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When the Paris treaty on climate change was adopted in 2015, the notion that the five-year check in — at next month’s delayed COP26 summit in Glasgow — would be taking place amid the wreckage of a global pandemic was a rather fanciful one.
The combination of large economies causing a spike in energy demand as they spring back to life, together with supply chain problems, labour shortages and rising inflation has all combined to form a “perfect storm” (according to all news outlets), threatening the economic recovery from coronavirus.
The latest twist comes today from Russia, where energy giant Gazprom — which supplies almost a third of continental Europe’s gas — damped down hopes of increased supplies next month, sending prices up by 18 per cent.
Aside from attempts at mitigating rocketing costs for consumers, such as “fuel cheques” in France or a potential cut in value added tax on household bills in the UK, the crisis has also highlighted sharp differences in national energy policies.
EU policy on the other hand is complicated by the fact that member states are moving in two different directions. France, the biggest supporter of nuclear, is promising to invest €1bn in the sector by the end of this decade, while Germany has decided to phase it out completely by next year. Belgium is also determined to ditch nuclear and increase its reliance on gas.
In the US, Democrats from coal-heavy states are holding up President Joe Biden’s green energy plans. And in China, the government is trying to address power outages in factories — a contributory factor to the country’s slowdown in growth shown in today’s GDP data — by reverting to dirtier fuels, ordering a rapid expansion in coal mines despite its pledges last year to reduce carbon emissions.
The scale of the challenges ahead in Glasgow was underlined last week by the International Energy Agency. Global emissions dropped sharply in 2020 because of the pandemic, the IEA said, but the speed of the global recovery means they are now on course for their second-largest ever annual increase.
You can find all our reporting on the run-up to COP26 at our Climate Capital hub
For up-to-the-minute news, visit our live blog
Need to know: the economy
Eagerly awaited GDP figures from China showed growth of 4.9 per cent in the third quarter, with quarter-on-quarter growth of just 0.2 per cent, confirming the slowdown in the country’s recovery. The new data add to pressures on President Xi Jinping as he enters the final year of his second term and continues his “common prosperity” strategy with its focus on wealth redistribution.
Latest for the UK and Europe
Traders are now betting on an increase in interest rates from the Bank of England as early as November after BoE governor Andrew Bailey warned the bank “would have to act” to curb inflation. Chief economics commentator Martin Wolf is scathing about government policy, arguing that it was impossible to deliver a high-wage, high-skill, high-productivity economy based on the “Brexit dividend” of restricting immigration of low-skilled people. New UK inflation figures will be published on Wednesday.
UK house prices continue to surge, with new data from the Rightmove property portal showing increases in all sections and regions for the first time in 15 years. Demand is still outstripping supply and buyers are scrambling to secure mortgages ahead of any rises in interest rates.
Congestion at the world’s ports tells us a lot about the pre-pandemic problems of the global economy, writes columnist Rana Foroohar, from the mismatch between skills and jobs to an over-reliance on China for manufactured goods. One solution might be to institute a “rule of four” — that no more than 25 per cent of any crucial supply should be sourced from one place, or come into one port.
Veteran investor Mohamed El-Erian warns of the dangers of rising inflation and supply chain problems for developing countries. Higher import costs are fuelling food insecurity and soaring energy costs are crippling industrial production, while ultra-loose monetary policies in the US and Europe have diverted capital to richer nations in search of higher returns.
Need to know: business
Shares in Valneva, the French vaccine maker, surged 43 per cent today after trial results showed its Covid-19 jab produced a stronger immune response with far fewer side effects than the comparable jab from Oxford/AstraZeneca. Its shares had fallen by a similar amount last month after the UK government ended its agreement to buy at least 100m doses.
Philips become the latest company to cut its annual forecast because of supply chain problems. Revenues at the Dutch manufacturer have also been hit by the recall of faulty sleep apnoea devices.
DIY share trading boomed during lockdown, with more than 7m people in the UK and 30m in the US opening investing accounts in the first 12 months of the pandemic. Users flocked to platforms such as Robinhood and ETrade in the US, or CMC Markets in London. But is this new army of traders here to stay?
The World of Work
Some people say: after a crisis, you should be able to go back to how things were. Others say: the essence of a crisis is that you fundamentally change. Psychotherapist Esther Perel offers some tips on how to navigate the “next normal” at work.
One route to that change is an executive MBA, where — perhaps not surprisingly — there is a new focus among business schools and students on resilience and managing disruption. Browse our latest guide, including rankings of the world’s top courses.
For those of us who started work before the iPhone arrived in 2007, writes columnist Pilita Clark, downtime was far easier to find. But younger workers seem a lot bolder in telling their bosses they won’t be working on demand, she writes, no matter how much they are needed.
Covid cases and vaccinations
Total global cases: 240.6m
Get the latest worldwide picture with our vaccine tracker
How do you know if that diamond brooch you have your eye on is ethically sourced? Our good gem guide looks at traceability and sustainability in the “Wild West” of the jewellery industry.
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