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The pound rose against the dollar after Boris Johnson announced he is to be replaced as prime minister. Sterling gained more than 0.4 per cent to $1.2 as traders priced in the prospect of an end to months of chaos under Mr Johnson’s leadership. He will remain in place while the Conservative Party selects a new leader.As markets reacted to the news, sterling regained some of the ground it lost this week but remains more than 10 per cent down against the US currency.The pound hit a two-year low against the dollar on Tuesday amid growing fears for the future of Britain’s economy.The dollar has strengthened in response to a series of large interest rate increases by the US Federal Reserve.RecommendedA weak pound is serving to push up prices for goods that the UK imports, such as energy, food and manufactured products.Consumer price inflation hit 9.1 per cent in May and is expected to surge to 11 per cent later this year, meaning households face big falls in living standards as wages fail to keep up with the rising cost of essential goods.While new leadership of the country promises to bring some measure of political stability, the new prime minister will still face a long list of economic problems. Consumer confidence has hit its lowest level on record according to a long-running survey by Growth from Knowledge (GfK), while car sales fell to their lowest level for any June since 1996. The construction industry is also slowing down, new industry figures show.The Bank of England said on Tuesday that the prospects for the UK economy had “deteriorated materially” since Russia invaded Ukraine. More

Britain’s economy is set to grind to a halt next year as the country records zero growth and falls behind all other major developed nations except Russia, according to new analysis.The Organisation for Economic Co-operation and Development (OECD) forecasts that the UK will continue to be plagued by high inflation and will not grow at all next year.The international body warned that war in Ukraine had had immediately slowed the global economic recovery from Covid-19 and resulted in higher inflation.Europe has been impacted most severely because of the continent’s heavy reliance on energy imports, the OECD said, adding that the war had again underlined the need for energy security and an acceleration of the green transition.It slashed its forcecast for global growth to 2.8 per cent next year, down sharply from predictions made in October.“Countries worldwide are being hit by higher commodity prices, which add to inflationary pressures and curb real incomes and spending, dampening the recovery,” OECD Secretary-General Mathias Cormann said during a presentation on Wednesday. “This slowdown is directly attributable to Russia’s unprovoked and unjustifiable war of aggression, which is causing lower real incomes, lower growth and fewer job opportunities worldwide.”The euro area economy is expected to expand by just 1.6 per cent and the US by 1.2 per cent. UK growth is estimated to be zero, in line with Bank of England estimates. More

Workers should “think and reflect” before asking for pay rises, £575,000-a-year Bank of England chief Andrew Bailey told MPs on Monday.The governor said high earners in particular should consider the impact of inflation before seeking salary top-ups as prices rises.It comes as the Office for National Statistics (ONS) is later this week expected to confirm inflation has passed eight per cent, while the Bank of England itself has warned it could is likely to peak at 10.25 per cent by the end of the year.Mr Bailey told MPs on the Treasury select committee: “I spoke in an interview about this. I do think people, particularly people who are on higher earnings, should think and reflect on asking for high wage increases. More

Business secretary Kwasi Kwarteng has ordered the next stage of a review into a proposed Chinese takeover of a group of UK tech firms, citing national security concerns.The step would allow the secretary of state to block the proposed sale if it is found to threaten British interests. Last September, the proposed sale of Perpetuus Group to a group led by Chinese company Shanghai Kington Technologies was blocked by Mr Kwarteng. Perpetuus Group is a collection of UK companies, some of which have developed new intellectual property involving modern engineering super material graphene. These technologies have “strategic applications”, according to a statement issued by the Department for Business, Energy and Industrial Strategy on Wednesday.Mr Kwarteng said of the next steps in the probe: “The UK remains firmly open for business, however we have been clear that foreign investment must not threaten our national security.“I have considered the evidence presented to me and asked the Competition and Markets Authority to undertake an in-depth investigation so we can fully consider the implications of this transaction,” the business secretary added.The probe uses powers under the 2002 Enterprise Act because the government intervened before its newer legislation, the National Security and Investment Act, came into force this year.Perpetuus’ website outlines a range of applications for its nanomaterials, which are constructed from tiny particles which can help to shrink the scale of electronic circuitry or improve its performance.Graphene, one of these materials, is a key branch of Perpetuus’ specialisms in sensitive technologies. It is used to create coatings and components which are much stronger or more aerodynamic than those using other comparable materials. Its applications are manifold in innovative engineering from vehicles, to aircraft.The transaction is considered to be much more sensitive than the proposed takeover of semiconductor maker Newport Wafer Fab, according to senior government sources. This is because Perpetuus’ technologies involve more sensitive and novel intellectual property.The £63m sale of Newport Wafer Fab last year to Nexperia, a Dutch company owned by China’s Wingtech, is also under review. This was confirmed by a statement from business minister Lord Callanan, on 7 April, but it came after a prolonged debate among senior government figures over the deal.There are deep cabinet divides over the role of Chinese investment in the UK and the threats it may pose to national security. Foreign secretary Liz Truss and Mr Kwarteng are understood to be keen to reduce dependence on China within sensitive supply chains.Other figures, including prime minister Boris Johnson and chancellor Rishi Sunak, have expressed concerns that national security fears must not override the need to remain an attractive investment destination for the world’s second-largest economy.Perpetuus and Newport Wafer Fab, the former whose activities include creating conductive coatings for electronics and the latter which makes silicon wafers, are both case studies which will inform the government’s semiconductor strategy. This is expected to be published this month by the Department for Culture, Media, and Sport, according to Whitehall sources.The review into the potential sale of Perpetuus is expected to last 24 weeks, but this could be extended if officials consider more time is needed for their investigations. More

Problems with a key post-Brexit IT system for customs checks are contributing to Easter traffic chaos in Kent as thousands of lorries are parked up awaiting Channel crossings.A 23-mile coastbound stretch of the M20 was closed from junction eight (Maidstone) to junction 11 (Westenhanger) heading for the Port of Dover or Eurotunnel as part of Operation Brock, causing chaos on surrounding local roads.The A20 Roundhill Tunnel is closed under the Dover TAP scheme to prevent HGVs jumping the queue.Some delays to Channel crossings are being driven by the suspension of P&O Ferries sailings after the operator sacked nearly 800 seafarers without notice last month, with rival DFDS warning it no longer has capacity to take stranded P&O customers.However, the Road Haulage Association said HMRC is “continuing to have issues” with its new post-Brexit GVMS system for customs declarations, without which lorries cannot move goods between Britain and the EU.Without the system, drivers lack scannable barcodes needed for the rapid check of lorries at ports including Dover.A temporary workaround could be in place until Monday, the RHA said.An HMRC spokesperson said: “We have put in place contingency processes to ensure businesses can keep goods and freight moving while we return to full service.”A message on the HMRC site says: “We are undertaking robust investigations into our systems to address the underlying issues behind this outage. We will provide a further update by midday, Monday 11 April. We apologise for any inconvenience this may cause.”Operation Brock involves using a moveable barrier to create a contraflow system enabling lorries to queue and other traffic to keep moving in both directions.However, the system has been overwhelmed, with Kent hit by long queues every day since 1 April when poor weather also disrupted crossings.The Port of Dover said in a statement it handled 30,000 departing passengers last weekend, which was a three-fold increase on the total during the corresponding weekend in 2021.It added it is “expecting another busy weekend” as it urged customers not to arrive before their booked sailing.Trevor Bartlett, leader of Dover District Council, said the port will be “under severe pressure throughout the busy Easter getaway” as he warned residents to prepare for “some disruption again this weekend”.He said he has “made it clear” to Kent Police, Kent County Council and the Kent Resilience Forum – a partnership of local organisations and agencies – that “we will not tolerate another weekend of gridlock in Dover”.The Conservative councillor went on: “For too long, local residents and businesses have had to endure disruption and, quite frankly, deserve better.“We share your concerns about the impact of gridlock on local businesses and access to vital health and social care for our most vulnerable residents.“Many are rightly worried about how the emergency services would be able to respond to a major incident when all routes into the town are effectively cut off.”Ashford MP Damian Green called for changes to be made to Operation Brock.He told KentOnline: “What we need is to make Brock work. We have established that up until now it does work, even in times of stress, because the motorway is kept open.“Once you close the motorway it makes it impossible, so the Kent Resilience Forum needs to look at what changes need to happen so Brock can cope with what is a very unusual situation, where more than half of the freight-carrying capacity at Dover has disappeared in one time.”P&O Ferries announced on Wednesday that it is preparing to resume cross-Channel sailings.A spokesman said: “P&O is looking forward to welcoming back vital services and we expect to have two of our vessels ready to sail on the Dover-Calais route by next week, subject to regulatory sign-off, namely both the Pride of Kent and Spirit of Britain between Dover-Calais.” More

The price of chicken will soon spike at the supermarket because of the Russian invasion of Ukraine, environment secretary George Eustice has warned.The minister also warned that Britons face food prices rises of up to 8 per cent this summer, as the chancellor Rishi Sunak comes under pressure to help families struggling with the mounting cost of living crisis.Mr Eustice warned that the impact of global price rises in wheat – with Ukraine a major exporter around the world – would impact on living costs in the UK.In a speech to the Food and Drink Federation, the minister said the rising costs of feed used by poultry farmers would have a particularly strong impact of the price of chicken at the supermarket.“Speaking roughly, there are three or four very large poultry producers in this country,” the environment secretary said.He added: “They have a situation where feed costs account for around half of their input costs, and they’re seeing a cost pressure of around 20 – 30 per cent. At some point, that’s got to feed through the system.”Mr Eustice said officials had estimated that food and drink inflation could reach 6 per cent over the summer, but price rises could increase by as much as 8 per cent.Experts have warned that the invasion of Ukraine could see the bulk of the country’s grain exports wiped out this year, leading to big price rises and adding to the financial pressure on British households.Known as “Europe’s breadbasket”, the country was expected to account for 12 per cent of global wheat exports and nearly a fifth of global maize production this year, according to ING Bank and the US Department of Agriculture figures.Last week Ronald Kers – chief executive of the 2 Sisters Food Group, one of the country’s biggest food producers – warned that food prices in the UK could soar 15 per cent by the middle of the year.He warned of particularly acute spike in chicken production costs, set to be made worse by the Ukraine crisis. “This conflict brings a major threat to food security in the UK and there is no doubt the outcome of this is that consumers will suffer as a result,” he said.“The input costs of producing chicken – with feed being the biggest component – have rocketed. Prices from the farm gate have already risen by almost 50 per cent in a year,” Mr Kers added.Mr Eustice also revealed on Tuesday that the government’s food resilience forum set up to deal with the Covid and Brexit crises was now meeting once a week.It comes as opposition parties, business groups and consumer experts all called on Mr Sunak to step in with support with energy costs as he prepares for Wednesday’s spring statement.Money Saving Expert founder Martin has told MPs that families are facing a “fiscal punch in the face” on 1 April with the imminent rise in the price of energy.Mr Lewis stressed that the chancellor current package of measures aimed at taking the sting fuel bills, including a £200 rebate to be repaid, were “clearly not enough”.Meanwhile, several business groups, representing both big and small firms, told MPs the government is listening to their concerns – but there has been very little action so far.“We argue that, given the scale of the cost increases that businesses are facing, that it would be right for the chancellor to step in and provide something analogous to that support that was provided to households,” said Paul Wilson, policy director at the Federation of Small Businesses.Mr Sunak is reportedly preparing to cut fuel duty by up to 5p per litre. However, a 5p-per-litre cut in fuel duty would fail to reverse even half of the increase in prices inflicted on motorists over the past fortnight, according to new figures. More