The pound fell and remains vulnerable to global growth concerns and the ongoing fuel crisis in the UK as analysts fear of a difficult winter ahead. The fuel crisis has sparked concerns that growth will slow down, while rising inflation will aggravate problems. The panic buying of petrol was the result of fears regarding supply chain issues as the UK is struggling to recover from the Coronavirus pandemic.
150 soldiers prepared to drive tankers
UK business secretary Kwasi Kwarteng has said that military tanker drivers are ready to help with the fuel crisis and transport petrol to stations, as 150 soldiers will be driving tankers within a few days. Despite calls to motorists to stop panic-buying at petrol stations, queues have continued. Kwarteng admitted that the last few days have been difficult, with large queues, but the situation is stabilising and that with soldiers driving the tanker fleet and getting petrol into the forecourts, things will return back to normal soon. In regard to issues in the run-up to Christmas, where people are busier, Kwarteng explained that it was difficult to make any predictions, but, nonetheless, he reiterated that the “situation is stabilising.”
The fuel crisis has generated more concerns about who will have priority access and many unions have requested that doctors, nurses and other essential workers to be given priority access to fuel. The Prime Minister has resisted this. The worst shortages have been experienced in London and English cities with fights and, in one incident in south London, a driver pulling a knife.
The supply chain issue and the shortage of lorry drivers is linked to Brexit and the government has said that it will deal with the driver shortage by providing temporary visas to 5,000 foreign drivers.
Bank of England to raise interest rates
The Bank of England will be forced to raise interest rates to fight inflation. Markets are concerned about the Bank having to tighten its policy against a weak background, with analysts describing it as a “stagflation story.”
The UK is especially vulnerable as it appears to be the hardest hit by the energy and supply chain crisis. The energy crisis is affecting economic activity, while the rising gas prices are a real issue for the currency. With the ongoing energy crisis, the pound will remain under pressure, and once it clears it will be able to stabilise. The gas price surge is also a global phenomenon as Asian countries are also competing for the same supplies. Growing fears of an energy shortage in China have led to Sinopec, an LNG importer, to outbid European competitors.
Traders and analysts are now focusing on the fuel crisis as they are worried about how the UK economy will fare and whether the current crisis is temporary or will last longer.
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