Holidaymakers warned of Dover ferry queues; survey shows UK economy slowing – business live

If you are on your way to Dover today to catch the ferry today then be prepared for the long haul.

The wait at Dover port for security is up to six hours, according to P&O Ferries, one of the operators. It will also get people onto the next available ferry if they miss their scheduled one. It seems it will be a long day for travellers.

The Port of Dover has blamed the French – and pictures from today show prominent temporary signs saying “French border checks”.

Vehicles queue at the Port of Dover on 22 July 2022 in Dover, England. Photograph: Dan Kitwood/Getty Images

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British Airways check-in staff accept 13% pay deal to avert Heathrow strike Passengers stand in a queue to the British Airways check-in desks at Heathrow Airport. Photograph: John Sibley/Reuters

British Airways workers have accepted a pay deal which will avert a threat of strike action by check-in staff at Heathrow.

Two unions, Unite and the GMB both said on Friday that workers had accepted a pay offer that they said represented a 13% pay increase.

More than 500 workers at Unite had voted in favour of industrial action after British Airways, which is owned by International Airlines Group (IAG), refused to reverse 10% pay cuts that the airline brought in during coronavirus pandemic lockdowns.

With airlines and airports already struggling with delays amid staff shortages, British Airways backed down on the pay cut, which Unite said “will be paid in several stages”. It will also reverse shift pay reductions imposed in 2020 from October 2022.

Unite general secretary Sharon Graham said:

This is a great result for our check-in members at British Airways. By standing together, they have forced a corporate giant like BA to do the right thing and restore levels of pay slashed in the pandemic. Germany bails out key gas distributor following Russian invasion chaos German Chancellor Olaf Scholz speaks during a press conference in Berlin on Friday. Photograph: Markus Schreiber/AP

German chancellor Olaf Scholz has announced his government will take a 30% stake in gas distributor Uniper in a bailout that marks one of the biggest European corporate casualties so far from Russia’s invasion of Ukraine.

The stake will cost the German state €15bn (£12.8bn) in guarantees and equity to prop up a company that has been hit by falling gas supplies from Russia.

Russia has used its stranglehold on Europe’s gas supplies to try to weaken the resolve of allies of Ukraine, and to try to forestall further financial sanctions from Europe that have targeted its advanced industries.

Uniper shares, listed in Frankfurt, dropped by 15% on Friday after the deal was announced.

Uniper’s controlling shareholder is Fortum, a company owned by the Finnish state. Fortum will end up holding 56% in Uniper, down from around 80% currently.

Klaus-Dieter Maubach, Uniper’s chief executive, said:

I’m pleased and relieved that today’s agreement stabilizes Uniper financially as a system-critical energy partner and preserves it as a single entity.

We now have a clear perspective on how the costs which arise due to the interrupted gas supplies from Russia can be shared by many shoulders going forward. But that does not mean that we will not continue to do our part. Uniper has so far borne the losses alone and will continue to bear the losses incurred until the general mechanism to pass through replacement costs is in place.

Under the deal Uniper will be allowed to pass on higher gas prices to customers from 1 October, but Scholz said the German government was looking at relief measures, according to Reuters.

If you are on your way to Dover today to catch the ferry today then be prepared for the long haul.

The wait at Dover port for security is up to six hours, according to P&O Ferries, one of the operators. It will also get people onto the next available ferry if they miss their scheduled one. It seems it will be a long day for travellers.

The Port of Dover has blamed the French – and pictures from today show prominent temporary signs saying “French border checks”.

Vehicles queue at the Port of Dover on 22 July 2022 in Dover, England. Photograph: Dan Kitwood/Getty Images

The UK’s competition regulator has criticised six of Britain’s biggest high street banks for breaking rules on giving correct information to customers.

The Competition and Markets Authority (CMA) said Bank of Ireland, Barclays, HSBC, Lloyds Banking Group, Metro Bank and NatWest had all breached the rules, and undertaken to make improvements. Metro Bank has been forced to repay customers who were overcharged on overdrafts.

Problems included giving incorrect interest rates for current accounts, using accurate promotional materials online and within branches, to accurately displaying the right locations and opening times.

Adam Land, senior director at the CMA, said:

It’s very disappointing that these six major banks have failed to uphold rules that have been in place for the last five years.

Customers have been let down, some of whom will receive refunds, so these high street names must get their act together. We will remain vigilant to ensure the rules are followed.

The Tata Steel steelworks are seen on the South Wales coastline at Port Talbot. Photograph: Peter Cziborra/Reuters

Away from public markets, there were notable comments on the future of the Port Talbot steelworks last night from the boss of Tata, the Indian conglomerate that owns it. He wants as much as £1.5bn from the government to upgrade the plant.

Natarajan Chandrasekaran, the chair of Tata Group, told the Financial Times that he was considering the closure of the plant without aid from the UK government to upgrade the furnaces to be able to run on electricity rather than fossil fuels.

Making the transition would be an important step in lowering emissions from the steelworks, which is responsible for a significant proportion of Wales’s carbon emissions.

Chandrasekaran said:

A transition to a greener steel plant is the intention that we have … But this is only possible with financial help from the government.

We have been in discussions over the last two years and we should come to an agreement within 12 months. Without this, we will have to look at closures of sites.

The full report is here:

The comments dismayed unions, who will now have to campaign for the survival of a major employer. A spokesperson for Community, the steelworkers’ union and the largest trade union at Tata Steel, said the government and the company “must do whatever it takes” to secure its future. He said:

This intervention from Tata is shocking, and has been made without any consultation with the trade unions. For months we’ve been in discussions with the company, but we should be clear there is no agreement on the decarbonisation roadmap.

The unions have been working with our experts exploring low carbon options that will protect our country’s steelmaking capacity, jobs and communities. That process is unfinished, but Tata’s comments make a mockery of the company’s commitments to an open and transparent dialogue with the unions.

It has been a quiet first two hours of trading on the stock market in London – the start of the school holidays is not usually a time when executives choose to put out market-moving statements.

The FTSE 100 edged up by 0.2% to 7,289 points. Grocery delivery company Ocado was the strongest gainer, up 4.9% to recover the losses of the day before when it reported a half-year loss.

Packaging companies Mondi and DS Smith were the biggest fallers, down 3.9% and 2% respectively.

Updated at 05.20 EDT

The euro has slumped following the lower-than-expected reading for German manufacturing.

It is down by 0.7% for the day against the US dollar, hitting a low of nearly $1.01 – a cent down on the start of the day, before recovering to $1.016 at the time of writing.

If Germany is in recession then it is likely that the rest of the eurozone will follow, weighing on demand for the single currency.

The euro fell on Friday following German economic data that suggested Europe’s largest economy may be in recession. Photograph: Refinitiv

The euro also slipped against the pound, but there was not exactly heartening news for the UK economy either, with strong signs that economic activity is slowing in falling retail sales and declining factory output.

The pound fell by 0.2% against the dollar on Friday morning.

UK factory output falls for first time since May 2020 pandemic lockdown – survey

The UK manufacturing sector’s output declined for the first time since the first coronavirus pandemic lockdown in May 2020, according to new survey data.

An index measuring manufacturing sector production fell to 49.7 in July, below the 50 mark that indicates an expansion, according to S&P Global, a data company.

The manufacturing purchasing managers’ index (PMI), which measures overall activity for the sector, suggested that UK manufacturing is still just about expanding, with a reading of 52.2, but it was still the slowest expansion in 25 months.

It came as the reading for the broader economy slipped to 52.8, down from 53.7 in June, a 17-month low. All the signs are pointing to a slowdown – if not quite yet the full-blown recession that seems to be on the cards for Germany.

Chris Williamson, chief business economist at S&P Global Market Intelligence said:

UK economic growth slowed to a crawl in July, registering the slowest expansion since the lockdowns of early-2021. Although not yet in decline, with pent-up demand for vehicles and consumer-oriented services such as travel and tourism helping to sustain growth in July, the PMI is now at a level consistent with just 0.2% GDP growth.

Forward-looking indicators suggest worse is to come. Manufacturing order books are now deteriorating for the first time in one and a half years as inflows of new work are insufficient to keep workforces busy, which is usually a precursor to output and jobs being cut in coming months.

Updated at 04.48 EDT

‘Critical incident’ declared at Dover port Cars queued at the port underneath the White Cliffs of Dover. Photograph: Gareth Fuller/PA

The Port of Dover has declared a “critical incident”, blaming “woefully inadequate” French border control staffing for queues of up to four hours as the busiest summer getaway in at least eight years kicks off.

The Kent port apologised to travellers facing long waits to cross the Channel on what was also expected to be an extremely busy day for air, road and rail travel as most schools across England and Wales break up for the holidays.

You can read the full report here:

At Dover it looks like it could be a long day for people going on their holidays.

Pictures from the port this morning show lines of cars extending from the border checks back onto roads.

Cars were queuing at the check-in at Dover Port in Kent as many families embarked on getaways at the start of summer holidays for many schools in England and Wales. Photograph: Gareth Fuller/PA

The Port of Dover is keen to deflect blame for the delays onto France’s border authority. In its withering statement today it said it had increased interim French border control booths by 50% and had improved traffic systems “in order to build in resilience and capacity in time for the summer”.

But it said that Police Aux Frontieres (PAF) had “fallen far short of what is required to ensure a smooth first weekend of the peak summer getaway period”.

Cars and lorries were stuck in queues to get into the ferry port in Dover on Friday morning. Photograph: Gareth Fuller/PA

“Germany is now in a technical recession,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.

It is likely that the German economy contracted in the second quarter, he said. Germany is the largest economy in Europe, with its powerhouse manufacturing industry usually a key driver of growth. Yet it is facing a tricky combination of rising input costs and falling demand. Vistesen said:

Manufacturing is bearing the brunt of the downturn in new orders and output, due to uncertainty over the war in Ukraine, energy security and ongoing supply side difficulties and high prices sapping demand. But the services sector is suffering now too, due to a “retrenchment in new demand” and staff shortages. Inflation pressures and stress on supply chains are easing, but only slowly, signalling that inflation will remain a problem in the near term even as the economy slows. In other words, Germany is now suffering from a severe case of stagflation. It’ll get better, but not for a while.

It is worth noting that the German PMI numbers are well below the expected readings from economists. The consensus was that both the manufacturing and services sectors would be expanding.

The below image shows the latest PMI readings for July, the previous reading, and economists’ expectations ahead of the survey being published. Note that all of the numbers in the right two columns were above the 50 mark, but the actual data for July were all below.

Germany’s purchasing managers’ index readings came in below economists’ expectations in July. Photograph: Trading Economics

The PMI surveys are watched by economists because they usually foretell the path of the economy as a whole, as you can see in this chart:

Germany’s PMI readings are correlated with GDP data. Photograph: S&P Global German economy ‘contracting’ according to closely watched survey

Germany’s economy is shrinking according to the closely followed purchasing managers’ index (PMI), in figures that will prompt renewed concerns over a possible recession in Europe.

The composite index measuring both manufacturing and services showed a reading of 48, well below the 50 mark that indicates an expansion in the econony, according to S&P Global, a data company.

A flash reading of the manufacturing index came in at a 25-month low of 49.2 for July, compared to 52 in June.

Paul Smith, economics director at S&P Global Market Intelligence said:

Having enjoyed a growth boost from the previous easing of virus-related restrictions, a collision of various headwinds in July served to push the German economy into contraction territory for the first time in 2022 so far.

Ongoing supply-delays and the uncertainty caused by the war in Ukraine continued to be reported as factors weighing on company performance, but based on a reading of anecdotal evidence, inflation and the pressures these are having on budgets was a noticeable feature behind the worst performance of private sector activity since the height of the first pandemic wave in the spring of 2020.

Updated at 03.46 EDT

Port of Dover blames French authorities for delays; June retail sales down 0.1%

Good morning, and welcome to our live, rolling coverage of business, economics, and financial markets.

Holidaymakers and lorry drivers have been stuck in long queues overnight at Dover, the UK’s key ferry crossing to the EU. And the Port of Dover has come out swinging, blaming French border authorities for failing to staff the posts.

The Port said “the popularity of Dover is not a surprise” as school holidays begin, but resources from Police Aux Frontieres (PAF) have been “insufficient”.

In a statement the Port said:

We are deeply frustrated that the resource at the French border overnight and early this morning has been woefully inadequate to meet our predicted demand and even more deeply regret the consequences that will now be felt by so many.

And there is no respite for British consumers. UK retail sales dropped for the third month in a row in June according to the latest government figures on Friday. Analysts suggest it is a sign of the slowing economy.

Sales dipped in June by 0.1%, the Office for National Statistics (ONS) said, but it also revised down its estimate for May, turning a decline of 0.5% to one of 0.8%.

The decline came even though food sales volumes rose by 3.1% because of feasting during the celebrations and an extra bank holiday for Queen Elizabeth’s jubilee celebrations.

Retail sales are seen as a bellwether for the UK’s consumer-dependent economy. The augurs are not good: 40-year high inflation is eating into spending power, with energy prices in particular on the up – not helped by Russia’s invasion of Ukraine. The ONS said there was a “broad downward trend since summer 2021 following the lifting of hospitality restrictions”.

The British Retail Consortium, a lobby group, said there are “hard days ahead” for UK consumers. Helen Dickinson, its chief executive, said:

The cost of living crunch caused by record inflation continues to damage consumer confidence and stifle household spending. Discretionary spending and particularly bigger purchases were put off as consumers become increasingly concerned about the future. As a result, furniture sales and white goods were particularly hard hit, while food sales held up a little better.

Retailers are squeezed between higher costs and weaker demand, resulting in the most challenging trading period since the start of the pandemic.

UK retail sales have followed a “broad downward trend” since last summer, the ONS said. Photograph: Office for National Statistics

The above chart is also a handy illustration of the pressures hitting UK consumers. While the value of the goods bought has continued to rise, the volume that buyers are getting for their money is dropping.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, a consultancy, said:

Households are continuing to spend more on goods, but are getting less in return.

Tombs said retail sales will probably bounce somewhat in the third quarter of the year thanks to the rise in the threshold for national insurance contributions and cost of living payments

Households’ real disposable incomes likely will edge up in the third quarter, facilitating a modest recovery in retail sales. Nonetheless, disposable incomes likely will fall to a new post-Covid low in the fourth quarter, as government policy support announced to date will not offset the huge hit to real disposable incomes from October’s likely 65% rise in the energy price cap. The agenda