Russia's invasion of Ukraine could spark a global recession because of soaring prices for food, fertiliser and energy, the head of the World Bank has said. Covid lockdowns in China are also adding to the slowdown, said the bank's boss David Malpass
Mr Malpass said: "As we look at the global GDP... it's hard right now to see how we avoid a recession," the BBC reports. And he added: "The idea of energy prices doubling is enough to trigger a recession by itself."
Speaking to a US business event he said Russia's moves to cut supplies of gas could cause a "substantial slowdown". He said energy prices were hitting Germany and countries in the developing world were affected by fertiliser, food and energy shortages.
The BBC reported that Mr Malpass did not give a specific forecast, but said how lockdowns in China's major cities were also having "having ramifications or slowdown impacts on the world".
In the UK, Chancellor Rishi Sunak is expected to cave in to pressure to impose a windfall tax on the soaring profits of oil and gas firms when he unveils a significant package to ease the cost-of-living crisis. Treasury sources did not deny reports he would use his announcement on Thursday to scrap the requirement to repay the £200 discount on energy bills, and could increase the level of the grant.
Mr Sunak will detail his plan in the Commons as the Government seeks to draw a line under the partygate row and focus on the squeeze in living standards caused by soaring inflation. Details of the one-off tax to fund fresh support measures were not known but Labour is likely to claim a victory of sorts after it campaigned for the measure against opposition from Boris Johnson.
Measures which have been discussed as part of a package worth around £10 billion could include a further increase to the warm homes discount to help low-income households cope with rising energy bills. Other measures which have been discussed include increases in the winter fuel allowance, a further cut in council tax or a VAT cut.
The need for extra help was illustrated by Ofgem chief executive Jonathan Brearley’s indication that the energy price cap will increase by a further £830 to £2,800 in October.
