Graeme Wearden 

China lockdown worries hit stocks; Uber and Twitter shares fall; Wizz Air to cut more flights – as it happened

Shares hit as China try to quell resurgent Covid-19 outbreaks, while shares in Twitter drop after Musk tries to cancel takeover, and Uber is hit by leak
  
  

A stock ticker outside Exchange Square, the building housing the stock market in Hong Kong, China, today
Exchange Square, which houses the Hong Kong stock exchange, Photograph: Jérôme Favre/EPA

Summary

A quick recap

Stock markets have begun the week with fresh worries about the global economy, after new outbreaks of the fast-spreading Omicron subvariant in several Chinese cities.

China’s CSI 300 index posted its biggest one-day drop in seven weeks, while gambling company stocks slumped after Macau closed down non-essential businesses.

Mining company and travel stocks have dropped in London, on concerns of an economic slowdown and weaker demand for commodities.

Victoria Scholar, Head of Investment at Interactive Investor sums up the day:

It was a tough start to the week for Chinese equity markets with Hong Kong’s HSI closing down almost 3% while the Shanghai Composite also finished the session in the red.

Tech behemoths like Tencent and Alibaba were among the hardest hit after facing fines from Beijing for reportedly not following anti-monopoly rules while casino stocks like Wynn Macau and Sands China were sharply lower following the news of fresh coronavirus lockdown measures in Macao.

Oil markets were also rattled after the first case of the highly transmissible Omicron subvariant was discovered in Shanghai as China’s draconian zero-tolerance approach to covid continues to take its toll on the world’s second largest economy.

Today’s volatility puts further strain on international investor confidence in China with a cocktail of pressures sending its equity markets sharply lower.

There has been fresh travel disruption in the UK, with Heathrow cancelling over 60 flights as it continues to struggle to to handle passenger numbers.

The UK’s largest airport also warned that it might have to ask airlines to cut more flights, if their existing reduction plans don’t go far enough.

Budget airline Wizz Air is to cut more summer capacity, as it tries to avoid disruption.

Shares in Twitter tumbled 7% after Elon Musk said he was terminating the takeover deal -- setting the scene for a courtroom battle.

And Uber’s shares fell 5% after leaked files exposed its attempts to lobby Joe Biden, Olaf Scholz and George Osborne, and its hiring of a political operative linked to Russian oligarchs in an attempt to buy influence in the country.

The Uber files is a global investigation based on a trove of 124,000 documents that were leaked to the Guardian by Mark MacGann, Uber's former chief lobbyist in Europe, the Middle East and Africa. The data consist of emails, iMessages and WhatsApp exchanges between the Silicon Valley giant's most senior executives, as well as memos, presentations, notebooks, briefing papers and invoices.

The leaked records cover 40 countries and span 2013 to 2017, the period in which Uber was aggressively expanding across the world. They reveal how the company broke the law, duped police and regulators, exploited violence against drivers and secretly lobbied governments across the world.

To facilitate a global investigation in the public interest, the Guardian shared the data with 180 journalists in 29 countries via the International Consortium of Investigative Journalists (ICIJ). The investigation was managed and led by the Guardian with the ICIJ.

In a statement, Uber said: "We have not and will not make excuses for past behaviour that is clearly not in line with our present values. Instead, we ask the public to judge us by what we’ve done over the last five years and what we will do in the years to come."

Shares in energy producers jumped, after outgoing prime minister Boris Johnson ditched mooted plans to introduce a windfall tax on the sector.

Soaring prices have plunged more people into financial trouble than Covid-19, according to a study tracking the fortunes of UK households since the start of the pandemic.

Former Formula One boss Bernie Ecclestone will face charges of fraud by false representation after an investigation by UK tax authorities which allegedly found undeclared assets worth more than £400m overseas.

Updated

Protest in China over frozen bank accounts ends in violence

A rare large-scale protest in China’s central Henan province has been violently broken up by unidentified security personnel, amid outcry over a financial scandal that has exposed the fragility of the country’s banking system.

A crowd of more than 1,000 protesters, according to some estimates, had gathered on Sunday in front of the Zhengzhou sub-branch of the People’s Bank of China to attempt to recover frozen savings held in rural banks.

Footage reviewed by the Guardian showed protesters demanding local authorities help them retrieve their savings. Some held banners that said: “Henan banks, give me my money back!”, while others called for China’s premier, Li Keqiang, to personally intervene.

White-shirted security guards confronted the crowd. Video showed them dragging protesters and beating them up. One man with a swollen eye said he had been beaten by “gangsters” and dragged on to a bus by police.

More here:

Michael Pettis, a professor of finance at Peking University, said the events in Henan had been a “very worrying reminder” of what would happen if China’s existing economic model became unsustainable.

“Because the past decade in China has seen a real estate bubble of historic proportions, along with among the fastest increases in debt ever seen, I suspect we are going to see a lot more of this in the next few years.”

Uber shares fall 5% after leak shows it flouted laws, duped police and secretly lobbied governments

Shares in tech giant Uber have dropped 5% in early trading, following the disclosure of confidential files showing the ethically questionable practices that fuelled the company’s success.

Uber’s shares have fallen as low as $21.20, down from $22.34 on Friday night, following the disclosure of the Uber Files.

This knocks over $2bn off the company’s market capitalisation.

The unprecedented leak of more than 124,000 documents to The Guardian showed how the company had flouted laws, duped police, exploited violence against drivers and secretly lobbied governments during its aggressive global expansion.

As the investigations team behind today’s stories explain:

The leak spans a five-year period when Uber was run by its co-founder Travis Kalanick, who tried to force the cab-hailing service into cities around the world, even if that meant breaching laws and taxi regulations.

During the fierce global backlash, the data shows how Uber tried to shore up support by discreetly courting prime ministers, presidents, billionaires, oligarchs and media barons.

Leaked messages suggest Uber executives were at the same time under no illusions about the company’s law-breaking, with one executive joking they had become “pirates” and another conceding: “We’re just fucking illegal.”

The cache of files, which span 2013 to 2017, includes more than 83,000 emails, iMessages and WhatsApp messages, including often frank and unvarnished communications between Kalanick and his top team of executives.

Senior executives at Uber ordered the use of a “kill switch” to prevent police and regulators from accessing sensitive data during raids on its offices in at least six countries, the investigation shows.

The leaked files also show how Uber secretly hired a political operative linked to Russian oligarchs in an attempt to buy influence in the country, despite concerns that paying the lobbyist risked bribes being paid to “grease the skids”.

The deal was part of a concerted effort by the Silicon Valley company to court several billionaires as well as top state officials allegedly aligned with Vladimir Putin in an attempt to secure its place in the Russian market.

In this previously unknown lobbying campaign in 2015-16, Uber tried to secure influence at the highest levels of the Russian state by approaching oligarchs said to have close ties to the Kremlin and encouraging them to invest in the company.

But it is the arrangement with Vladimir Senin – an influential lobbyist at the time and now a pro-Kremlin member of the State Duma – that could prove most damaging to Uber. Former US prosecutors and corruption experts said the circumstances in which Uber hired Senin in 2016 should have raised “red flags” and risked breaching US anti-bribery laws.

Uber accepted it had hired Senin and paid him hundreds of thousands of dollars, but said it did not believe there was any violation of the law. Referring to his ties to Putin, a company spokesperson said:

“We certainly would not engage with Mr Senin or others like him today.”

Twitter shares fall in US

Shares in Twitter have dropped 7% at the start of trading in New York, as investors react to Elon Musk announcing he is terminating his deal to acquire the company.

Twitter have dropped to $34.12, their lowest since mid-March, shortly before Musk announced he’d agreed to pay $54.20 per shares for the social media firm.

But with Twitter vowing to take Musk to court to force him to buy the company for $44bn, the bumpy and often troubled takeover saga isn’t over.

Musk walked away -- or at least tried to -- arguing that there are many more spam bot accounts on Twitter’s platform than it claims, and accusing the company of not providing to provide enough information on spam accounts.

The Tesla chief also accused Twitter of breaching their agreement by failing to consult with Musk when firing senior employees recently.

But the issue could now be resolved in the court of Delaware, with several ways the dispute could play out.

Musk could pay the $1bn break-up fee agreed in the original deal, or Twitter could win its argument that he buys the whole company at the $44bn price.

Alternatively, Musk could win -- although some legal experts aren’t convinced by his case.

“The agreement doesn’t give him the right to receive any information, for any reason,” said Brian Quinn, an associate professor at Boston College law school.

“He is going to bear a burden of proving to the court that he had legitimate need for the information and that his requests were reasonable. He can’t use unreasonable information requests to create a pretext to claim a violation.”

Or... the two sides could renegotiate at a lower price. Or Musk could even change his mind....

Updated

Millions of German jobs at risk if Russia turns off gas

Millions of workers’ livelihoods in Germany are at stake if Russia decides to cut off gas supplies to the country in the long run, as feared, the head of the German Federation of Trade Unions has warned.

DBG chief Yasmin Fahimi told the Handelsblatt newspaper:

“In the event of a continued halt of gas supply from Russia, companies that were still posting record profits in the first two quarters could quickly find themselves in existential distress and millions of jobs could be threatened as a result.

There’s anxiety over energy disruption in Europe today, as Russia turns off the biggest single pipeline carrying gas to Germany today for annual maintenance.

The Nord Stream 1 pipeline, which transports 55 billion cubic metres (bcm) a year of gas from Russia to Germany under the Baltic Sea, is due to be offline from today until July 21st.

However governments, markets and companies are all worried the shutdown might be extended because of the war in Ukraine.

Robert Habeck, Germany’s economy minister, spoke of the “nightmare scenario” that could occur if Russia doesn’t turn the pipeline back on again.

Habeck told the broadcaster Deutschlandfunk:

“Everything is possible, everything can happen.

It could be that the gas flows again, maybe more than before. It can also be the case that nothing comes.

Former Formula One boss Bernie Ecclestone will be charged with fraud by false representation, the Crown Prosecution Service has announced.

The CPS says it has authorised the charging of Bernard Charles Ecclestone with fraud by false representation, following an HMRC investigation into overseas assets believed to be worth more than £400m.

Andrew Penhale, Chief Crown Prosecutor, said:

“The CPS has reviewed a file of evidence from HMRC and has authorised a charge against Bernard Ecclestone of fraud by false representation in respect of his failure to declare to HMRC the existence of assets held overseas believed to be worth in excess of £400m.

“The Crown Prosecution Service reminds all concerned that criminal proceedings against this defendant are now active and that they have a right to a fair trial. It is extremely important that there should be no reporting, commentary or sharing of information online which could in any way prejudice these proceedings.”

More details here.

Here’s the Communication Workers Union on today’s strike action at Crown Post Offices, in a pay dispute (see earlier post for details).

Update: Sri Lanka’s president and the cabinet will make way for a unity government, the prime minister’s office said on Monday, after tens of thousands stormed the official residences of both men, enraged by the island’s worst economic crisis in decades.

The parliamentary speaker said President Gotabaya Rajapaksa would resign on Wednesday, Reuters reports.

There has been no direct word from Rajapaksa, whose brothers and nephew earlier quit as ministers as the country began running out of fuel, food and other essentials in the worst crisis since independence from Britain in 1948.

Prime Minister Ranil Wickremesinghe, whose private home was set alight by protesters, has said he will step down. His office said Rajapaksa had confirmed his resignation plans to the prime minister, adding that the cabinet would resign once a deal was reached to form an all-party government. More here.

Sri Lanka’s government bonds have slumped to fresh lows today as the country’s economic crisis hit new depths.

Sri Lanka’s president, Gotabaya Rajapaksa, informed the prime minister, Ranil Wickremesinghe, that he will resign, following mass protests last weekend.

Hundreds of thousands of people descended on Colombo and overran the president’s house and office, and the residence of the prime minister, following the turmoil that has left Sri Lanka facing soaring inflation, power outages, and shortages of food, fuel and medicines.

This has left Sri Lanka facing a political vacuum, as South Asia correspondent Hannah Ellis-Petersen reports:

Protesters have continued to occupy the president and prime minister’s official properties, claiming them as public property and stating that they will not leave until both have stepped down.

On Sunday, leaders from Sri Lanka’s main opposition parties met to try to form a new unity government and decide who would be put forward as the new prime minister and president.

Sri Lanka said in May that it would default, as its government tried to hold onto its scarce foreign currency reserves.

The country’s dollar-denominated bonds, which are already in default due to Sri Lanka’s widespread economic crisis, weakened as much as 2.25 cents today. That left many trading below 30% of their original face value.

Wall Street is set for a weak start to the new week, as China’s latest Covid-19 lockdowns worry traders.

The S&P 500 index is down around 0.6% in the futures market, with commodity producers and energy stocks hit by slowdown worries.

More strike news....Belgian Ryanair pilots will join the industrial action planned by their French counterparts on July 23 and 24, Belgian public service broadcaster RTBF reported today.

Dider Lebbe, permanent secretary of the CNE union, told RTBF that cabin crew members were demanding compliance with Belgian labour and a guaranteed minimum salary for all (via Reuters).

No 10 says no plans to extend windfall tax to energy generators

Shares in electricity producers have jumped after Boris Johnson’s spokesman said the PM has no plans to extend a windfall tax on profits to electricity generators before he steps down.

Asked whether the windfall tax that is being introduced for oil and gas producers would be extended to electricity generators, the spokesman said:

We would not seek to make any new policies or major fiscal decisions. So there’s no plans to do that.

We will continue to evaluate the scale of the profits and consider appropriate steps but there’s no plans to introduce or extend that to that group.

SSE, which runs gas-fired power stations and hydro plants to generate power, have jumped 3.3% to the top of the FTSE 100 index, along with Centrica (+4%), Britain’s biggest energy supplier.

Drax, which owns the UK’s largest power station, have jumped 6.3% to the top of the FTSE 250 index.

Former chancellor Rishi Sunak had hinted that he could widen the windfall tax on North Sea oil producers to electricity generators, as they had also enjoyed extraordinary profits recently.

But with most of the candidates to replace Johnson pledging to cut taxes (despite the pressure on public services) there may be less appetite to extend the windfall tax further.

Updated

The UK’s summer of industrial action continue to grip the courts, where barristers have walked out for a third week running.

Criminal cases face further disruption as a four-day strike by defence barristers went ahead today.

Lawyers gathered at the Supreme Court in London as well as Birmingham, Preston and Plymouth Crown Courts to support the ongoing Criminal Bar Association (CBA) action in a dispute over conditions and Government set fees for legal aid advocacy work.

The Ministry of Justice (MoJ) announced at the end of June that a 15% pay rise would be applied from the end of September, claiming the typical criminal barrister would receive £7,000 extra a year as a result.

But CBA is asking for 25% and is angry at the delay. It also says that many will receive nothing like £7,000, with specialist criminal barristers making an average annual income after expenses of £12,200 in the first three years of practice.

New bank lending in China leapt in June, as Beijing’s central bank stepped up its efforts to revive the pandemic-hit economy.

Chinese banks extended 2.81 trillion yuan (£350bn) in new yuan loans in June, beating forecasts, data from the People’s Bank of China showed today.

That’s an increase on May’s lending, and the highest since March, as the PBoC tries to support the economy by maintaining accommodative monetary support.

Worries about global growth are pushing the pound and the euro down, as investors seek the safe haven of the dollar.

This has knocked the euro back towards last week’s 20-year lows, at just below $1.01 to the dollar.

The pound has also lost ground, down almost one cent to $1.195. That’s close to sterling’s lowest level since the pandemic, which it touched last week.

Thanim Islam, market strategist at international business payments specialist Equals Money, says:

Dollar demand still persists in the markets with a further bid attributed to safe-haven demand following a sell in China equity markets as Covid-19 cases in Shanghai continued to climb.

China's stock market sees biggest fall in seven weeks as Covid cases rise

China’s stock market has posted its biggest fall in seven weeks, as the latest Covid restrictions spark global growth worries.

The CSI 300 index of Chinese stocks has fallen 1.7% today, following the flare-up of Omicron variants in several cities, the biggest drop since late May.

Hong Kong’s Hang Seng index has tumbled 2.7%.

Mohit Kumar of Jefferies says:

Overnight, the risk sentiment is on the back foot with Asian stocks and E-minis [US futures] lower on concerns over rising COVID cases in China.

Bloomberg has calculated that close to 30 million people in China are under some form of movement restrictions.

That figure has risen as more cities and counties seek to quell resurgent Covid-19 outbreaks. Shanghai ordered further rounds of compulsory testing last week, and Macau is today closing down non-essential businesses such as gambling venues (see earlier).

Bloomberg says:

The nation reported 352 new cases for Sunday, with the daily figure hovering over 300 for the past week, the highest level since late May. New infections in Shanghai jumped to more than 60 for Sunday, from near zero just over a week ago, spurring concern the city’s brutal two-month lockdown could be revived.

Other metropolises are imposing curbs as outbreaks flare, putting China’s zero-tolerance approach to the virus to the test once again.

Xi’an, home to more than 13 million people and the famed Terracotta Warriors, and Wuxi, a manufacturing hub in eastern China with a population of 7.5 million, are both under city-wide restrictions. Xi’an started “seven days of control measures” -- a new description for Covid restrictions now being used by officials -- after a cluster there was found via genetic sequencing to be the BA.5 sub-variant, which may have higher immune escape than earlier omicron strains.

Heathrow cancels more than 60 flights today

Heathrow airport has cancelled more than 60 flights today -- highlighting how airports are struggling to cope with rising demand.

The flights were spread across Terminals 3 and 5, with British Airways, Virgin Atlantic and Air France among the airlines affected.

The cancellations came as Heathrow warned that it could force airlines to scrap more flights.

A spokesperson for the airport said in a statement.

“We are expecting higher passenger numbers in Terminals 3 and 5 today than the airport currently has capacity to serve, and so to maintain a safe operation we have asked some airlines in Terminals 3 and 5 to remove a combined total of 61 flights from the schedule,”

“We apologise for the impact to travel plans and we are working closely with airlines to get affected passengers rebooked on to other flights.

Here’s the full story by my colleague Jasper Jolly:

Here’s AJ Bell investment analyst Danni Hewson on Wizz Air’s latest results, and its plan to cut capacity.

“Despite its best efforts to aggressively grow its position in the low-cost airline market, Wizz Air’s latest trading update doesn’t paint a picture of a company flying high.

“While aircraft capacity is up compared with the period just before the pandemic, the percentage of bums on available seats has fallen.

“Wizz Air’s ticket fares were down in the quarter and there has been a big jump in fuel costs. All in all, the airline was loss-making in its first quarter, meaning the considerable effort put into making it a winner in the industry hasn’t actually generated any extra money in its pocket.

“Ever the optimist, Wizz Air sees a much better second quarter, predicting that ticket prices will be higher, more people will be travelling, and non-fuel costs will ease back. However, like many other airlines, Wizz Air is reducing its capacity this summer to ease pressures on airports.

“There isn’t much else that Wizz Air can do beyond entering a price war to help fill its planes to maximum capacity. That seems unlikely given the trend across the sector is for air fares to go up.”

Wizz Air to cut more flights amid summer travel woes

Low cost European carrier Wizz Air is cutting its peak summer flight programme due to travel chaos at airports.

The Hungarian airline, which is listed in London, said it would trim its capacity by another 5% as part of efforts to avoid flight cancellations and delays due to “ongoing external disruptions”.

Wizz Air told the City it had adjusted its schedules to improve agility and resiliency, to avoid cancellations and lift it punctuality, adding:

In total for the peak summer period we expect to reduce utilization a further 5% versus the plan outlined at the full year results to reduce the impact of ongoing external disruptions.

Strikes and staff shortages have already forced airlines to cancel many thousands of flights -- with Heathrow hinting today that more could be scrapped if necessary.

Despite this disruption, Wizz Air expects to make “a material operational profit” in the July-September quarter, due to a pick-up in revenues and pricing.

It made an operating loss of €285m in April-June, due to travel disruption, lower prices in April and May, and the strength of the US dollar against the euro.

Updated

Heathrow has apologised for the chaos caused by delays and cancellations since pandemic travel restrictions were lifted.

In this morning’s statement to the stock market (see earlier post), the airport said it was sorry about the problems leading to a rebound in demand.

“Despite our best efforts there have been periods in recent weeks, where service levels have not been acceptable, with long queue times, delays for passengers with reduced mobility, bags not travelling with passengers or arriving late, and we want to apologise to any passengers who have been affected by this,”

Here’s the full story:

Updated

Elon Musk has responded to Twitter’s pledge to sue him, with a series of photos of himself having a good old chortle:

But will Twitter actually have the last laugh, having turned to New York-based law firm Wachtell, Lipton, Rosen & Katz to force Musk to complete the deal?

One legal expert said he expected Twitter to file a lawsuit in Delaware, the US state that has jurisdiction over the deal, as soon as Monday, to prevent Musk wriggling out.

Our global technology editor Dan Milmo reports:

“They will likely be asking for a declaratory judgment that they are not in violation of the contract. Also, they will ask for an order from the court that Musk specifically perform his obligations under the agreement,” said Brian Quinn, an associate professor at Boston College law school.

Under the terms of the agreement the company can ask a judge for “specific performance”, which would compel Musk to buy the company for the $54.20 a share he agreed to in April. Alternatively, the company can also seek a $1bn break fee from Musk for walking away from the deal in contravention of the agreement.

Quinn said Musk’s arguments would probably fail in court. In Friday’s letter, Musk put forward three broad arguments: that Twitter had breached the agreement by failing to provide enough information on spam accounts; that Twitter has misrepresented the number of spam accounts in its disclosures to the US financial watchdog; and that the company breached the agreement by failing to consult with Musk when firing senior employees recently.

Quinn said Musk’s information requests on spam accounts were not “reasonable” and would not be accepted by the court. “He can’t use unreasonable information requests to create a pretext to claim a violation,” he said.

Twitter shares drop 7%

Shares in Twitter have dropped 7% in Frankfurt this morning, after Elon Musk announced on Friday night he was terminating his $44bn bid to buy the company.

They’ve fallen from €38 (or around $38) last week to below €34.

Musk had originally agreed to pay $54.20 a share, but the stock had already fallen away from that levels as doubts grew over the transaction:

Updated

Growth worries are pushing the oil price down this morning, with Brent crude off $2 per barrel at $104.80.

Last week, Brent briefly fell below the $100 per barrel mark for the first time since the Ukraine invasion.

European markets hit by Covid worries

European stock markets have dropped sharply in early trading, as traders worry about rising Covid-19 cases in China.

In the City, the FTSE 100 index has dropped by 75 points, or 1%, to 7120, while Germany’s DAX and France’s CAC have lost around 1.4% each.

Mining companies are leading the selloff in London. Anglo American has lost 4.5% and Antofagasta are down 3.6%, on fears of lower demand for commodities such as iron ore, coal and copper.

Restrictions have been reimposed in several Chinese citues as authorities respond to rising cases of the new, more infectious, Omicron subvariant.

As well as the closures in Macau (see last post), the city of Xi’an, home to 13 million, went into a seven-day “circuit breaker” lockdown last week to battle an outbreak of Omicron BA.5.

China’s stringent zero-Covid policy has led to a cycle in which outbreaks lead to mass testing, lockdowns and eventually the easing of restrictions, weighing on growth and disrupting supply chains.

Macau casino stocks tumble in shutdown to battle Covid-19

In the financial markets, shares in Macau casino operators have slumped today as the world’s largest gambling hub battles its worst-ever Covid-19 outbreak.

Macau shut all its casinos for the first time in more than two years today, along with other non-essential businesses, with people ordered to stay at home

Macau has recorded about 1,500 Covid-19 infections since mid-June. Around 19,000 people are in mandatory quarantine, according to government figures.

More than 30 zones in the city that have been deemed high risk are now under lockdown, meaning no one is allowed to enter or exit for at least five days. While the government said it was not imposing a citywide lockdown, the stringent measures mean Macau is effectively closed.

A Bloomberg gauge of the city’s six licensed casino operators fell as much as 6.3%, and is down 20% this year.

Sands China, the resorts and casinos developer, has shed 8.5%.

‘Worse than the pandemic’: price rises push more people into financial trouble

Soaring prices have plunged more people into financial trouble than Covid-19, according to a study tracking the fortunes of UK households since the start of the pandemic.

A total of 1.6 million more households are struggling than the last time the study of 6,000 households reported nine months ago.

It brings to 4.4 million – one in six – the number of households estimated to be in “serious financial difficulties” across the whole population.

The majority of those have cut the quality of food they eat, a third have pawned possessions and a quarter have cancelled insurance, the research shows. Single parents, renters, disabled people and families with three or more children are worst affected. Credit card debt is rising and a quarter have zero savings.

More UK households are being hurt by the rising cost of living

The only group in less financial strife since October 2021 are households with income of more than £100,000, according to the study by Abrdn Financial Fairness Trust and Bristol University.

Mubin Haq, the chief executive of Abrdn Financial Fairness Trust, said:

“This is the first substantial deterioration we have seen since tracking people’s finances when the pandemic started.

“Times are tough for everyone, but it’s those on the lowest incomes who are particularly feeling the effects of rising prices.”

Here’s the full story:

Post Office workers have launched a 24-hour strike over pay, with more industrial action due later this week.

Members of the Communication Workers Union (CWU) are on strike on Monday at Crown Post Offices - the larger branches usually sited on high streets.

Supply chain and administrative workers will strike on Thursday, which the union said will affect sub-post offices.

The CWU which overall represents about 3,500 members involved in the dispute, said the strike was about “dignity and respect”.

The union said its members had rejected a pay offer it said was worth 3% from April this year, on top of a freeze from April 2021, and a £500 lump sum -- which is well below the rate of inflation.

CWU assistant secretary Andy Furey said:

“The blame for this disruption lies entirely with the senior Post Office leadership, who have repeatedly failed - and wilfully refused - to set out a sensible and fair pay agreement.

“Everyone knows that the only solution is a fair pay rise that properly rewards members for their extraordinary efforts in serving the public and delivering a profitable Post Office, while also taking account of the extreme cost of living.

“There most certainly is money available, but management do not want to give workers their fair share.

“Our message to the employer today is: don’t waste our members’ time by misleading statements.

“Stop the spin and get serious about pay. Until you do this, the strikes will continue.”

Inaction from former chancellor Rishi Sunak and transport secretary Grant Shapps contributed to the “predictable” and “preventable” delays and cancellations that have crippled airports across the country, the boss of a leading airline services company has claimed.

Philipp Joeinig, chief executive of Menzies Aviation, says the industry asked for Government help in minimising staff shortages fuelled by Brexit and the pandemic -- such as a targeted furlough scheme. But assistance was not forthcoming.

Writing in The Times, he said staffing problems that caused travel chaos was both predictable and preventable.

“Brexit had a big negative impact, reducing the available pool of employees.

“This was compounded during the pandemic, with the British aviation sector suffering huge job losses once furlough schemes ended before the easing of travel restrictions - and with many of these people lost to the industry forever.

“The aviation sector lobbied the government at the time to provide sector-specific aid to retain its skilled, security-cleared people to avoid staff shortages. This was not forthcoming for aviation services businesses.”

Heathrow could ask airlines to cancel more flights this summer

Heathrow has warned it will ask airlines to cancel more flights this summer if it doesn’t think they’ve taken enough action to reduce disruption.

In its latest business and traffic commentary, Heathrow says it will “carefully assess” airlines’ reviewed schedule changes, to see if they’ll minimise further disruption for passengers over the summer getaway.

Heathrow CEO John Holland-Kaye says:

“We will review the schedule changes that airlines have submitted in response to the Government’s requirement to minimise disruption for passengers this summer and will ask them to take further action if necessary.

We want everyone who is travelling through Heathrow to be confident that they will have a safe and reliable journey.”

Airlines have been allowed to temporarily give up some of their flights in a “slot amnesty”, to help them trim their schedules to manageable levels following the chaos over Easter and half-term.

Heathrow says it has taken on more staff -- by the end of July it will have as many people working in security as before the pandemic.

Introduction: Firms see inflation lasting longer

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

The cost of living crisis is forcing more Britons to cut back on spending, and company bosses fear there is worse to come.

A survey of company directors has poured cold water on hopes that price pressures could ease.

The Institute of Directors has polled its members, and found that just 27% who expressed an opinion thought inflation would peak by the end of winter.

A fifth think inflation won’t peak until next spring -- later than the Bank of England hopes -- while nearly half see it peaking even later than that.

Inflation is already a 40-year high of 9.1%, and these expectations suggests companies could lift their own prices further -- which would drive up the cost of living even higher.

Kitty Ussher, chief economist of the IoD, said the economy needs to see inflation peaking, as this would improving business and consumer confidence, spurring investment and growth.

But Ussher adds (via the Financial Times):

If business leaders expect inflation to persist for longer, they may adjust their own pricing strategies accordingly, leading to a potential for the expectation of price rises to become self-fulfilling”.

Also coming up today

Elon Musk is facing the prospect of a legal battle with Twitter after announcing on Friday he was pulling pulling the plug on the transaction.

Twitter’s chairman, Bret Taylor, swiftly responded with a tweet stating that the company intended to “pursue legal action to enforce the merger agreement”.

Legal experts say Musk could be forced to complete the deal, despite his concerns over the number of spam accounts on the social media platform.

As Carl Tobias, Williams chair in law at the University of Richmond, puts it:

“Musk’s filing does not appear to give him strong legal grounds to walk away from the deal.

His counsel has only made allegations and arguments for Musk’s position and judges would have to decide whether the evidence that Musk would present is persuasive enough to support ending the deal.”

Twitter, Bloomberg say, are forming a legal team to sue Musk over the dropped takeover, while Twitter’s shares could take a heavy tumble when Wall Street opens.

The UK train drivers’ union is expected to announce today whether it plans to strike in a pay dispute, that could cause huge disruption to rail services.

ASLEF will release the results of strike ballots by drivers at eight train companies, which could lead to walkouts over the summer, adding to the disruption on the UK’s travel network.

A strike by Aslef drivers would halt services at the affected train companies – Chiltern, GWR, LNER, London Overground, Northern, Southeastern, TransPennine and West Midlands – while action by the smaller TSSA union could deprive the rail network of contingency staff to keep services running during a wider strike at Network Rail.

MPs will quiz the Bank of England governor, Andrew Bailey, about the Bank’s Financial Stability Report, published last week, which warned the outlook for the UK economy had “deteriorated materially”.

European markets are set to open lower, amid anxiety over a pick-up in Covid-19 cases in China ahead of the latest US inflation report due on Wednesday.

The agenda

  • 9am BST: China’s new yuan loans in June
  • 12.30pm BST: Eurozone finance ministers meet for a eurogroup meeting
  • 3.15pm BST: Treasury Committee to quiz Bank of England on stability of UK economy

Updated

 

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