As the global food prices continue to escalate, the International Monetary Fund (IMF) has been updating the world on the crisis playing out in every nook and cranny of the world. Here below is an update of the situation published by the global monetary fund.

Estimating Financial and Fiscal Costs of the Global Food Crisis Against the backdrop of rising global food insecurity, a recent International Monetary Fund (IMF) paper estimated that higher food and fertilizer import prices will add $9 billion in 2022 and 2023 to the balance of payments of the 48 most affected countries. 

The war in Ukraine continues to affect food production and distribution amidst a worldwide food crisis already stressed by regional conflicts, climate shocks, and the pandemic. The IMF paper identifies 48 countries, primarily low-income countries in the Sahel and other parts of Sub-Saharan Africa, that are most affected because they face significant import price pressures or have portions of their populations experiencing acute food insecurity, as defined by the World Food Programme (WFP). From a fiscal perspective, the analysis suggests that $5 billion to $7 billion in further spending is needed to assist vulnerable households in these countries. 

An additional $50 billion is required to end acute food insecurity over the next 12 months. Although estimating the cost of the food crisis is difficult in terms of data availability and the multiple factors driving price hikes, the report attempts to quantify costs using three approaches: the impact of the terms-of-trade shock on countries facing higher staple and fertilizer prices, the budgetary cost of supporting the poorest households, and the financial cost of eradicating acute food insecurity. 

The first approach—approximating $9 billion in foreign exchange needs over 2022/23 for the 48 most affected countries—employs international price changes for five essential cereals and three fertilizers. The price differentials are applied to the latest (September) import volumes assumed to grow proportionately with real gross domestic product and compared to IMF end-of-2021 price forecasts as a baseline scenario. The analysis offers a few caveats, including that it is not assumed that import volumes respond to price changes in the short term but will react over time. 

Furthermore, the $9 million in financing linked with higher food and fertilizer prices does not account for other balance-of-payments pressures such as commodity (particularly energy) price changes and rising interest rates on borrowing abroad. The second approach uses the most recent food inflation data to estimate the $5 billion to $7 billion needed to compensate households living on less than $1.90 per capita per day in the 48 countries identified. The methodology assumes 6-month compensation and unchanged household budget allocation for food. The range of total fiscal costs reflects cross-country variation in inflation and represents 0.15 percent to 0.30 percent of gross domestic product. Estimates do not include how other price hikes, such as for fuel for transport and cooking, would need to be factored into increases in social spending. 

The third approach applies the WFP’s total annual operational cost of $22.2 billion to support 151.6 million people to the 345 million people now suffering from acute malnutrition or worse to arrive at the $50 billion figure associated with lifting people out of acute food insecurity for 12 months. The IMF report and accompanying blogs highlight that many of the 48 countries affected by the food crisis face several overlapping vulnerabilities and must receive further humanitarian assistance and concessional financing from development partners. Other policy responses include implementing effective public expenditure for emergency relief, facilitating regional trade and reducing food export bans, improving input access for food production and distribution, and investing in climate-smart agriculture.

In South Sudan, the high levels of acute food insecurity are causing a high level of hunger-related deaths as food insecurity reaches emergency (IPC Phase 4) outcomes, with famine (IPC Phase 5) outcomes likely by January 2023, driven by prolonged conflict and recurrent flooding (FEWS NET). A fourth consecutive year of flooding is expected to result in another year of livestock and crop losses as flooding continues based on forecasts for above-average rainfall amid already high river levels and highly saturated soils. Humanitarian food assistance deliveries continue to reach areas of great concern across South Sudan to mitigate widespread acute food insecurity, although they are reaching only 20 percent of people in need. 

The Famine Early Warning Systems Network continues to assess a credible famine (IPC Phase 5) scenario given the high proportion of the population likely to face significant food consumption gaps and their vulnerability to new shocks. Fangak and Canal/Pigi are among the areas of most significant concern for this risk of famine (IPC Phase 5). If flood severity exceeds that of 2021 or if conflict intensifies, restricting household movement and humanitarian access, famine could occur. Emergency (IPC Phase 4) reflects an already high level of hunger-related mortality in South Sudan (FEWS NET). 

Higher fertilizer prices could decrease cereal production by 16 percent during the 2022 cropping season (WFP). Fertilizer prices more than doubled from their levels a year ago in East Africa within 2 months of the onset of the war in Ukraine. This coincided with the 2022 primary season crop planting, disrupting farming operations. There have also been fertilizer price hikes region-wide, with fuel prices 17 percent to 75 percent higher in April 2022 than a year earlier. 

The steepest increases have been observed in Burundi, Ethiopia, Kenya, Somalia, and South Sudan and have limited farmers’ ability to use farm machinery and transport and will further reduce their ability to grow sufficient crops this year. The WFP estimates that cereal production during the 2022 cropping year could be 16 percent lower than in 2021 because of high fertilizer and fuel prices. Total 2022 cereal production will be about 37.8 million tonnes, down from 45.2 million in 2021. The most significant declines in cereal production will be in Ethiopia (21 percent), Kenya (12 percent), and Sudan (12 percent).

Compiled by Alain Agbor Ebot

The pound hit a record low against the dollar Monday on surging fears about the UK economy after the government unveiled a huge tax-cutting budget.

The selloff came as equity markets across Asia and Europe fell again owing to a growing expectation that central bank interest rate hikes to fight runaway inflation would lead to deep and painful recessions. Oil also suffered heftier selling.

Officials in several countries including the United States, Britain, Switzerland and Sweden announced more increases in the cost of borrowing.

The moves sent equity markets deep into the red again after officials reiterated their focus on fighting inflation, even if that means causing a recession.

But the biggest casualty of the week was the pound, which fell below $1.10 for the first time since 1985 as new finance minister Kwasi Kwarteng announced his controversial mini-budget.

It then extended the losses Monday to briefly touch an all-time low of $1.0350 in Asian trade after he said he intended to unveil further reductions, despite his budget causing ructions on London’s markets.

It also fell to a two-year low against the euro, though the single currency remains under pressure against the dollar, sitting at 2002 levels.

Now, observers are warning that the pound could fall even further.

“The pound’s crash is showing markets have a lack of confidence in the UK and that its financial strength is under siege,” said Jessica Amir, of Saxo Capital Markets.

“The pound is a whisker away from parity and the situation is going to only worsen from here.”

Kwarteng, who was appointed by Liz Truss after she became prime minister earlier this month, said he planned to slash taxes to kickstart the British economy and provide cash to cushion families from rocketing energy costs.

But investors were spooked by the huge amount of borrowing likely needed for the multi-billion-pound package, which critics said would benefit the rich far more than the poorest during a cost-of-living crisis.

Sterling’s drop has led to speculation the Bank of England will have to step in with an emergency interest rate hike to give the currency a much-needed shot in the arm.

‘Macau casinos soar’

“Whether or not the UK government announcement of the biggest tax reduction since 1972… will in time yield a significant growth dividend is not something markets are yet willing to contemplate,” said National Australia Bank’s Ray Attrill.

“Instead, they were consumed by worries over the scale of near-term UK government financing needs, at a time when the current account deficit is running at more than eight percent of GDP.”

He added: “Chatter about a possible UK sovereign rating downgrade has already begun.”

And former US treasury secretary Lawrence Summers was scathing of Britain’s recent monetary policy decisions.

“It makes me very sorry to say, but I think the UK is behaving a bit like an emerging market turning itself into a submerging market,” he told Bloomberg Television’s Wall Street Week last week.

“Between Brexit, how far the Bank of England got behind the curve and now these fiscal policies, I think Britain will be remembered for having (pursued) the worst macroeconomic policies of any major country in a long time.”

The collapse in sterling came as markets across the world are sent into a spin by recession worries caused by a sharp tightening of monetary policy by central banks fighting decades-high inflation.

New York’s three main indexes ended well down, with the Dow at a two-year low, and Asia followed suit.

Tokyo shed more than two percent as traders there returned from a long weekend break, while Seoul was off more than three percent, with Sydney, Shanghai, Mumbai, Singapore, Taipei and Jakarta also tanking.

Hong Kong was also down having reversed early gains that came after the city said it would relax strict hotel quarantine measures for international travelers.

Still, Macau casino stocks rallied as the city said it would accept Chinese tour groups again from November, having been blocked during the pandemic.

London edged up tentatively after Friday’s hammering, while Paris and Frankfurt were also higher.

Oil prices ticked lower, extending the big losses suffered Friday as expectations that a recession is looming the surging greenback added to the sell-off in crude, which is priced in dollars and therefore more expensive for buyers using other currencies.

Both main contracts are sitting at their lowest levels since January, having wiped out all the gains seen in the wake of Russia’s invasion of Ukraine.

Black Gold Investors’ Gary Ross described the strong dollar as “a wrecking ball for commodities”.

Source: AFP

Indian industrialist Gautam Adani briefly became the world’s second-richest person on the Forbes real-time billionaire tracker on Friday, weeks after becoming the first Asian to break into the top three.

The self-made billionaire’s net worth surged $4 billion overnight to $154 billion, according to Forbes, ranking him ahead of LVMH’s Bernard Arnault and Amazon’s Jeff Bezos.

Tesla founder Elon Musk remained well out in front with a fortune of more than $270 billion.

Arnault — who at times held the top spot in May 2021 — and Adani traded the number two position during the day as the share prices of their companies fluctuated.

Adani, 60, made his fortune in ports and commodities trading and now operates India’s second-largest conglomerate with interests ranging from coal mining and edible oils to airports and news media.

His ballooning net worth reflects a stratospheric rise in the market capitalisation of his publicly listed companies, as investors back the Adani Group’s aggressive expansion of old and new businesses.

Shares in the flagship Adani Enterprises — of which the billionaire owns 75 percent — have soared more than 2,700 percent since March 2020, and doubled in value in the past six months.

Stock price surges in other group companies including Adani Transmission, Adani Power, Adani Ports and Adani Green Energy catapulted Adani past fellow Indian billionaire Mukesh Ambani this year.

Analyst estimates indicated the market capitalisation of Adani’s seven listed companies also briefly overtook those of the Tata group on Friday morning, making the Adani Group India’s largest conglomerate.

Born in the city of Ahmedabad in the western state of Gujarat to a middle-class family, Adani dropped out of college to work in the diamond industry before starting his export business in 1988.

In 1995, he won a contract to build and operate a commercial shipping port at Mundra in Gujarat, which has since grown to become India’s largest port.

At the same time, Adani expanded into thermal power generation and coal mining in India and overseas.

In recent years, the conglomerate has forayed into petrochemicals, cement, data centres and copper refining, in addition to establishing a renewable energy business with ambitious targets.

Recent investments in Indian news media and a bid for 5G airwaves this year have raised speculation that the billionaire’s empire could soon impinge on sectors dominated by Ambani’s Reliance Industries.

But Adani’s rapid expansion into capital-intensive businesses has also raised financial alarms, with Fitch Group’s CreditSights last week reiterating that they “remain concerned over the Adani Group’s leverage”.

Source: AFP

The United Arab Emirates has promised “robust actions” against money-laundering and terrorist financing after the Middle East financial hub was placed on a grey list of countries subject to heightened scrutiny.

The wealthy Gulf state, which includes the freewheeling trade-to-tourism hub Dubai, was named on the Paris-based Financial Action Task Force’s 23-strong list on Friday, joining the likes of Yemen, Syria and South Sudan.

Grey-list countries are “actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing”, the global watchdog said in a statement.

UAE officials said they would strive to meet a list of requirements laid down by the taskforce, including increasing prosecutions and identifying sanctions evasion.

“The UAE takes its role in protecting the integrity of the global financial system extremely seriously,” the UAE’s Executive Office of Anti-Money Laundering and Countering the Financing of Terrorism said in a statement.

“The UAE will continue its ongoing efforts to identify, disrupt and punish criminals and illicit financial networks,” it added, pledging “robust actions and ongoing measures… to secure the stability and integrity of the country’s financial system”.

The resources-rich UAE has become a nexus connecting the Middle East, Europe, Central Asia and Asia. Dubai has the world’s busiest airport in terms of international passenger traffic, and one of the busiest sea ports.

While the desert country has successfully diversified its economy rather than relying on oil, experts and international organisations have long criticised a failure to crack down on murky financial transactions.

Source:  AFP

Oil prices broke above $100 a barrel for the first time since 2014, stock markets slumped and the rouble hit a record low on Thursday after Russian President Vladimir Putin launched an invasion of Ukraine.

Markets displayed all the predictable reactions. Europe’s main stock markets opened 2.5%-4% lower and benchmark government bonds, the dollar, Swiss franc, Japanese yen and gold all rallied in a move to safety.

Putin said he had authorised what he called a special military operation and the Ukraine government accused Moscow of launching a full-scale invasion.

The United States and its allies will impose “severe sanctions” on Russia after the attacks, U.S. President Joe Biden said. Europe’s leaders said they would freeze assets and shut Russian banks out of its financial markets. Russian and Ukraine markets went in freefall.

The rouble weakened nearly 7% to an unprecedented 86.98 per dollar and there were 10% plus falls on the Moscow stock exchange when it opened after an initial suspension. The Russian central bank then ordered a ban on short selling and over-the-counter markets until further notice.

The equities rout had started with a 2.6% dive for pan-Asian indexes. Europe’s STOXX 600 index then fell 2.75% – hitting its lowest since May 2021 and 10% below a January record high.

The German DAX fell 3.7%, bearing the brunt of the sell-off due to heavy reliance on Russian energy supplies and the amounts its companies sell to Russia. The surge in oil prices helped limit losses on the UK’s commodity-heavy FTSE 100, although it still slumped 2.3% and futures markets pointed to similar falls for Wall Street later.

S&P 500 e-minis were down 2% and Nasdaq futures were 2.8% lower, which if it materialises, would confirm the tech-focused index it is in a so-called ‘bear’ market.

“In the past when you have had geopolitical flareups you tend to have a very volatile periods on markets then normalisation, but it’s difficult to assess when we will get that,” said LGIM portfolio manager Justin Onuekwusi.

The dollar index was up 0.5%, in the currency markets.

Assets have seen a sharp increase in volatility over the deepening crisis, with the Cboe Volatility Index, known as Wall Street’s fear gauge, up more than 55% over the past nine days.

Brent crude futures, jumped more than 3.5% to shoot past $100 a barrel for the first time since September 2014.

West Texas Intermediate leapt 4.6% to $96.22 per barrel, its highest since August 2014, while gold jumped more than 1.7% to hit its highest level since early January 2021.

That dive for safety also saw yields on Germany’s AAA-rated government bonds drop eight basis points to 1.139%, the lowest in three weeks.. the benchmark U.S. 10-year yield was down sharply too, going as low as 1.86% from its U.S. close of 1.977% before edging back up to 1.90%.

Investors have also been grappling with the prospect of imminent policy tightening by the U.S. Federal Reserve aimed at combating surging inflation. The question now is whether the conflict will give central bankers a reason to delay those moves or whether the further rise in energy priced could spur them on.

While expectations of an aggressive 50-basis-point hike at the Fed’s March meeting have eased, Fed funds futures continue to point to at least six rate hikes this year.

“Markets are now more adequately pricing in the risk of something horrific happening. That combined with the uncertainty is a horrible environment to be in. No one wants risk exposure when that’s floating around,” said Rob Carnell, head of Asia Pacific research at ING.

Source: REUTERS

Qatar’s emir said major gas exporting nations were working to ensure “credible and reliable” supplies as he hosted a forum overshadowed by the worsening crisis in Ukraine on Tuesday.

Sheikh Tamim bin Hamad Al-Thani said the 11-nation Gas Exporting Countries Forum, which includes Russia, was striving to preserve stability in world markets, which have been rocked by growing fears of a conflict.

But the group made no immediate promise of extra production for Western Europe, which has sought alternatives to Russian gas as the crisis drives up prices and threatens supplies.

Russia is a key member of the forum, which is taking place after Moscow ordered troops into two rebel regions of Ukraine, prompting international condemnation.

Russian Energy Minister Nikolay Shulginov made no reference to the tensions but he told the forum that “Russian companies are fully committed to existing contracts” for gas supplies.

Russia currently accounts for 40 percent of gas used in Europe, and Qatar five percent.

The United States has asked Qatar to help Europe if Russian gas is cut. But Qatar and other producing countries insist that there are no major reserves that can be diverted to Europe, now paying record prices, unless existing customers, mainly in Asia, agree to give up promised supplies.

Qatar’s emir said forum countries were “working hard to ensure a credible and reliable supply of natural gas to world markets and preserve the stability of those markets”.

The emir and other speakers called for closer contacts with consumer markets to ensure a stable supply of gas, which the forum has been pushing as an essential part of the global drive towards cleaner energy.

The summit was also attended by presidents and prime ministers from Algeria, Iran, Mozambique, Equatorial Guinea and Trinidad and Tobago.

Iran’s President Ebrahim Raisi said his country wanted to increase production and exports but was being held back by what he called “cruel and unnatural” US sanctions against his country.

Major powers are negotiating with Iran to revive an accord regulating its controversial nuclear programme that could provide relief from the crippling sanctions.

Even before the sharp rise in energy prices over the past year, the major gas-producing nations had said they needed long-term contracts to ensure a guaranteed supply to consumers.

The European Union has until recently resisted 10, 15 and 20 year contracts typical in the industry. But Qatar and others say that the massive investment needed to increase production meant they need long term deals.

Source: AFP

President Vladimir Putin unveiled a new Russian gas deal with China at a meeting with President Xi Jinping in Beijing on Friday, promising to increase Moscow’s far east exports at a time when Putin is at odds with European customers over Ukraine.

Russia, already Beijing’s No. 3 gas supplier, has been strengthening ties with China, the world’s biggest energy consumer, reducing its dependence on its traditional European energy customers.

“Our oilmen have prepared very good new solutions on hydrocarbon supplies to the People’s Republic of China,” Putin said in a meeting with Xi to discuss closer cooperation. “And a step forward was made in the gas industry, I mean a new contract on supplying 10 billion cubic metres (bcm) per year to China from Russia’s Far East,” said Putin, who was in Beijing to attend the Winter Olympics.

Putin has accused the United States of stoking tensions over Russia’s neighbour Ukraine, which seeks NATO membership. More than 100,000 Russian troops have amassed near the border with Ukraine. Western countries accuse Moscow of planning an invasion, which it denies.

Russia is Europe’s biggest provider of natural gas, and Western countries are worried that already strained supplies could be interrupted in the event of a conflict. However, the new deal with Beijing would not let Moscow divert gas otherwise bound for Europe, as it involved gas from the Pacific island of Sakhalin, unconnected to Russia’s European pipeline network.

Russian gas giant Gazprom said in a statement that it plans to increase gas exports to China to 48 billion cubic metres a year, including via the newly agreed pipeline which will deliver 10 bcm annually from Russia’s Far East.

Under previous plans, Russia aimed to supply China with 38 bcm by 2025. The announcement did not specify when it would reach the new 48 bcm target.

An industry source told Reuters earlier on Friday that Gazprom, which has a monopoly on Russian gas exports by pipeline, had agreed a 30-year contract with China’s CNPC, with the first gas to flow through the new pipeline in two or three years.

Power of Siberia

Russia now sends gas to China via its Power of Siberia pipeline, which began pumping supplies in 2019, and by shipping liquefied natural gas (LNG). It exported 16.5 billion cubic metres (bcm) of gas to China in 2021, including 10.5 bcm via the Power of Siberia pipeline, a network that is also separate from the pipelines that send gas to Europe.

Putin is accompanied by several Russian officials and business executives, including Igor Sechin, head of oil giant Rosneft. Alexei Miller, the head of Gazprom is not in the delegation. Rosneft and CNPC signed a deal on supplying 100 million tonnes of oil to China through Kazakhstan for 10 years, the Russian company said, effectively prolonging the existing deal.

Source: REUTERS

The world’s 10 wealthiest men doubled their fortunes during the first two years of the coronavirus pandemic as poverty and inequality soared, a report said on Monday.

Oxfam said the men’s wealth jumped from $700 billion to $1.5 trillion, at an average rate of $1.3 billion per day, in a briefing published before a virtual mini-summit of world leaders being held under the auspices of the World Economic Forum.

A confederation of charities that focus on alleviating global poverty, Oxfam said the billionaires’ wealth rose more during the pandemic more than it did the previous 14 years, when the world economy was suffering the worst recession since the Wall Street Crash of 1929.

It called this inequality “economic violence” and said inequality is contributing to the death of 21,000 people every day due to a lack of access to healthcare, gender-based violence, hunger and climate change.

The pandemic has plunged 160 million people into poverty, the charity added, with non-white ethnic minorities and women bearing the brunt of the impact as inequality soared.

The report follows a December 2021 study by the group which found that the share of global wealth of the world’s richest people soared at a record pace during the pandemic.

Oxfam urged tax reforms to fund worldwide vaccine production as well as healthcare, climate adaptation and gender-based violence reduction to help save lives.

The group said it based its wealth calculations on the most up-to-date and comprehensive data sources available, and used the 2021 Billionaires List compiled by the US business magazine Forbes.

Forbes listed the world’s 10 richest men as: Tesla and SpaceX chief Elon Musk, Amazon’s Jeff Bezos, Google founders Larry Page and Sergey Brin, Facebook’s Mark Zuckerberg, former Microsoft CEOs Bill Gates and Steve Ballmer, former Oracle CEO Larry Ellison, US investor Warren Buffet and the head of the French luxury group LVMH, Bernard Arnault.

Source: AFP

Over 4,500 flights were cancelled around the world by Saturday and thousands more were delayed as the highly infectious Omicron variant disrupted holiday travel, according to tracking website Flightaware.

One route, however, was thankfully not affected: Santa was on track delivering presents to children across the globe, air defense officials assured US President Joe Biden.

According to Flightaware.com, at least 2,000 flights were cancelled worldwide on Christmas Day, including roughly 700 originating from or headed to US airports, with more than 1,500 delays as of 0720 GMT.

On Friday, there were around 2,400 cancellations and almost 11,000 delays. The site also reported over 600 cancellations for Sunday.

Pilots, flight attendants and other staff have been calling in sick or having to quarantine after exposure to Covid, forcing Lufthansa, Delta, United Airlines and many other carriers to cancel flights during one of the year’s peak travel periods.

Flightaware data showed United cancelled around 200 flights on both Friday and Saturday, or 10 percent of those that were scheduled.

“The nationwide spike in Omicron cases this week has had a direct impact on our flight crews and the people who run our operation,” United said in a statement on Friday.

“As a result, we’ve unfortunately had to cancel some flights and are notifying impacted customers in advance of them coming to the airport,” the airline said, adding that it was working to rebook passengers.

Similarly, Delta cancelled at least 260 flights Saturday and around 170 on Friday, saying it has “exhausted all options and resources — including rerouting and substitutions of aircraft and crews to cover scheduled flying.”

“We apologize to our customers for the delay in their holiday travel plans,” the company said.

Eleven Alaska Airlines flights were axed, after employees said they were potentially exposed to Covid-19 and had to self-isolate in quarantine.

The cancellations added to the pandemic frustration for many Americans eager to reunite with their families over the holidays, after last year’s Christmas was severely curtailed.

Chinese airlines accounted for the highest number of cancellations with China Eastern scrapping around 480 flights or over 20 percent of its flight plan, and Air China grounding 15 percent of its total scheduled departures at around 0720 GMT Saturday.

Huge travel bump

According to estimates from the American Automobile Association, more than 109 million Americans were scheduled to travel by plane, train or automobile between December 23 and January 2, a 34 percent increase since last year.

But most of those plans were made before the outbreak of the Omicron variant, which has become the dominant strain in the United States, overwhelming some hospitals and healthcare workers.

Luckily, Omicron did not affect Santa’s travel plans, according to the North American Aerospace Defense Command (NORAD), which has tracked St. Nick’s Christmas journey for over 60 years.

Major General Eric Kenny, commander of the Canadian NORAD region, told AFP that Santa had distributed over two billion gifts and was above Pakistan around 1800 GMT.

“Santa is doing very well so far,” Kenny said. “He’s been at it for many hours already and will go throughout the evening as well.”

Biden and First Lady Jill Biden also spoke to NORAD officials via video conference Friday to ensure Father Christmas’ trip was going smoothly.

Biden then spoke, also via video call, to several American families, asking children what presents they wanted and telling them that they had to be in bed before midnight, otherwise Santa would not come.

But in a sign of deep political divisions plaguing American society, the event then took a sour turn, when a father, to whom Biden had just wished happy holidays, launched an insult at him.

According to journalists present at the event, the father said “Merry Christmas” followed by “Let’s go Brandon!” The phrase has been used by supporters of Donald Trump as a euphemism for a derogatory remark against the current president.

Source: AFP

The supply chain troubles caused by Brexit and the pandemic have been so bad for Satyan Patel that the shelves at his convenience store in central London are seriously lacking water and soft drinks.

“Last week I ran out of Coca-Cola. I haven’t had large bottles of Evian for three weeks,” said Patel.

“Without products, there’s no business. With empty shelves like this, no one is going to come in the shop anyway,” he added.

A wide range of businesses have suffered through shortages for several months in the UK — from milkshakes at McDonald’s to beer at a pub chain to mattresses at Ikea.

But shoppers are also facing empty shelves for things as basic as water and milk at UK supermarkets and grocery stores.

The coronavirus crisis has severely disrupted the global supply chain, but Britain’s divorce from the European Union late last year has exacerbated the problem in the UK.

Shops are not getting products delivered to them as rules making it harder to hire EU citizens has left haulage companies with a drastic shortage of lorry drivers.

Many people who returned to their home countries from Britain during the lockdown have not returned.

Co-op, a cooperative supermarket group, said it was “impacted by some patchy distribution” to its deliveries but it was working with suppliers to re-stock quickly.

The group said it was recruiting 3,000 temporary workers “to keep depots working to capacity and stores stocked as quickly as possible”.

– Where’s the milk? –

According to recent estimates, the UK currently faces a shortage of about 100,000 lorry drivers.

“We had already decided to reduce our stock because of Covid… but now we’re finding it hard to get some products as well because they’re just not available,” Patel said.

At a supermarket near his store, the soft drinks aisle was a little short of bottles and cans but other shelves were full.

But 22-year-old sales assistant Toma said the situation was grim.

“We don’t have stock, we have nothing in our warehouse,” said Toma, who declined to give her last name.

“We have gaps everywhere,” she said. “Sometimes we receive only a certain amount (of some products). We don’t even have water.”

The shortages began when the pandemic hit and got worse after Brexit came into force on January 1, Toma said.

Some customers complain to supermarket staff and “say it’s us to blame”, she added.

At another major supermarket in southeast London, water bottles were sparse and milk was missing from shelves.

Frozen-food group Iceland and retail giant Tesco have warned of Christmas shortages.

Iceland head Richard Walker said the company has reduced deliveries as it has 100 fewer drivers than it needs.

“Every day we are missing around 10 percent of the stock we have ordered into our depots,” he wrote in a blog, adding that “when things were at their worst” its sole bread supplier was unable to deliver to as many as 130 stores per day.

– ‘Perfect storm’ –

Shortages of goods in the UK “will probably last for a while and may even intensify further”, according to a note by Capital Economics, a research consultancy.

A report this week from the Confederation of British Industry cited the Road Haulage Association as saying it would take at least 18 months to train enough Heavy Goods Vehicle (HGV) drivers to replace those who have left.

For the CBI, the dual effects of Brexit and Covid-19 are a “perfect storm”.

Stock levels in relation to expected sales fell by more than 20 percent to a record low across the retail and distribution sector in August, according to the CBI.

The group has urged the government to be more flexible on immigration and add skilled lorry drivers to a list of professions that are short on workers.

Road transport companies and businesses dependent on deliveries are offering bonuses and higher wages in an attempt to retain drivers, but the moves have raised concern that they could contribute to rising inflation.

Ryan Koningen, a 49-year-old project manager at a company in the City of London, said his colleagues often discussed the situation and “the question of costs: will they rise because drivers are paid premiums?”

He too said he had noticed shortages of “day-to-day products”.

Source: AFP