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Energy supplier Bulb to enter special administration; pandemic hits eurozone consumer confidence – as it happened

This article is more than 2 years old
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Mon 22 Nov 2021 12.01 ESTFirst published on Mon 22 Nov 2021 03.04 EST
The website logo for energy company Bulb.
The website logo for energy company Bulb. Photograph: True Images/Alamy
The website logo for energy company Bulb. Photograph: True Images/Alamy

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Key events

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Time to wrap up.

Britain’s seventh biggest energy supplier Bulb, which provides gas or electricity to 1.7 million households, is to enter special administration in the largest casualty yet of the energy crisis.

European consumer confidence has dropped, as rising pandemic cases and inflation worry citizens, as the euro hit a 21-month low against the pound.

Germany’s Bundesbank has warned that inflation could soon approach 6%, and that growth in Europe’s largest economy may faltered this quarter.

Joe Biden has nominated Jay Powell to serve a second term as chair of the Federal Reserve, as the US battles high inflation and tries to recover jobs lost in the pandemic.

The news drove Wall Street to record highs, but will disappoint progressives who favoured Lael Brainard (who gets the vice-chair position).

The UK’s recovery will be less speedy than hoped in 2021 and 2022, according to new forecasts from EY Item Club.

Shares in Marks & Spencer jumped to their highest in two-and-a-half-years, on reports that New York-based Apollo Global Management had mulled a buyout.

But mining company Hochschild have ended the day down 27%, after Peru’s government announced plans to shut two of its gold and silver mines on environmental grounds.

The insurer LV= has claimed that a takeover by the US private equity firm Bain Capital will result in £212m in extra distributions for members, as it tried to fight back against criticism of its decision to demutualise.

British Airways could move flights away from Heathrow if the airport is allowed to increase charges by 50%, the airline’s owner has warned.

Hopes that Crossrail will open in central London in early 2022 – this time on schedule – have been boosted as the troubled £19bn scheme moved into its final phase of testing at the weekend.

The John Lewis Partnership has launched a £1m fund that will channel cash into projects with the potential to end the high street’s “throwaway” culture.

Police and banks have warned consumers to be vigilant when shopping in this week’s Black Friday sales, with a rise in scams expected to cost shoppers millions.

The CBI has told ministers that levelling up cannot be left to the free market, after decades of “benign neglect” has left the country with a “branch-line economy”.

However, the message may have been lost after Boris Johnson gave a particularly shambolic speech to business leaders:

This is like an anxiety dream... https://t.co/Ka1Ym3tDNg

— Heather Stewart (@GuardianHeather) November 22, 2021

Goodnight. GW

FTSE 100 closes higher

In the City, the stock market has shaken off worries about Covid-19 lockdowns to end the day higher.

London’s FTSE 100 index jumped 32 points or 0.45% to 7,255 points, up from Friday’s three-week lows, with mining companies and oil giants in the risers.

The renomination of Jerome Powell as Fed chair lifted equity markets a little, while pulling the pound and the euro lower against the US dollar.

Dan Suzuki, deputy CIO at Richard Bernstein Advisors, says:

It seems in line with what the tea leaves were indicating. The Democrats gave up the option of a future inflation scapegoat in favour of a well-respected known entity that was supported by Yellen.

While on paper, Powell leans slightly more hawkish than Brainard, their policies are very similar, and Powell provides more consistency and less uncertainty. Biden still has more appointments that will shape the overall make-up of the Fed.

Pandemic concerns held back other markets, though, with the pan-European Stoxx 600 finishing the day flat.

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The British government has agreed with energy regulator Ofgem to appoint special administrators for Bulb, Prime Minister Boris Johnson’s spokesman said on Monday (via Reuters).

We have agreed with Ofgem on the appointment of special administrators for Bulb and are taking this forward as quickly as possible.

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Here’s Tim Speed, partner and energy specialist at the law firm Shakespeare Martineau, on Bulb’s special administration:

The appointment of an energy administrator is a drastic step for Ofgem and is another indicator as to the extent that the energy market is struggling. Bulb supplies 1.7 million customers and is the seventh biggest supplier in the UK.

A Supplier of Last Resort (SoLR), which involves another company taking over supply to the failed supplier’s customers, is the default action for the majority of collapsed energy companies. However, the size of Bulb means this isn’t viable. Although the process has existed for some time, an energy supply company administration has never been implemented before, showing how dire the current situation is. The aim is to ensure supplies are continued at the lowest possible cost, with the administrator able to split up the existing business by transferring all or part of it to other companies, when appropriate.

Energy suppliers that are concerned about their future must act quickly. By identifying the problem and seeking professional advice early on, it may be possible to secure an investment or sale that guarantees a future for the business. However, this does take time, so it’s important to address any issues whilst there is still sufficient cashflow.

Ofgem and the government need to make serious decisions about the future running of the market, because the events of recent months cannot be repeated.

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Rising Covid-19 cases hits eurozone consumer confidence

The rise in Covid-19 cases in Europe has hit consumer confidence, as people worry that fresh lockdowns will be imposed this winter.

The European Commission’s gauge of consumer morale has dropped this month, away from the three-year highs earlier this summer.

Consumer confidence in the euro area dropped to -6.8 points, from 4.8, while in the wider EU it dropped to -8.2 points, from -6.1 points.

This indicates that the recent rise in Covid-19 infections, which has forced a full lockdown in Austria and emergency measures in Germany.

"New virus wave is weighing on sentiment." @MelanieDebono on Advance Consumer Confidence, #Eurozone, November #PantheonMacro

— Pantheon Macro (@PantheonMacro) November 22, 2021

#Eurozone #Consumer confidence falls to -6.8 points in November. Higher #prices and the threat of new lockdowns seem to be the reasons. Q4 might be difficult for the Eurozone #economy. #macrobond pic.twitter.com/Vmt8Bm8IIS

— Andreas Auer (@AndiAuer_AAA) November 22, 2021

Bert Colijn of ING says concerns about new Covid cases, and inflation worries, are hitting confidence:

At face value, there is still a lot to like about the current economy. The labour market is fuelling income growth and should take away worries about spending as jobs are relatively plentiful.

Uncertainty for consumers seems to be stemming from two big issues. The rising cases of Covid and inflation. The first has the risk of causing further lockdowns and economic pain over the winter months. Quite some countries have already taken new restrictive measures and it looks like there’ll be more are to come in the coming weeks. This clearly has a dampening effect on the economic outlook and this casts a shadow on consumer confidence at the moment.

Inflation is another factor, especially as energy prices have been soaring, which is now being felt in households across the continent. That results in an income squeeze as real wage growth suffers on the back of this despite a strong labour market. Without significant upward pressure on wages, we could see a dampening effect on consumer spending as lower-income groups especially spend a larger part of their income on energy bills.

🇪🇺 Eurozone Consumer Confidence Full Report: https://t.co/JjhTV9mxe5 pic.twitter.com/eDQ1cJaTJ1

— PiQ  (@PriapusIQ) November 22, 2021
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The energy regulator Ofgem has now responded to Bulb’s collapse:

Customers of Bulb do not need to worry – Bulb will continue to operate as normal.

Ofgem is working very closely with government. This includes plans for Ofgem to apply to court to appoint an administrator who will run the company.

Customers will see no disruption to their supply, and their account and tariff will continue as normal.

Bulb staff will still be available to answer calls and queries.

Ofgem responds: “Customers of Bulb do not need to worry - Bulb will continue to operate as normal. Ofgem is working very closely with Government. This includes plans for Ofgem to apply to Court to appoint an administrator who will run the company. 1/2

— Simon Neville (@SimonNeville) November 22, 2021

“Customers will see no disruption to their supply and their account and tariff will continue as normal. Bulb staff will still be available to answer calls and queries.” 2/2

— Simon Neville (@SimonNeville) November 22, 2021
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Miliband: Ministers have been complacent over energy crisis

Ed Miliband MP, Labour’s shadow business secretary, has accused government ministers of complacency over the energy crisis.

Following Bulb’s collapse into administration today, Miliband says:

The collapse of energy suppliers is a direct consequence of a decade of Conservative inaction in government which has left us exposed and vulnerable as a country. Families hit by a cost of living crisis will be deeply worried about what this collapse means for them, as will the workers at Bulb.

The business secretary has buried his head in the sand for too long. The government was warned by Ofgem over a year ago about “systemic risk to the energy supply sector as a whole”.

Instead of action we’ve had complacency from ministers and they are making the cost of living crisis worse by raising national insurance and refusing to cut VAT on energy bills.

Labour will scrutinise the special administration regime to ensure it protects bill-payers and secures value for money for taxpayers. But alongside those measures, the government should now remove VAT from domestic gas and electricity bills for six months, so that families have some respite during the winter, and roll out a national home insulation plan to reduce energy bills by £400 and cut emissions.

Is Ofgem having a team bonding day is a mobile phone black spot? We’re nearly 3 hours on from one of the biggest UK energy sector collapses in history and they’ve still not put out a statement.

— Simon Neville (@SimonNeville) November 22, 2021
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US home sales unexpectedly rose in October, despite the surge in prices making houses unaffordable for many first-time buyers.

Existing home sales rose 0.8% to a seasonally adjusted annual rate of 6.34 million units last month, the National Association of Realtors says, more than expected.

#Existing #Home sales in the US, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.8% Month-over-Month to an annualized 6.34 million in Oct. of 2021, the highest since Jan. and above market forecasts of 6.2 million. pic.twitter.com/OmwHZMqKaF

— EGM Futures (@EgmFutures) November 22, 2021

Sales rose in the most affordable Midwest region and the densely populated South, but fell in the Northeast and were unchanged from a month earlier in the West

The median existing house price increased 13.1% from a year earlier to $353,900 in October, extending the rally which began after pandemic lockdowns were eased over a year ago.

The median existing-home price for all housing types in October was $353,900, up 13.1% from October 2020 ($313,000), as prices climbed in each region. #NAREHS pic.twitter.com/grsbZjnqka

— NAR Research (@NAR_Research) November 22, 2021

The S&P 500 index of US stocks, and the tech-focused Nasdaq Composite have both hit record highs.

The Nasdaq and S&P 500 hit all-time highs!https://t.co/jLDBCflI4W

— TheStreet (@TheStreet) November 22, 2021

The dollar is still stronger too, pushing the pound down over half a cent to $1.339.

Two months ago, Senator Elizabeth Warren called Jerome Powell “a dangerous man” on Tuesday and vowed to oppose his renomination as Fed chair.

In remarks during a hearing before the Senate banking committee, Warren said that under Powell the Fed had watered down post financial-crisis bank regulations and weakened the US banking system.

“Your record gives me grave concerns,” the Massachusetts Democrat said.

Over and over, you have acted to make our banking system less safe, and that makes you a dangerous man to head up the Fed, and it’s why I will oppose your renomination.

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Wall Street has opened higher, as investors welcome Joe Biden’s decision to nominate Jerome Powell for a second four-year term as Fed chair.

The Dow Jones industrial average, the S&P 500 and the Nasdaq Composite have all risen at the open, with banks and tech stocks among the risers.

Futures extended gains and Treasuries stretched losses after President Biden selected Jerome Powell for a second term at the head of the Federal Reserve https://t.co/WJpeLVimn5 pic.twitter.com/UHpDDXXqtI

— Bloomberg Markets (@markets) November 22, 2021

Lael Brainard could have been a tougher Fed chair for Wall Street. As a Federal Reserve governor, she has objected to otherwise-unanimous motions to roll back financial regulations brought in to prevent financial crisis.

As Fed vice-chair, she will still have significant influence.

CNBC says:

As the only Democrat on the Fed’s board, Brainard’s objections – 12 in 2020 alone – went unheeded.

But now someone is listening. And his name is Joe Biden.

The president has picked Brainard to be vice chair of the Fed, one of the most powerful economic positions in the world and perhaps the heir apparent to the Federal Reserve chair role itself. Biden on Monday picked Jerome Powell to lead the Fed for a second term.

The job of Fed vice chair carries say in how interest rates are set, the balance of employment versus inflation, and the direction of regulation over the nation’s biggest banks like JPMorgan Chase, Bank of America and Wells Fargo.

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Biden to renominate Powell as Fed chair; plus Brainard as vice-chair

Federal Reserve chairman Jerome Powell (right) with Fed governor Lael Brainard in 2019 Photograph: Ann Saphir/Reuters

Over in Washington, Federal Reserve chair Jerome Powell is to be nominated for a second four-year term by President Joe Biden.

The move ends uncertainty over whether Powell would be given a second term as the world’s most powerful central banker.

Progressive lawmakers had pushed Biden to choose Fed board member Lael Brainard, arguing that Powell did not take recognise climate change as an urgent and systemic economic threat.

But in the event, Biden has decided to nominate Jay Powell for a second four-year term as Federal Reserve chair.

Brainard, the only Democrat on the Fed’s board, will be proposed as vice-chair, giving her a more powerful position at the central bank.

Powell’s first term was dominated by the pandemic, and a severe downturn in which the Fed’s ultra-low interest rates and huge stimulus programmes helped to spur the recover, revitalise the jobs market, and saw inflation hit a 30-year high.

Biden says:

While there’s still more to be done, we’ve made remarkable progress over the last 10 months in getting Americans back to work and getting our economy moving again.

That success is a testament to the economic agenda I’ve pursued and to the decisive action that the Federal Reserve has taken under Chair Powell and Dr Brainard to help steer us through the worst downturn in modern American history and put us on the path to recovery.

US White House Nominates Powell for Fed Chair and Brainard for vice-Chair

— Newsquawk (@Newsquawk) November 22, 2021

Interactive Investor’s head of investment, Victoria Scholar, points out that the US dollar has pushed higher.

White House has confirmed that Biden will nominate@federalreserve chair Jay Powell for a second term

The President will nominate Lael Brainard as Vice Chair

US dollar moves modestly higher on the announcement #breaking pic.twitter.com/hE2K3i8VAu

— Victoria Scholar (@VictoriaS_ii) November 22, 2021
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Citizens Advice: UK energy market needs reforms

Gillian Cooper, head of energy policy for Citizens Advice, says “serious questions must be asked” about the state of the UK energy market and how it is regulated.

Bulb customers will be protected by the special administration process and they shouldn’t see much change to their service for now.

But when the country’s seventh largest supplier fails, serious questions must be asked about the state of the market and how it’s regulated.

It’s clear reforms are needed to prevent consumers and taxpayers from paying the price for supplier failures in future.”

Walid Koudmani, market analyst at financial brokerage XTB, says Bulb’s collapse shows the “bleak” situation in Britain’s energy market, which could leave consumers with much less choice.

Bulb energy’s collapse continues to highlight the bleak situation which has already seen a number of other energy providers fold under increasing costs and the inability to provide advertised services to their customers.

As today’s announcement further reduces competition in the market, it could lead to a scenario where only a small number of major players are left in the energy market once issues are settled and things return to normal.

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Full story: Bulb Energy, which supplies 1.7m customers, collapses into administration

Jillian Ambrose

Bulb Energy has gone bust and will be placed into a special administration process to manage the fallout of the biggest energy supply collapse on record.

The energy regulator drew up plans over the weekend to put the company into a special administration process designed to protect Bulb’s 1.7 million household customers, according to industry sources.

A statement from the company on Monday said.

We’ve decided to support Bulb being placed into special administration, which means it will continue to operate with no interruption of service or supply to members.

If you’re a Bulb member, please don’t worry as your energy supply is secure and all credit balances are protected.

The UK day-ahead gas price has soared this year. Photograph: Refinitiv

The company’s collapse has been long expected by industry rivals, which described the company as the “walking dead” after it struggled to find new investment, or a willing buyer, before the UK’s looming winter energy crisis.

Here’s the full story:

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