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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Crossrail to finally open; German exports to Russia plunge; climate protests at Barclays AGM – as it happened

Oil United States Russia ING Ukraine Destatis US Federal Reserve European Union Germany
The Canary Wharf Elizabeth Line Station
The Canary Wharf Elizabeth Line Station Photograph: Jonathan Brady/PA

Wall Street rallies despite rate hike

And finally, stocks have closed sharply higher in New York despite the US central bank making its biggest interest rate rise in over 20 years.

The benchmark S&P 500 index has ended the day 3% higher, its best day since May 2020.

The rally came after Fed chair Jerome Powell said central bank officials are not “actively” considering a rate hike of three-quarters of a percentage point at coming monetary policy meetings.

Powell calmed nerves by telling reporters:

“A 75 basis point increase is not something that the committee is actively considering.”

The Fed is clearly on track to raise borrowing costs several times more, as it tries to get inflation under control (although rate hikes won’t fix some factors, such as China’s lockdowns and the Ukraine war).

But Powell also tried to reassure investors, saying there was a good chance of a soft or softish landing....

Stocks have jumped in New York, after Jerome Powell told the press conference that the Fed is not “actively considering” a 75-basis point hike.

That has calmed concerns that the Fed could announce a really sharp rise in borrowing costs at its next meeting mid-June.

The Dow is up over 2%, or 700 points, at 33,828 points.

Powell: Essential to bring inflation down

Fed chair Jerome Powell is holding a press conference to explain the reasons behind today’s decision.

He begins by saying ti is essential to bring inflation down:

I’d like to take this opportunity to speak directly to the American people.

Inflation is much too high and we understand the hardship it is causing, and we’re moving expeditiously to bring it back down. We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses. The economy and the country have been through a lot over the past two years and have proved resilient. It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all.

Powell adds that Russia’s invasion of Ukraine is causing “tremendous loss and hardship, and our thoughts and sympathies are with the people of Ukraine”.

The impact on the US economy is “highly uncertain”, Powell explains, but as well as lifting inflation, the invasion could also restrain economic activity abroad and further disrupt supply chains.

My colleagues and I are acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing, and transportation.

We are highly attentive to the risks that high inflation poses to both sides of our mandate, and we are strongly committed to restoring price stability.

A snappy Fed summary from Callie Cox of eToro:

Fed hikes rates: expert reaction

Neil Birrell, Chief Investment Officer at Premier Miton Investors, says:

“As expected, the FOMC voted to raise rates by 0.5%, though won’t begin to shrink its balance sheet until June. However, the tone of the statement makes it clear that they are well aware of the need to be attentive to the risks associated with an acceleration in inflation.

Prior to the meeting, a further 1% of rate rises at the next 2 meetings was priced in. That seems justified for now, but the risk may well be on the upside.”

Alastair George, Chief Investment Strategist at Edison Group:

“Today’s Fed rate increase of 0.5% is in line with market expectations but in many respects represents the easier part of the journey back to normal policy settings. While inflationary pressure is close to peaking following the recent surge in energy prices, recent survey data now suggests a slowing of the global economy is underway.

Although inflation fears are the dominant narrative right now, just how far the US Fed will dare to continue to tighten into the face of a slowing economy could be the bigger question for investors as soon as midsummer.”

Simon Harvey, Head of FX Analysis at Monex Europe:

The move in interest rates was largely signalled in the Fed’s inter-meeting communications and thus didn’t take markets by surprise, despite it being the largest increase in rates since May 2000.

Instead, the market focus has been on the Fed’s choice of wording within the policy statement ahead of Powell’s press conference, especially around the description of domestic activity and inflation conditions. Apart from referencing the increased inflation and growth risks stemming from China’s zero-Covid policy and outlining the growth risks stemming from the war in Ukraine with greater certainty, the Fed’s policy statement didn’t offer many adjustments.

Additionally, against some expectations that the Fed would change the wording around the future tightening path to “expeditiously” return rates to the neutral range, the rate statement maintained the wording from March that “ongoing increases in the target range will be appropriate”. This, along with the fact that no FOMC member dissented in favour of a larger 75bp move as hinted at recently by James Bullard, meant that the latest decision was deemed on the dovish side by markets

Full story: Federal Reserve announces biggest interest rate hike since 2000

The Federal Reserve has moved to tamp down soaring inflation in the US, announcing the sharpest rise in interest rates in over 20 years, our US business editor Dominic Rushe reports.

The Fed’s benchmark interest rate was raised by 0.5 percentage points to a target rate range of between 0.75% and 1%. The hike is the largest since 2000 and follows a 0.25 percentage point increase in March, the first increase since December 2018.

More rate rises are expected. The Economist Intelligence Unit expects the Fed to raise rates seven times in 2022, reaching 2.9% in early 2023. Starting in June, officials also plan to shrink their $9tn asset portfolio, a policy move that will further push up borrowing costs.

In a statement the Fed said that although “overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong”.

But it warned that inflation “remains elevated,” the invasion of Ukraine had implications for the US economy that remain “highly uncertain” and Covid-related lockdowns in China “are likely to exacerbate supply chain disruptions”.

Here’s the full story:

The Federal Reserve has also unveiled plans to shrink its $9tn balance sheet, which swelled during its pandemic stimulus programme.

From June 1, the Fed will start to unwind that stimulus, in a process known as ‘run-off’ whereby it stops reinvesting securities as they mature.

The Fed will start by not reinvesting up to $30bn of government debt (Treasuries) and $17.5bn of mortgage-backed securities, giving a runoff total of $47.5bn per month.

But after three months, both caps will double, to $60bn for Treasuries and $35bn for MBS, as the Fed looks to scale back its balance sheet.

Updated

Here’s the statement from the Fed, explaining why it has raised its benchmark policy rate by half a percentage point for the first time since 2000:

Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong. Job gains have been robust in recent months, and the unemployment rate has declined substantially. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.

The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain. The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent and anticipates that ongoing increases in the target range will be appropriate.

Federal Reserve raises US interest rates by 50 basis points

Just in. The US Federal Reserve has raised interest rates by 50 basis points, the biggest move in over 20 years.

Fed policymakers voted unanimously to lift its key interest rate, the fed funds rate, to a 0.75%-1% range.

The move, which had been expected by Wall Street, comes after US inflation hit a 40-year high of 8.5%.

Fed says that inflation remains elevated, with the Ukraine war creating upward pressures, and the latest Covid-19 lockdowns in China adding to supply chain problems.

It adds that it anticipates that ongoing increases in interest rates will be appropriate, as it tries to get inflatio under control.

Summary

Ahead of the Fed decision later, here’s a round-up of today’s stories.

And some great reading ahead of Bank of England day tomorrow:

UK lawyers will still be able to service Russian clients despite the UK’s ban on service sector exports, my colleague Jasper Jolly reports:

Since well before the latest invasion of Ukraine there has been widespread support in parliament, including from Conservative party MPs, for measures to prevent London companies from being “enablers” to Russian companies that play an important role in supporting Vladimir Putin’s regime.

Yvette Cooper, the shadow home secretary, told parliament in March it was “shameful” that Russian companies could “launder their money and their reputations through our capital city”, pointing to “an industry of enablers”.

However, it is understood that the measures will not affect the legal profession or other important services sectors such as software development and cloud services.

That means law firms will be free to continue to serve Russian clients. In some cases lawyers may even be able to serve clients who are subject to sanctions under licences provided by the Treasury.

Here’s his full story:

UK bans service sector exports to Russia - reaction

Leading anti-corruption campaigner Bill Browder has welcomed the UK’s ban on service sector companies working with Russia, calling it ‘big and welcome news’:

Browder, a prominent critic of Russian president Vladimir Putin, sucessfully lobbied for the Magnitsky Act. It allowed the US to sanction Russian officials responsible for the death of Browder’s tax lawyer Sergei Magnitsky, who died in a Moscow prison in 2009 after uncovering a $230m fraud.

Browder has also called for the US to issue visa bans against British lawyers who worked with Russian oligarchs, using the UK legal system against journalists and whistleblowers.

Iain Wright, managing director, reputation and influence at accountancy body ICAEW, said many firms had already cut ties with Russia:

“The UK government has announced a further package of sanctions aimed at demonstrating to the Russian elite the political and financial costs of their aggression against Ukraine.

“Many of our individual members and member firms have already taken proactive steps to disengage as appropriate with Russia. ICAEW is confident that chartered accountants, whether in practice or in business, will be ready and willing to play the fullest possible role in making these further measures effective.”

Updated

US stocks have now dropped into the red, with the tech-focused Nasdaq index down 1% ahead of today’s decision from the Fed.

US service sector slows as input prices hit record

Growth across the US services sector has slowed, adding to concerns over the global economy, as firms continue to be hit by surging prices.

The Institute for Supply Management’s non-manufacturing activity index has dropped to 57.1 last month, from 58.3 in March, showing weaker growth than expected.

Services firms reported that new order growth slowed, and that they had cut jobs.

A measure of input prices hit a record high, due to soaring commodity and energy prices, and rising wages.

Helpfully, the ISM also tell us what survey respondents are saying - with many citing rising prices, problems hiring staff, and supply chain woes.

Here are a few examples:

  • “Pricing pressures and product availability issues continue to be extremely problematic.” [Accommodation & Food Services]
  • “Large construction projects have been mostly constrained due to continued supply chain issues and large cost increases. Continued shortages in account management continue to be a source of frustration for day-to-day operations and service.” [Educational Services]
  • “Overall business has softened.” [Information]
  • “Continued delays due to supply chain logistics issues; increased pricing across the board.” [Retail Trade]
  • “Fuel and chemicals continue to go up in price.” [Utilities]
  • “Cost pressures beginning to slow demand.” [Wholesale Trade]

Wall Street calm ahead of Fed decision

Wall Street trading has begun cautiously as traders wait for the Federal Reserve to set US interest rates later today (2pm New York, or 7pm BST).

The S&P 500 stock index has gained 8 points, or 0.2%, in early trading to 4,184 points.

Energy and materials stocks are up, following the jump in the oil price after the EU proposed a phased embargo on Russian oil. US crude is now up over 4% at $106.65 per barrel.

The Fed is expected to raise its target borrowing rate by 50 basis points, the first half-point rate rise since 2000, as it tries to pull US inflation down from a 40-year high of 8.5%.

That would lift the fed funds target rate range to 0.75% to 1%. In March, the Fed lifted rates by a quarter-point, up from almost zero.

Matthew Ryan, senior market analyst at Ebury, says a 50-basis hike now looks like the ‘bare minumum’ (rather than the ‘usual’ 25bp move).

Speaking during an IMF panel of central bankers last month, FOMC chair Jerome Powell stressed that it was ‘absolutely essential’ to restore price stability, and that rates would need to be raised ‘expeditiously’ in order for the bank to reach its goals.

Markets have subsequently ramped up bets in favour of an aggressive pace of US hikes this year, with fed fund futures now pricing in more than 250 basis points of tightening by year-end. With such an aggressive pace of hikes already priced in by markets, we think that the bar for a hawkish surprise from the Fed is now very high.

“A 50-basis point hike will be seen as the bare minimum - we think that it is a nailed-on certainty.

Updated

25 years since Bank of England got control of UK interest rates

Speaking of central banks... it’s 25 years this week since the Bank of England was given control over UK interest rates, after the Labour party won the 1997 election.

Our economics editor Larry Elliott has written about how the move was dramatically revealed. Here’s a flavour:

Gordon Brown had a surprise in store for Eddie George when he summoned the then governor of the Bank of England to a meeting at 11 Downing Street on bank holiday Monday, 25 years ago this week.

For the past two years, Labour’s new chancellor had been working on a plan to give Threadneedle Street the right to set interest rates and now he was ready to tell George about it. Secrecy was complete. The first the City heard of the idea that henceforth it would be the Bank’s job to hit the government’s inflation target, was when it was announced 24 hours later.

Accompanying George was his private secretary Andrew Bailey, since elevated to the governor’s office himself. Bailey was there to see George’s surprise at Brown’s news – but now he has to steer the Bank through its trickiest time since independence. The annual inflation rate is 7% – its highest in three decades – and is set to move even further away from the official 2% target. The City expects the Bank to raise borrowing costs to 1% on Thursday – the fourth time in a row it has raised rates.

Speaking before the quiet period when the Bank avoids public pronouncements about the looming interest rate decision, Bailey said nobody at Threadneedle Street had seen Brown’s independence announcement coming.

“It had, of course, been mused on as a concept for some years – but the idea that the New Labour government would implement it, immediately surprised almost everyone, I think,”

Bailey recalled Brown producing a letter outlining his plans.

“Eddie, of course, was very supportive of the decision – and the famous letter now sits in the Bank of England’s museum. Though I confess it is not in mint condition, as for a number of weeks after Gordon handed it over, it went around in my briefcase.”

Here’s the full story:

India’s central bank announced a surprise interest rate rise today, in the latest sign that surging inflation is forcing policymakers to tighten policy.

The Reserve Bank of India’s monetary policy committee raised the key lending rate by 40 basis points to 4.4%, up from the record low of 4% set in the pandemic.

RBI governor Shaktikanta Das made the surprise announcement during an online media briefing on Wednesday.

The BBC has more details:

The decision came amid soaring prices of food and fuel, with inflation at an 18-month high and higher global prices filtering through into India.

“Inflation-sensitive items relevant to India such as edible oils are facing shortages due to the conflict in Europe and export bans by key producers. The jump in fertiliser prices and other input costs has a direct impact on food prices in India,” Mr Das said.

India’s main stock index, the Sensex, tumbled 2.3% on the news.

US payroll growth slows

US companies added fewer new jobs last month than expected.

Private payrolls increased by just 247,000 for April, payrolls processing firm ADP reports, below estimates for a 390,000 gain. That’s weaker than the 479,000 new jobs in March,

ADP chief economist Nela Richardson says firms struggled to find workers, with more than 11.5m job openings (a record).

“In April, the labor market recovery showed signs of slowing as the economy approaches full employment.

“While hiring demand remains strong, labor supply shortages caused job gains to soften for both goods producers and services providers.”

According to ADP, small US firms cut 120,000 jobs last month, while large ones added 321,000.

The official US Non-Farm Payroll jobs report is released on Friday. It’s expected to show an increase of 400,000, and a drop in the unemployment rate to 3.5%

Updated

UK sanctions Russian media outlets

The UK has also announced 63 new sanctions, including travel bans and assets freezes for individuals linked to Russian broadcasters and newspapers, and sanctions against mainstream media organisations.

Those sanctioned today include employees of Channel One, a major state-owned outlet in Russia, which had described the invasion of Ukraine as a “special military operation”, PA Media explains.

The Government has also imposed sanctions on war correspondents embedded with Russian forces in Ukraine, including:

  • Evgeny Poddubny, a war correspondent for the All-Russia State Television and Radio Broadcasting Company;
  • Alexander Kots, a war correspondent for Russian newspaper Komsomolskaya Pravda; and
  • Dmitry Steshin, a Russian journalist and special correspondent for Komsomolskaya Pravda.

Organisations including major, state-owned broadcaster, All Russia State Television and Radio Broadcasting, will also face sanctions.

Other media companies sanctioned include: InfoRos, a news agency spreading “destabilising disinformation about Ukraine”; SouthFront, a disinformation website; and the Strategic Culture Foundation, an online journal spreading disinformation about the invasion.

The Uk is also forcing “social media, internet services and app store companies” to take action to block content from Russian state media outlets RT and Sputnik, which have spread disinformation about the war.

Culture minister Chris Philp said:

“For too long RT and Sputnik have churned out dangerous nonsense dressed up as serious news to justify Putin’s invasion of Ukraine.

“These outlets have already been booted off the airwaves in Britain and we’ve barred anyone from doing business with them.

“Now we’ve moved to pull the plug on their websites, social media accounts and apps to further stop the spread of their lies.”

UK bans services exports to Russia

Russian businesses will be banned from using UK professional services firms such as accountancy companies, in the latest round of sanctions following the invasion of Ukraine.

Measures announced by the Foreign Secretary, Liz Truss, will see Russian businesses cut off from the UK’s accountancy, management consultancy and PR sectors.

According to the Government, Russia is “heavily reliant” on service companies in Western countries, and cutting off UK services will account for 10% of Russian imports in the sectors affected.

Ms Truss said:

“Doing business with Putin’s regime is morally bankrupt and helps fund a war machine that is causing untold suffering across Ukraine.

“Cutting Russia’s access to British services will put more pressure on the Kremlin and ultimately help ensure Putin fails in Ukraine.”

Business Secretary, Kwasi Kwarteng, added that the UK’s professional services exports are extraordinarily valuable to many countries, “which is exactly why we’re locking Russia out”.

“By restricting Russia’s access to our world-class management consultants, accountants and PR firms, we’re ratcheting up economic pressure on the Kremlin to change course.”

In March, the UK’s Big Four accountancy firms - EY, Deloitte, KPMG and PwC - all said they would cut off their businesses in Russia and Belarus, as multinational firms cut ties with the two countries.

Updated

Extinction Rebellion’s Money Rebellion group have tweeted about the Standard Chartered AGM protests:

Climate activists and other disgruntled investors glued themselves to chairs, set off alarms and chanted slogans at shareholder meetings hosted by Barclays, and also Standard Chartered, Reuters reports.

Amid anger over lenders’ financial support for Big Coal, protesters also repeatedly interrupted Barclays chairman Nigel Higgins as he tried to get the meeting there underway.

“Stop the greenwashing, take it off the table,” a man who did not give his name said, before being escorted out of the meeting, which is being held in the northern English city of Manchester to reflect Barclays’ increased focus on regional lending.

After gluing her hand to her chair, a second female protester shouted:

“Your climate policy is not worth the paper it’s written on,”

Meanwhile, climate activists attending the StanChart meeting in London were heard chanting, “Life on Earth before your profit, Standard Chartered, please just stop it”, while wearing masks of the face of CEO Bill Winters adorned with devil horns.

Last November, we reported that Barclays had financed $5.6bn of new fossil fuel projects from January 2021 to the eve of the UN climate summit, more than any other UK bank, while Standard Chartered had made $4.3bn available.

Here is more footage from the Barclays AGM protests:

Climate protests at Barclays AGM

Climate protesters have disrupted Barclays annual general meeting this morning, accusing the bank of ‘greenwashing’ for continuing to fund fossil fuel projects.

The AGM in Manchester was briefly suspended after a series of activists spoke out, and were removed by security, with some gluing themselves to chairs.

PA Media has more details:

Chairman Nigel Higgins was forced to pause the meeting while security removed the protesters as he was repeatedly interrupted, with the activists dominating the first 45 minutes and setting off alarms.

One woman protester glued herself to her seat in the audience to avoid being removed.

Protesters criticised the group over its investment strategy, claiming the bank is continuing to invest heavily in fossil fuels and accused it of “greenwashing”.

One activist said the bank is “morally bankrupt”.

He said: “Barclays has ploughed 160 billion US dollars (£128bn) into fossil fuel extraction.”

Another called on the firm to “change your policy”.

He said: “You did say you were going to do it last year and you failed.

“Please, I’m begging you, after this meeting, change your policy.”

Mr Higgins - appearing flustered amid the disruption - had asked protesters to wait until the question and answer session at the end of the meeting, but was forced to ask security to step in.

Reuters’ banking correspondent Lawrence White reports that the AGM was briefly halted after a protester glued herself to her chair:

Extinction Rebellion (XR) protestors have also been protesting outside a Barclays bank branch in Oxford this morning.

A Joules store in Belfast, back in 2020.
A Joules store in Belfast, back in 2020. Photograph: Liam McBurney/PA

The boss of fashion retailer Joules is to quit, as the company warns the soaring cost of living has hit company profits.

Nick Jones is stepping down as Joules’ chief executive in the first half of the next financial year, after three years at the business.

The news comes as Joules warns that “challenging” market conditions and weak consumer confidence have hit recent trading, saying:

“Joules has not been immune to these sector-wide pressures, which have led the group’s profit performance to fall below management’s expectations.”

Reduced demand for full-price items hit Joules profit margins, while demand for home and garden products had been “subdued”.

Shares in the company have tumbled almost a third.

Boohoo has admitted its clothing prices are likely to rise this year after profits almost halved amid weakening consumer demand and rising costs.

The online fashion specialist said pre-tax profits fell 94% to £7.8m in the year to 28 February. Sales rose 14% to almost £2bn but growth was down more than 40% in the previous year, as deliveries overseas were held up by disruption to international shipping and wavering demand during the pandemic.

The cost of shipping and flying in goods from factories was up £22m, while the bill for posting them out to customers rose £38m. Marketing costs also soared as Boohoo relaunched new brands bought during the pandemic including Debenhams, Dorothy Perkins and Burton.

Profits and sales took a hit as customers returned more unwanted items than they had during the pandemic lockdowns, when the group sold more stretchy garments, such as leggings and hoodies, where an exact fit was less important.

Shares in Boohoo have tumbled 12%.

Sarah Riding, retail and supply chain partner at the law firm Gowling WLG, says the increase in returns is “a severe chink in the amour of the retailer”:

“Regaining this lost ground must now be prioritised through tightening up their returns process and vitally, improving visibility. This is paramount, not only because returns have become a normal and regular aspect of modern consumer behaviour, but because the longer items are out of the supply chain, the less profitable they become.”

Map: The Elizabeth line stations

This map shows how the Elizabeth line will operate (apologies, you may have to zoom in to see the detail).

A map of the Elizabeth line

Passengers travelling in/out on the existing outer branches will change at Paddington or Liverpool Street station until the autumn.

Then, services from Reading, Heathrow and Shenfield should connect with the central tunnels.

Updated

The economic clouds over the eurozone have darkened, with new data showing retail sales fell in March, by 0.4%.

It’s a bigger decline than expected, and suggests record high inflation and the Ukraine war hit confidence.

Many EU countries relaxed Covid-19 restrictions in March, which could have supported spending in the shops. However, households are now being hit by soaring energy prices and other costs instead.

The biggest monthly fall was for mail orders and internet purchases, down 4.3%, as people returned to shops rather than buying online.

Graphic: Crossrail links services

This graphic shows how Crossrail will link passenger services from the east and west of London.

Transport for London says it will transform travel across London and the South East, by:

“dramatically improving transport links, cutting journey times, providing additional capacity and transforming accessibility with spacious new stations and walk-through trains.

Part of the delay and cost has been in Crossrail’s complicated signalling, which integrates three different systems, our transport correspondent Gwyn Topham explains:

Trains will run automatically in the central tunnels but need to switch to different signalling systems on both the eastern section of the railway to Shenfield and on the lines to Reading and Heathrow in the west.

Until that is fully operational, passengers travelling in the existing TfL Rail outer branches will need to change at Paddington or Liverpool Street stations. Trains from east or west will directly cross the central section later this year, and services running all the way through are expected to start next year.

More signs with the purple livery of the Elizabeth line will be uncovered in the coming weeks, as well as the updated tube map showing the connections with the rest of the TfL network. Bus services will also be changed in east London to connect with the new stations.

Here’s Gwyn’s full story on the Elizabeth line opening:

The mayor of London, Sadiq Khan, has welcomed the news that Crossrail services will finally start running through central London on May 24:

“This is the most significant addition to our transport network in decades, and will revolutionise travel across the capital and the south-east – as well as delivering a £42bn boost to the whole UK economy and hundreds of thousands of new homes and jobs.

“Green public transport is the future and the opening of the Elizabeth line is a landmark moment for our capital and our whole country, particularly in this special Platinum Jubilee year.”

How Crossrail is only partially opening

Crossrail services will start with 12 trains per hour between Paddington and Abbey Wood, from 6.30am to 11pm.

But they’ll initially only operate from Mondays to Saturdays, with Sunday set aside for further testing and software updates, “in preparation for more intensive services from the autumn.”

The aim is to increase to 22 trains per hour in the autumn, in the peak between Paddington and Whitechapel.

At the start, passengers coming in from the west on trains from Reading and Heathrow to Paddington, and from Shenfield to Liverpool Street in the east, will need to change onto the new trains.

Services from Reading, Heathrow and Shenfield should connect with the central tunnels from this autumn this year.

The Bond Street Elizabeth line station is not ready, so won’t open on May 24 as work is still ongoing after construction problems. TFL hopes it will open by the end of the year.

TFL says:

The station continues to make good progress and the team at Bond Street are working hard to open the station to customers later this year.

Updated

Sunday Times transport editor Nicholas Hellen points out that while Crossrail is finally opening in London, the North of England is still waiting for similar investment:

Northern Powerhouse Rail (NPR), or High Speed 3, is a proposal to connect Liverpool, Manchester and Leeds with new fast services, along with upgrades to services to York, Hull and Sheffield.

But in 2021, the government decided the full high-speed east-west line linking Manchester to Leeds will not be built, and scrapped the eastern leg of the HS2 project to Leeds.

The downgrade was heavily criticised, with senior Conservative MPs, regional leaders and industry figures accusing ministers of betraying the north with a delayed and downgraded £96bn rail plan.

Our transport correspondent Gwyn Topham toured the Elizabeth line in February, and reported:

On the first media trip to see the line in action, riding on spacious trains along the tunnels winding from Paddington to Liverpool Street, flaws appeared conspicuously absent. Twelve trains an hour are now running in the central section excavated under the capital, with an official deadline for opening at the end of June.

Andy Byford, the transport commissioner, said the opening would be “a massive fillip to London’s morale and confidence” after the capital was drained of so much life during the pandemic. “When people arrive, day one, they will be blown away by the scale and by how quiet and smooth the train ride is.”

On the concourse below the glass roof of Paddington’s Elizabeth line station, Byford’s words seemed no exaggeration, with trains arriving barely audibly behind the screens sealing the track from the platforms.

Mark Wild, the chief executive of Crossrail, said it was “epic, a beautiful outcome”. Most of the volumes of the newly built stations, such as the control rooms, aren’t even visible, he said: “The Shard would fit in here quite comfortably.”

Crossrail’s first official opening planned for December 2018 was cancelled, and Byford explained in February that the line “has to be flawless” before it launched.

Updated

Crossrail have put together this video showing the work behind the long-delayed £19bn line, which finally opens in three weeks:

Crossrail: Elizabeth line to open on May 24

The Elizabeth line will open on 24 May, with the tunnelled central London section of the long-delayed £19bn Crossrail project now ready for passengers.

Transport for London said that the line will open, subject to final safety approvals, the week prior to the Queen’s Jubilee celebrations.

The line is set to massively boost capacity on transport in London and the South East, cutting journey times, with a number of new stations and much longer, spacious trains.

The Elizabeth line will initially operate as three separate railways, with the overground services already running as TfL Rail in the west and east planned to join directly with the central section from this autumn.

Abena Oppong-Asare, Labour MP for Erith and Thamesmead, tweets:

Updated

Russia’s factory sector continues to contract

Russia’s factory sector continued to shrink last month, as the country headed into an sharp economic downturn

The latest S&P Global Russia Manufacturing PMI showed that the sector deteriorated in April.

Output, new orders, employment and stocks of purchases all fell, and supplier delivery times lengthening markedly.

It found:

  • Output and new orders contract again amid impact of sanctions
  • Inflationary pressures remain substantial
  • Employment falls for third month in a row

The PMI rose to 48.2 in April, up from 44.1 in March -- any reading below 50 shows that activity fell.

The report says:

Rates of contraction in production and new sales eased from March, but sanctions weighed on client demand and the ability of firms to source raw materials. Input shortages and unfavourable exchange rate movements meanwhile led to further substantial upticks in cost burdens and output charges.

Meanwhile, output expectations were historically subdued amid concerns regarding the impact of sanctions on future demand and new orders.

Aston Martin has appointed its third chief executive in three years, with Tobias Moers stepping down from the maker of sports cars after only two years in charge.

Moers will leave the board of the British carmaker with immediate effect but will stay until the end of July to “support the leadership team with a smooth transition”, Aston Martin Lagonda announced.

The former Ferrari boss Amedeo Felisa will replace him a chief executive. Felisa joined Aston Martin’s board as a non-executive director in July 2021.

Aston Martin, known as the maker of cars used in the James Bond film franchise, has regularly gone through turbulent periods in its 109-year history. Its latest problems began with a stock market listing in 2018 that quickly went sour as high listing costs forced it to look for new funding.

On the UK’s cost of living crisis, the UK’s environment secretary has been criticised for proposing shoppers should choose value brands in the supermarket as the cost of food soars.

George Eustice, the cabinet minister overseeing food and farming, told Sky News food prices were going up because of the knock-on effect of higher energy costs, pushing up fertiliser and feed costs.

“Generally speaking, what people find is by going for some of the value brands rather than own-branded products – they can actually contain and manage their household budget.

“It will undoubtedly put a pressure on household budgets and, of course, it comes on top of those high gas prices as well.”

Pat McFadden, a Labour shadow Treasury minister, criticised Eustice’s comments as “woefully out of touch from a government with no solution to the cost-of-living crisis facing working people”.

Author and campaigner Jack Monroe flagged in January that many of the Smart Price, Basics and Value range products have been vanishing from shelves:

While Western countries cut their reliance on Russian oil, China’s independent refiners have been discreetly buying it at steep discounts, the Financial Times reports today.

Here’s the details:

An official at a Shandong-based independent refinery said it had not publicly reported deals with Russian oil suppliers since the Ukraine war started in order to avoid attracting scrutiny and being hit by US sanctions.

The official added that the refinery had taken over some of the purchase quota for Russian crude from state-owned commodity trading firms, which are seen to represent Beijing and have mostly declined to sign new supply contracts.

Many western companies are self-sanctioning or struggling to secure the insurance, shipping or financing needed to buy Russia’s commodity exports, raising expectations that energy-hungry China will step in and buy the unsold barrels.

More here: China’s independent refiners start buying Russian oil at steep discounts

Oil jumps after EU proposes Russia ban

Oil prices have jumped after the European Union proposed phasing out imports of Russian oil.

Brent crude has risen over 3%, to around $3 per barrel, to $108.77 per barrel, as traders digest the prospect of an embargo within six months.

Before the Ukraine invasion, Brent crude had been trading around $90 per barrel.

But today’s rally still leaves oil below the highs of early March, when it hit $130/barrel as the UK and US announced bans on Russian oil.

Stephen Innes, managing partner at SPI Asset Management says:

“Oil prices are not precisely flying, so traders suspect the devil will be in the details at this stage.

One key detail is that Hungary and Slovakia would be given an exemption, so they can keep buying Russian crude oil until the end of 2023 under existing contracts, an EU source told Reuters.

Here’s our full story on the proposal for a total, phased-in ban on Russian oil imports to the EU:

Ursula von der Leyen has proposed a total ban on Russian oil imports to the EU, saying Vladimir Putin had to pay a “high price for his brutal aggression” in Ukraine.

Member states in Brussels are scrutinising a proposed sixth package of sanctions, but in a speech on Wednesday the European Commission president said Russian oil flows had to stop.

Von der Leyen said Russian supply of crude oil would be prohibited within six months and refined products would be banned by the end of the year, while she acknowledged the demands from countries such as Slovakia and Hungary for additional flexibility.

Updated

EU proposes removing Sberbank, two other Russian banks from SWIFT

Europe’s latest proposed sanctions on Russia will hit three of its banks, including the largest, Sberbank.

Commission head Ursula von der Leyen told the European Parliament that Sberbank and two other banks would be removed from the international SWIFT transaction and messaging system.

That would further isolate the Russian financial system, over the ongoing war in Ukraine, Commission head Ursula von der Leyen told European Parliament.

“We de-SWIFT Sberbank – by far Russia’s largest bank, and two other major banks.

By that, we hit banks that are systemically critical to the Russian financial system and Putin’s ability to wage destruction.”

Swift (the Society for Worldwide Interbank Financial Telecommunication) is the main secure messaging system that banks use to make rapid and secure cross-border payments, allowing international trade to flow smoothly.

It has become the principal mechanism for financing international trade. In 2020, about 38 million transactions were sent each day over the Swift platform, facilitating trillions of dollars’ worth of deals.

Being cut off from Swift would hurt Russian trade, and making it harder for its companies to do business.

Updated

German trade: What the experts say

Germany’s trade balance ‘crashed’ in March, warns Oliver Rakau of Oxford Economics:

With exports down 3.3%, and imports up 3.4%, Germany’s traditional trade surplus dropped to €3.2bn in March. That’s down from €11.1bn in February and €14bn a year earlier in March 2021.

Here’s Bloomberg’s take:

German exports to Russia plummeted to their lowest in almost two decades, with the fallout from President Vladimir Putin’s attack on Ukraine also contributing to a drop in overall trade.

Governments and companies are severing ties with Russia amid Western outrage at the attack and the barrage of sanctions imposed on the Kremlin and associated tycoons. Germany’s economic outlook, meanwhile, has darkened as its key manufacturing sector suffers from input shortages and record inflation as a result of the war.

More here: German Exports to Russia Sink to Two-Decade Low After Invasion

Introduction: German exports tumble as trade with Russia shrinks

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

German exports to Russia have tumbled to their lowest in almost two decades, as the Ukraine war hits the European economy.

Sales to Russia sank nearly two-thirds to about €860m in March, with overall German exports also dropping in an early sign of the economic impact of the Ukraine war on Europe’s largest economy.

And with a ban on Russian oil looming, trade pressures could intensify.

Total German exports dropped by 3.3% month-on-month in March, the latest data from statistics body Destatis this morning shows.

German trade data
German trade data Photograph: Destatis

Exports to Russia were particularly hit, sinking over 60% compared with February, due to sanctions imposed as a result of the Ukraine invasion, and “unsanctioned behaviour of market participants”, Destatis reports.

Looking ahead, despite richly filled order books, the short-term outlook for German exports doesn’t look encouraging, warns ING’s Carsten Brzeski:

New lockdowns in China and a continuation of, instead of easing, last year’s supply chain disruptions will leave significant marks on German industry. According to a recent Ifo survey, almost half of all German companies are dependent on imports from China. Also, the war in Ukraine is very likely to disrupt other supply chains for good.

More generally, with a high risk that the war accelerates the trend of deglobalization and high energy and commodity prices for longer, the German export sector is facing more headwinds ahead.

More here: German exports plunge in March

German imports, though, rose 3.4% during the month -- suggesting that supply chain frictions didn’t hamper goods coming in.

Notably, imports from Russia into Germany only fell by 2.4% to €3.6bn, as oil and gas continued to flow.

But that could change soon, with the EU outlining a phased oil embargo on Russia over its war in Ukraine, as well as sanctioning Russia’s top bank and banning Russian broadcasters from European airwaves.

President of the European Commission Ursula von der Leyen announced the proposals in a speech in the European parliament.

This will be a complete import ban on all Russian oil, seaborne and pipeline, crude and refined. We will make sure that we phase out Russian oil in an orderly fashion, in a way that allows us and our partners to secure alternative supply routes and minimises the impact on global markets.

This is why we will phase out Russian supply of crude oil within six months and refined products by the end of the year.

The move is an attempt to “break the Russian war machine”, after Germany dropped its opposition, our Brussels bureau explains:

A proposal to phase in a prohibition on Russian oil imports will be discussed by member state ambassadors in Brussels on Wednesday, with the most dependent, such as Slovakia and Hungary, seeking exemptions.

Those championing the ban have been bolstered by a change in approach in Germany, where reliance on Russian oil has been reduced from 35% at the end of last year to 12%.

The German economics minister, Robert Habeck, has called on EU member states to show “solidarity with Ukraine” and “do their bit”

Elsewhere today

The UK’s cost of living squeeze has intensified, with household goods prices rising by the fastest rate in more than 15 years.

Non-food inflation jumped to 2.2% in April, from 1.5% in March, as soaring energy costs, the widerimpact of the war in Ukraine, and Covid lockdowns in China, pushed up prices.

Staff at the UK’s City watchdog are striking today in a dispute over pay and working conditions.

Unite members at the Financial Conduct Authority will hold a two-day walkout, over changes to pay, terms and conditions which it says have left thousands of FCA staff worse off.

Online grocery group Ocado could face a shareholder revolt today at its annual general meetings. Some shareholders, including Royal London Asset Management, are opposing plans to extend a pay package that could give top bosses up to £20m per year for five years.

European markets are set for a subdued start, as investors brace for the Federal Reserve to (probably) hike US interest rates later today.

The agenda

  • 7am BST: German trade balance for March
  • 9am BST: Eurozone service sector PMI report
  • 9.30am BST: UK mortgage approvals and consumer credit data for March
  • 1.15pm BST: ADP report of US private sector payrolls
  • 7pm BST: US Federal Reserve interest rate decision
  • 7.30pm BST: US Federal Reserve press conference

Updated

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