014, at over $77/barrel, as the energy price crunch continues.

Brent crude, the international benchmark, has gained almost 2% to $80.85 per barrel, a new three-year high.

The World Trade Organization has raised its projection for global trade growth in 2021 and 2022, citing the resurgence of economic activity in the first half of the year.

The WTO now expects merchandise trade will grow this year by 10.8%, after a fall of 5.3% in 2020.

That’s up from a previous forecast of 8.0%, and would be the fastest year-on-year jump since 2010 (after the recession caused by the financial crisis)

It then sees trade growth of 4.7% in 2022, up from 4.0% forecast before.

WTO Director-General Ngozi Okonjo-Iweala said trade can help the global recovery from Covid-19.

“Trade has been a critical tool in combating the pandemic, and this strong growth underscores how important trade will be in underpinning the global economic recovery,”

But, the WTO also warned that the pandemic remains the biggest risk to the recovery in global trade and output, and that uneven access to vaccines could exacerbate economic divergence.

Okonjo-Iweala warned:

“The longer vaccine inequity is allowed to persist, the greater the chance that even more dangerous variants of Covid-19 will emerge, setting back the health and economic progress we have made to date.”

The chairman of Morrisons has played down concerns over the UK’s supply chain crisis, caused by the national shortage of HGV drivers across Britain.

Andrew Higginson said this morning the supply crunch had been well publicised but was “slightly overblown”, adding that he expected no disruption to Christmas deliveries.

“[Christmas] tends to come every year, and everyone seems to be sort of ready for it,” Higginson said, speaking after the takeover battle for Morrisons was won by CD&R.

“So no, I think it’ll be a good Christmas for people, I think people will want to treat themselves as they usually do.

There are logistical issues at the moment, and I think those are sort of well publicised and slightly overblown, but you know the supply chains in the UK are incredibly efficient and I’m sure we’ll be able to deliver a great Christmas for customers as we go through.”

Here’s the full story:

Some UK pharmacies have reported seeing delays to deliveries of medicines in some areas and called on the government to ensure a robust contingency plan was in place to prevent deeper medicine supply problems, Reuters reports.

“Pharmacists and their teams have been working very hard to ensure patients have access to their medicines during the current crisis,” Leyla Hannbeck, CEO of the Association of Independent Multiple Pharmacies (AIMp), told Reuters, adding:

“While the situation with fuel crisis has started to improve, we are aware that some geographical areas continue to be affected by delays to deliveries of medicines.”

Hannbeck said the crisis was having a considerable impact on the workload and stress of pharmacists:

“We are watching the situation with delivery drivers and fuel crisis very closely and are liaising with the government and asking the government to ensure robust contingency plans and strategy are in place to ensure medicines supply is not affected and that we can continue caring for our patients.”

AIMp represents community pharmacy businesses with multiple pharmacies. Its members represent a significant number of pharmacies across the United Kingdom.

Members of the armed forces arrived at the Buncefield oil depot in Hemel Hempstead this morning, as the military was drafted in to deliver fuel to UK petrol stations.

Soldiers, in uniform and wearing face masks, were seen walking near the gates to the Hertfordshire Oil Storage Terminal.

Almost 200 military personnel, including 100 drivers, are being deployed from Monday to provide temporary support as the government tried to relieve pressure on petrol stations.

These military personnel have been trained at haulier sites across the country over the last week, and will be used to ship fuel to forecourts which are still struggling to meet demand, or dry after the surge in buying.

They arrived as the Petrol Retailers Association warned that petrol stations in the South East are struggling the most, while other parts of the country are in better shape.

Chancellor Rishi Sunak insisted the fuel situation for drivers “is improving”, and that army drivers will help address problems in some areas.

Asked about petrol shortages, he told LBC Radio:

“We know there’s enough petrol at our refineries and our terminals, and the issue is we’ve had a very steep demand spike.

The good news is it is getting better, so I think every single day since about last Tuesday we’ve delivered more petrol to forecourts than has been taken out, the number of people getting deliveries has increased, the volume of fuel getting delivered has increased....

The situation has been improving now for, I think, over a week; every day, as the stats have come on, it’s getting better and, as demand settles back to more normal levels, the strong expectation is things will resolve themselves.

People should know we’re doing everything we can.”

It will take more than a week for the UK’s fuel crisis to be completely resolved, according to the executive director of the Petrol Retailers Association.

Gordon Balmer told Sky News this morning that the situation is slowly returning to normal in most parts of the country.

But, the ‘pinch point’ in the South East of England, due to population density and the number of fuel stations in the region, and it could take up to 10 days for petrol stations to build their stock up to normal levels.

Balmer says:

That’s being worked on right now with military drivers.

We hope the situation will improve during the week, we’ll continue to monitor it, but it might take a week to 10 days for members to build their stocks back up to normal levels.

Balmer adds that extending visas for foreign drivers until March will help, as will improving terms and conditions to attract new recruits, and unblocking the backlog of driver applications and return to work applications at the DVLA.

Balmer also confirmed that 22% of fuel stations in London and the South East were without fuel yesterday, according to its daily straw poll of members.

Some have been out of fuel since the panic buying began, he added:

“One of the situations seems to be worse with BP but we do know that they are rectifying that.

“Some of our members tell us they have been without fuel for a number of days - some over a week now.”

But other areas of Britain, such as Scotland, Northern England and the Midlands, the crisis was almost over, with 6% of forecourts dry yesterday.

Shares in WM Morrison has dropped 3.7% this morning, after US private equity firm Clayton, Dubilier & Rice won a takeover auction for the supermarket chain on Saturday.

CD&R will pay 287p per share, below the 297p which Morrisons had closed on Friday night.

Morrisons shares have now fallen to 285.8p -- still around 60% above their levels before the takeover battle began in June.

Rival supermarket Sainsbury, though, have jumped 2.75% to the top of the FTSE 100 risers, amid speculation that it could be targeted by thwarted Morrisons bidder Fortress.

Fortress was outbid by CD&R on Saturday, having offered to pay 286p per share for Morrisons.

Managing partner Joshua A Pack has indicated that Fortress remained interested in UK assets, saying:

“The UK remains a very attractive investment environment from many perspectives, and we will continue to explore opportunities to help strong management teams grow their businesses and create long-term value.”

Opposition parties have urged CD&R to protect Morrison’s workers and ensure that the supermarket is not heaped with debt and stripped of assets.

Seema Malhotra, Labour MP and shadow minister for business and consumers, said.

“Morrisons is a much-loved British firm which has been rooted in communities up and down the country for over 100 years,”

“The new owners must urgently deliver binding assurances for workers, pension fund holders and local people.”

“We cannot see a repetition of previous cases where businesses have been loaded with debt and asset-stripped. Morrisons is a great British company, which must be safeguarded for the future.”

Europe’s stock markets have opened lower this morning, after racking up their worst week since February.

The pan-European Stoxx 600 is down 0.5% in early trading. Bank stocks, car makers, and luxury goods makers are leading the fallers, a sign of anxiety about growth prospects as rising inflation threatens the outlook.

In London, the FTSE 100 is flat. Travel and hospitality stocks are among the risers, after Merck & Co announced last week that their experimental antiviral pill could halve the chances of dying or being hospitalized by Covid-19.

Oil companies are also rallying.

But BT has dropped 5.5%, following a Sunday Telegraph report that Sky is closing in on a deal with Virgin Media O2 to invest in its full-fibre broadband rollout, which would intensify its challenge against BT.

Trading in shares of debt-laden China Evergrande was suspended by the Hong Kong exchange today after the enormous Chinese developer missed a key bond interest payment last week, its second offshore debt obligation in a week.

Evergrande, which has $305bn (£225bn) of debts, said trade was suspended “pending the release by the company of an announcement containing inside information about a major transaction”, sparking speculation it could sell its profitable property management unit.

Global Times, the Chinese state newspaper, reported that rival property company Hopson Development plans to buy a 51% stake in Evergrande’s property management unit for more than $5bn.

With liabilities equal to 2% of China’s GDP, Evergrande has sparked concerns its woes could spread through the financial system and reverberate around the world.

Here’s the full story:

The news knocked Asia-Pacific markets, with Hong Kong’s Hang Seng index slumped by 2.3% and Japan’s Nikkei closing down 1.1%.

Richard Hunter, Head of Markets at interactive investor, explained:

Concerns around the property sector in China generally depressed Asian markets overnight, as Evergrande missed an interest repayment, exacerbating fears about contagion in the region.

Further news is expected on a potential “major transaction” regarding the company which could potentially ease some fears, although stalling economic growth in the region and a tightening of regulatory restrictions has not helped sentiment.

Staff shortages are rippling out from the haulage, farming and hospitality sectors to almost all parts of the economy, putting “severe pressure” on medium-sized business across the UK, a new survey has warned.

More than a quarter of the 500 firms polled said the lack of staff was putting pressure on their ability to operate at normal levels, with reduced stock – due to the resulting supply chain disruption – hurting their business.

While some firms had considered cutting production, others were planning to raise prices, leading to concerns over rising inflation as the Christmas trading period approaches.

Nearly a fifth said they were increasing wages to attract new staff, while others were introducing extra perks to lure workers.

But the report, released by accountancy and advisory firm BDO, said the knock-on effects for consumers could be “significant”, with nearly one-third of businesses saying the prices would need to rise in the next three to six months to make up for the disruption.

More than one-third of firms in the survey said they had also cut down on the kinds of products and services on offer, with a further third planned to do the same over the coming month unless the situation radically improves. A similar proportion expect stock ranges to be affected long-term.

Businesses blamed the pandemic and Brexit for the shortage of overseas workers, with 38% saying a lack of regional talent was hurting their ability to recruit much-needed staff.

BDO partner Ed Dwan said:

“Brexit, global supply chain issues and the long tail of Covid-19 has created a perfect storm for UK businesses,”

“After navigating the challenges of the pandemic and hoping for some respite, businesses have found themselves facing more major disruption, with those across almost all sectors reporting staff shortages.

“This is an era of upheaval, and the challenges faced by the UK’s mid-tier – the engine of the UK’s economy – points to a long road ahead.”

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the UK supply chain crisis and business.

Britain’s supply chain crisis shows that the public are losing confidence in the government’s ability to manage the economy and handle problems, according to Berenberg Bank today.

Berenberg has cut its forecasts for UK growth in the coming months, and lifted its predictions for inflation, citing the downside risks to near-term real output caused by growing problems in the supply chain.

Kallum Pickering, Berenberg’s senior economist, says the panic buying at the pumps is a “warning sign” for the economy -- highlighting the “dismal state of affairs” and the risk of more serious outcomes ahead.

Pickering (like the government) points out that other European countries, and the US, also face shortages of lorry drivers. But only the UK has seen panic buying - which he sees as proof that the public are losing confidence.

Due to these worsening supply issues, Berenberg now expects UK GDP to expand by 1.4% in the third quarter, down from 1.5% before, and then only by 0.8% in Q4 - just half as fast as the 1.6% previously expected.

For 2022, they have cut their growth forecast to 5% from 5.8%. But on the upside - they expect growth this year to reach 6.9%, due to the strong performance in the second quarter of 2021.

Berenberg also warn that the surge in UK inflation to peak at a slightly higher rate, and persist for longer than previously expected.

• We raise our Q4 2021 call to 4.0% from 3.9% as well as our Q1 2022 call to 4.1% from 3.9%.
• Thereafter, we have lifted our calls by c0.3ppt across the forecast horizon. For our annual calls, we raise 2021 to 2.4% from 2.3%, 2022 to 3.2% from 2.9% and 2023 to 2.5% from 2.2%.

Pickering writes that the whole supply chain crisis begs the question of why the UK (once again) seem to be getting hit harder than other economies?

In my opinion, the panic and hysteria in UK partly reflects a growing lack of confidence by the public in the government’s ability to manage the economy and fix problems when they arise.

The fuel crisis echoes the rush to stockpile toilet paper during the first wave of the pandemic. It is unnerving that panic buying could become a feature of the UK economy – which remains one of the richest and, at least until recently, well managed in the world.

The self-fulfilling fears of shortages of essential goods are akin to a run on a bank when depositors suddenly lose confidence and try to withdraw cash en masse. That the government remains a comfortable 5ppts ahead of the Labour party in opinion polls suggests that the public believes the official opposition would not do any better.

Pickering adds that the the government’s apparent shortcomings hurt economic performance --- citing the slowdown in business investment after the Brexit vote.

If poor crisis management translates into suboptimal economic policy, Johnson could add to the Brexit damage by weakening the UK’s still competitive and flexible markets.

But, the UK’s “highly competent civil service” could make some half-baked policy initiatives more realistic.

The British comedy ‘Yes, Prime Minister’ is of course a parody. But once in a while, it may contain a kernel of truth.

Which takes onto the Conservative Party conference, where the supply chain crisis is a hot topic. Yesterday, prime minister Boris Johnson argued that the supply chain disruption - from queues at forecourts to the threat to mass slaughter pigs - was part of a post-Brexit transition

Johnson told the BBC:

When people voted for change in 2016 and when people voted for change in 2019, as they did, they voted for the end of a broken model of the UK economy that relied on low wages and low skills and chronic low productivity.

We’ve moving away from that.”

Focusing on wage growth, though, when rising inflation is hitting household budgets, and when earnings figures are being distorted by the pandemic.

A Tory MP said that he hopes the current HGV driver shortage will lead to supermarket supply chains being dismantled.

Chris Loder caused a stir by arguing that the disruption “mean that the farmer down the street will be able to sell their milk in the village shop like they did decades ago.”

The fuel supply crisis eased over the weekend. But there were still shortages and closures in London and the South East, where on Sunday morning up to 22% of filling stations were dry and only 60% had both grades of fuel available, according to the Petrol Retailers Association.

Elsewhere in Britain, including Scotland, the Midlands and northern England, the crisis was “virtually at an end”, the PRA said, with 6% of forecourts dry.

Brian Madderson, PRA chairman, warned:

“The fuel is still not going to the pumps that need it most in London and the south east.”

Military drivers are due to take to the road from today, driving fuel tankers to petrol stations which are short of petrol and diesel.

The agenda

• 9am BST: Spanish unemployment report for September
• 3pm BST: US factory sales for August