Stock markets extended their rally when they opened as fears of an energy supply crunch eased, with the key Nord Stream 1 gas pipeline from Russia to Europe due to resume operation on Thursday after maintenance work. But shares later turned negative as worries over energy supplies and recession resurfaced.
The FTSE 100 in London is trading some 18 points lower at 7,279, a 0.2% fall, while Germany’s Dax is down 0.8%, France’s CAC lost 0.5% and Italy’s FTSE MiB dropped 1.5%. The Italian prime minister Mario Draghi demanded a new pact from his coalition partners if they wanted him to stay in office, after tendering his resignation six days ago.
On Wall Street, shares were mixed: the Nasdaq opened 0.1% higher after a positive outlook from Netflix set the tone for other high-growth stocks, while the S&P 500 and the Dow Jones were flat.
The EU’s executive in Brussels has set out a plan to cut gas use, urging member states to cut consumption by 15% between 1 August and 31 March. It’s a voluntary cut, but could become mandatory in an emergency. The president of the European Commission, Ursula von der Leyen, said a complete shutdown of Russian gas flows was “likely”.
The EU has been scrambling to wean itself off Russian gas since the invasion of Ukraine, but is alarmed about a potential energy crisis this winter.
Inflation also picked up in Canada, to 8.1% last month, the fastest annual increase in the cost of living in 39 years, caused by a near-55% spike in gasoline prices and a near-9% rise in food prices.
Here’s a round-up of today’s other main stories:
In Canada, inflation picked up to 8.1% last month, according to Statistics Canada, the fastest annual increase in the cost of living in 39 years.
Gasoline was the biggest single factor pushing inflation up, as pump prices were up 54.6% compared to the same month a year ago, while food prices jumped 8.8%.
Italy’s Draghi seeks new coalition pact
The Italian prime minister Mario Draghi has stepped back from resigning, calling on his coalition partners to come up with a new pact to save his unity government from collapse, after receiving public support for the coalition.
Six days after the president rejected his resignation, Draghi told Italy’s Senate a new agreement was “the only way, if we want to stay together”.
We need a new, sincere and concrete pact: are you ready?
Draghi, the former president of the European Central Bank, has led an Italian unity government for 18 months and was due to step down next year ahead of elections. But he stood down last Thursday when a key member of the coalition government, the populist Five Star movement, pulled out of a confidence vote and triggered a political crisis.
Meanwhile, in London Boris Johnson bowed out of his final parliamentary appearance with a round of applause from his party, jeers from the opposition and this exit line:
Mission largely accomplished… hasta la vista, baby.
Opposition parties have accused Rishi Sunak of “economic illiteracy” and a lack of seriousness over the climate emergency after he announced a plan for the UK to become energy independent while at the same time making it harder to use onshore wind, writes our political correspondent Peter Walker.
Before the fifth and final round of MPs’ voting for the Conservative party leadership on Wednesday, the former chancellor set out what he called an “energy sovereignty strategy”, intended to achieve UK energy independence by 2045 at the latest.
But in the same announcement, Sunak pledged that as prime minister he would make it more difficult to build onshore windfarms in England.
UK give go-ahead to Sizewell C nuclear plant
The UK government has given planning consent to the £20bn Sizewell C nuclear power plant in Suffolk, writes our energy correspondent Alex Lawson.
The decision, which had been repeatedly delayed, was finally announced on Wednesday.
French energy company EDF wants to build the two reactor plant next to its existing site at Sizewell B, which began operating in 1995.
However, the proposals have faced fierce opposition from local campaigners, who have argued against the project because of the environmental impact and the cost to energy billpayers. Campaigners now have six weeks to decide whether to appeal against the decision.
Here is our full story on the EU’s plan to cut gas consumption by 15% between 1 August and the end of next March.
And here is the latest on the UK heatwave and that damage it’s caused to the UK’s railways.
Severe disruption on Britain’s railway continued on Wednesday while engineers worked to repair the effects of an unprecedented heatwave, as Network Rail announced a new “resilience taskforce” to plan for future extreme weather, reports our transport correspondent Gwyn Topham.
Services were expected to return towards normal later in the day, after two days of blanket speed restrictions and mainline closures, but damage including broken overhead wires and fires that spread on to tracks was still halting many services on Wednesday morning.
The East Coast mainline remained closed between London and Peterborough after a fire on Tuesday evening, suspending LNER services out of King’s Cross, and Thameslink and Great Northern services north of the capital.
‘Everything is going up’: the UK hospitality sector struggles as inflation soars, writes our retail correspondent Sarah Butler.
“I am wrestling every single day to keep the business up,” said Damian Wawrzyniak, the chef behind Peterborough gastro pub House of Feasts, who fears he will have to close the restaurant next month after six years.
Wawrzyniak said bills had soared but he could not raise prices to compensate as ordinary people cut non-essentials including dining out to cope with the rising cost of living.
The number of diners visiting his restaurant is down by about 40% while the cost of some ingredients has gone up 40% or more. “The price of cheese has doubled. Oil is [through] the roof. My energy bill is up by 300% and is now nearly the same as the rent,” said Wawrzyniak. “Electricity, gas, BT … Everything is going up, even insurance.”
Jedidajah Otte has spoken to three people with a disability or illness, who are struggling with the soaring cost of living.
Back in the UK, low-fat milk has gone up the most in price in a range of everyday items, by 26.3% in June, followed by butter, up 21.5%, according to a breakdown of this morning’s official inflation figures.
Jam is 15.1% more expensive, eggs have gone up 11.5% and bread is 9.7% dearer.
In Russia, the gas giant Gazprom said today that it had still not received documentation from Siemens needed to reinstall a turbine for the Nord Stream 1 gas pipeline following maintenance work.
The pipeline, which transports gas from Russia to Europe, is scheduled to return to operation on Thursday.
It is the single largest route for Russian gas exports to Europe and runs under the Baltic sea to Germany. Kremlin-controlled Gazprom cut gas exports through the pipeline to 40% of capacity last month, citing delays in the return of a turbine that Siemens Energy was servicing in Canada.
EU executive warns complete shutdown of Russian gas ‘likely’
The EU executive warned that a complete shutdown of Russian supplies was “likely,” reports Jennifer Rankin from Brussels.
The EU has been scrambling to wean itself off Russian gas since the invasion of Ukraine, but is alarmed about a potential energy crisis this winter. In response to EU support for Kyiv, the Kremlin has already stopped or reduced gas supplies to a dozen EU member states and is expected to send lower volumes of gas to Germany when the Nord Stream I pipeline reopens on Thursday after scheduled maintenance works.
The European Commission President Ursula von der Leyen said the Kremlin had kept gas storage as low as possible before the invasion and gone on to cut supplies.
Russia is blackmailing us, Russia is using energy as a weapon.
She told reporters a complete stop of Russian gas was likely:
It is a likely scenario that there is a full cut off of Russian gas and that would hit the whole European Union. A gas crisis in the single market, our economic powerhouse, will affect every single member state in our European Union.
EU to cut gas use by 15%, make cuts mandatory in emergency
The European Commission has proposed a gas demand reduction plan to prepare the EU for supply cuts from Russia. It urged EU member states to cut gas use in Europe by 15% until next spring.
All consumers, public administrations, households, owners of public buildings, power suppliers and industry can and should take measures to save gas.
This voluntary reduction in gas use would apply to all member states between 1 August and 31 March next year.
However, the Commission wants to be able be able to impose a mandatory gas cut on all member states in an emergency, and is proposing a new council regulation that would enable it to declare a ‘union alert’ on security of supply, after consulting member states.
The union alert can be triggered when there is a substantial risk of a severe gas shortage or exceptionally high gas demand.
The Commission’s plan sets out measures for how gas use can be reduced, by replacing gas with other fuels, and making energy savings in all sectors, while safeguarding supply to households and essential users like hospitals and key industries.
Where possible, priority should be given to switching to renewables or cleaner, less carbon-intensive or polluting options. However, switching to coal, oil or nuclear may be necessary as a temporary measure, as long as it avoids long term carbon lock-in.
Market-based measures can mitigate the risks to society and the economy. For example, Member States could launch auction or tender systems to incentivise energy reduction by industry.
Royal Mail holds AGM and threatens split
As the Royal Mail annual meeting got under way in York, a Communication Workers Union spokesperson said:
It is pathetic that Royal Mail, a company which announced profits of £758m mere weeks ago, is now pleading poverty and threatening fragmentation unless they get their way.
Our members are committed to growing Royal Mail as a high quality public service – they deserve a decent pay rise.
Royal Mail reported today that it is losing £1m a day and has threatened to split if it cannot achieve “significant operational change”, as it faces what could be the biggest strike of the summer.
About 115,000 postal workers who are members of the CWU were balloted in recent weeks and voted 96.7% in favour of strikes, on a turnout of 77%. They are demanding a bigger pay rise than the 2% they have been awarded by Royal Mail. The company is offering a further pay rise of 3.5% but only if the union agrees to a series changes.
The union’s general secretary Dave Ward said yesterday that it would give the company “another opportunity to come back to the negotiating table” but if a deal could not be reached, the CWU would notify Royal Mail of industrial action. If they go ahead, the strikes are expected to take place in August.
Ward added that the vote for strike action was “also a vote of no confidence in Royal Mail’s CEO and board, who should seriously consider their futures” at the company’s annual meeting.
British gas prices rise as demand rises amid lower wind speeds
British gas prices are rising, with traders reporting high gas demand due to expectations of lower output from wind farms.
The British day-ahead contract rose 29%, or 56p, to 250 pence per therm while the within-day contract advanced 31%, or 58p, to 245p per therm.
Analysts at Refinitiv said:
Wind speeds are dropping below seasonal norms over the second half of this week in north west Europe.
Britain’s gas system is undersupplied by 17m cubic metres, National Grid data showed.
In the Dutch market, prices rose slightly as the market awaited the restart of Russian gas flows to Europe via the Nord Stream 1 pipeline tomorrow, following maintenance work.
The Dutch August contract reached €162.50 per megawatt hour, up 0.25%, while the day-ahead contract rose 4.2% to €158 per megawatt hour.