Today's business and finance round up 31st August 2022
Pub chains warn that energy bills could mean last orders
31st August 2022
Bite-sized business news from the UK and beyond
Good morning Today is the last day of meteorological summer which means Starbucks is ready to move on to autumn as from tomorrow customers can order the Pumpkin Spice Latte. Originally debuted in 2003 the coffee giant has sold more than 600m of the fan favourite.
Today's stories
Pub chains warn that energy bills could mean last orders
Why Europe’s power crisis could last for years
LEISUREPub chains warn that energy bills could mean last orders
What happened?Yesterday six of the UK’s biggest pub chains released an open letter calling on the government to help with soaring energy costs.How did we get here?Last week the energy regulator announced that the price cap for bills will rise by 80% in October however this is only for households and not for businesses. In fact businesses don’t have the equivalent protection from rising wholesale energy prices.Pub groups Greene King, Admiral Taverns, JW Lees, Carlsberg Marston’s, Drake & Morgan and St Austell Brewery said the sector had seen an average energy bill increase of 150% since 2020 with some pubs seeing 300%. One pub landlord said his bills had gone from £13,000 a year to £35,000.The sharp jump in costs is threatening to put many pubs out of business at a time when the industry is also facing big increases in wholesale food and drink prices.Industry leaders are asking for an urgent government support package that caps the price of energy for businesses.Yesterday the chancellor Nadhim Zahawi said that more government measures to help businesses and households with their energy bills were on the way. But with a new prime minister set to be in post from next week pubs will have to wait until then to hear further details. Zooming out: Even before the recent crises of the pandemic and energy bills, pubs were struggling to keep afloat. Last month new research showed that the number of pubs in England and Wales hit 39,970 - the lowest level on record. Over the last decade thousands of pubs have closed as younger people drink less, supermarkets sell cheaper alcohol and the industry complains of being too heavily taxed.
Other stories to keep you in the loop
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Eurostar scraps Disneyland Paris trains
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Former Soviet leader Mikhail Gorbachev credited with ending the Cold War dies age 91
ENERGYWhy Europe’s power crisis could last for years
What happened?The European Commission is working on an ‘emergency intervention’ to the continent’s electricity market as prices surge, per the Financial Times. Europe’s benchmark electricity price hit record highs this week, and in the UK, the energy price cap will jump by 80% in October.Why it matters: Gas prices worldwide are soaring as the war in Ukraine continues, and European governments fear the worst is yet to come. After all, colder weather is right around the corner, and Russia could choose to turn off the taps at any time.The CEO of Shell, whose firm has enjoyed record profits amid the high gas prices, said that the energy crisis could last “a number of winters where we have to somehow find solutions through efficiency savings, through rationing and a very, very quick build out of alternatives.”In looking to overhaul the existing electricity market model, leaders from several countries are backing the idea of separating electricity prices from the price of gas on the global market. Here's how:
Right now, European customers typically pay an electricity rate that's linked to the price of natural gas (since natural gas is widely used to generate electricity).
The problem, according to leaders, is that if electricity is coming from cheaper renewable sources, people are still paying the high price linked to natural gas.
It’s not yet clear what the new model would look like, but the idea is that electricity generated from cheaper sources should be priced differently.
Big picture: As risks grows over high energy prices dragging Europe into recession, investors are betting that the euro (which underpins 19 economies) will fall further in value. The euro is currently sitting at 20-year lows, right at parity with the US dollar.
Stat of the day
UK consumer credit card debt rose 13% in July, the highest increase since 2005
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