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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

UK should ‘cherish’ turnips, suggests Thérèse Coffey, as food shortages could last a month – as it happened

Justin King United Kingdom United States Brexit NFU National Farmers Union Tesco

And here’s a video clip of the turnip comments:

Updated

Closing post

Time to recap….

Thérèse Coffey, Defra secretary of state, told MPs the UK’s fruit and vegetable shortages could last another two to four weeks.

Coffey also argued that Britons should ‘cherish the specialisms’ for food in the UK, saying that without food imports “A lot of people would be eating turnips right now” rather than thinking of lettuce and tomatoes.

A Downing Street spokesman said the environment secretary was explaining the importance of “celebrating” British produce, saying:

“We don’t believe it is for us to tell people what they should or shouldn’t buy – that is entirely a matter for them.

“I think what the Secretary of State was doing was setting out the importance of celebrating the produce that we grow here in the UK but, ultimately, it is for individuals to decide what food they wish to buy.”

Tesco, Aldi, Asda and Morrisons are all now rationing certain fresh produce lines as shortages of salad crops hit the UK.

The British Tomato Growers Association (BTGA) has predicted there will be “significant volumes” of British tomatoes on supermarket shelves by the end of March.

But Philip Pearson, development director at the UK’s largest tomato producer, has pointed out that the government was warned there would be empty shelves without more support.

Pearson told the Guardian:

“I don’t want to sound ‘I told you so,’ as that doesn’t help anybody, but we are where we were worried we would end up.”

Justin King, the former CEO of Sainsbury’s, argued that Britain had brought the problem on itself – telling Radio 4’s Today Programme that Brexit had disrupted the agricultural sector.

King said:

There is a genuine shortage but we did rather bring this problem upon ourselves.

“We could have chosen to subsidise the energy this winter as we have done for other industries.”

City analyst Clive Black told clients that the UK food system has been hindered by “abject policy failure and inept policy implementation” by the government.

The Liberal Democrats have called for an urgent COBRA meeting, together with food experts, supermarkets and farmers, to hammer out a solution to this crisis.

Over in Spain, growers have said ffluctuating temperatures, increased production costs and the knock-on effects of Brexit are all contributing to the UK’s vegetable shortages.

In other news, Bank of England policymaker Catherine Mann has warned it is too early to stop raising UK interest rates.

In a speech at the Resolution Foundation’s headquarters in London, Mann argued that high interest rates were needed to prevent inflation becoming embedded in wages and prices. She warned this could lead to “extended persistence of inflation into this year and the next”.

The EU’s executive body has banned its thousands of staff from using TikTok over cybersecurity concerns, a decision the Chinese-owned social video app has criticised as “misguided” and based on “fundamental misconceptions”.

In the energy world, the head of the International Energy Agency has warned that the battle between Europe and Russia is not over, despite a sharp drop in wholesale gas prices that has eased concerns over high bills and blackouts.

Ministers are under pressure to cut subsidies to the operator of Britain’s biggest power station after it reported an 84% increase in annual profits, helped by high electricity prices.

Weapons maker BAE Systems has also profited from the Ukraine conflict. It predicted higher earnings this year after posting record new orders in 2022, as Western governments ramp up military spending.

Shares in Rolls-Royce have surged 22% today, after its new boss launched a sweeping review of the aircraft engine maker, pledging that there is “much more” to come after last year beat expectations.

Britain’s energy regulator, Ofgem, is facing a boardroom overhaul amid stinging criticism over alleged failures in its oversight of the prepayment scandal.

Heathrow has hit out at the regulator accusing it of “getting it wrong” on its pricing while its airline customers such as British Airways “charge what they like” and make “huge profits” on high fares.

New analysis has revealed that women “work for free for nearly two months” a year, due to a 15% gender pay gap that widens “dramatically” after women have children.

And on the economic front, US economic growth has been revised lower due to weaker consumer spending. US GDP grew by 2.7% per year in Q4 2022, not the 2.9% first estimated.

No 10: Coffey was setting out importance of 'celebrating' UK products

Downing Street has said Thérèse Coffey was setting out the importance of “celebrating” British produce, in response to her remarks about ‘cherishing’ turnips amid food shortages.

No 10 also rejected suggestions Brexit is to blame for the shortages.

A Downing Street spokesman said:

We don’t believe it is for us to tell people what they should or shouldn’t buy – that is entirely a matter for them.

I think what the secretary of state was doing was setting out the importance of celebrating the produce that we grow here in the UK but, ultimately, it is for individuals to decide what food they wish to buy.

Asked if Brexit has had an impact on shortages, he said:

The industry and retailers themselves have spoken about the reason for some of the supply issues we are facing, notably poor weather in certain parts of southern Europe and north Africa.

Updated

Why Britain’s biggest tomato farmer left some greenhouses empty

Multiple glasshouses owned by tomato grower APS Group were left empty last year, for the first time in the business’s 80-year history, my colleague Joanna Partridge reported this morning.

“We did say, as an industry, last year: ‘If you don’t support us through the winter you will have empty shelves,’” Pearson says.

“Government didn’t listen, our customers didn’t listen, nobody listened.

“I don’t want to sound ‘I told you so,’ as that doesn’t help anybody, but we are where we were worried we would end up.”

The combination of soaring energy bills to provide artificial light to help the plants grow, especially during the winter, combined with associated surges in the price of fertiliser and the cost of packaging prompted many British producers and their European counterparts to take the decision to plant fewer crops this winter.

Here’s the full piece:

During her Commons appearance, Thérèse Coffey also suggested that the fixed-price contracts which supermarkets typically agree with farmers could be a factor behind shortages.

European supermarkets are more likely to have ‘variable price contracts’, she said, which offer flexibility.

Those UK contracts may not have adjusted to the higher costs which farmers face to heat greenhouses to produce salad vegetables, for example, in unseasonal times.

Jack Ward, CEO of the British Growers Association, has said that Brexit is “a bit of a smokescreen here,” compared to rising costs, saying.

“The UK food retailing system is probably the most competitive anywhere in the world. It’s about what growers get back in return.”

Bloomberg has the details:

Poor harvests in Spain and Morocco are still part of the story, but a key issue is the impact of inflation on growers in the UK, according to Ward. He said that greenhouses normally used to grow tomatoes, peppers and cucumbers were left vacant because it hasn’t been economical to pay the higher energy costs.

Higher labor costs have also made it more expensive to grow salad items, and it’s risky as the produce is prone to pests and diseases, said Ward. In some cases growers are choosing to plant wheat instead as it’s less costly and pays more.

The supply of tomatoes and cucumbers is expected to fall to the lowest level since records began in 1985, according to the NFU.

Here’s Liberal Democrat leader Ed Davey on Thérèse Coffey’s comments about cherishing our domestic food specialisms today:

Bankman-Fried charged with four new counts in FTX criminal case

Four new charges have been unsealed against Sam Bankman-Fried, accused of fraud in last year’s implosion of the FTX cryptocurrency exchange.

A new superseding indictment against FTX cryptocurrency exchange founder Bankman-Fried containing 12 charges has been unsealed in a Manhattan federal court, Reuters reports.

The new indictment, which was filed on Wednesday, says:

“Exploiting the trust that FTX customers placed in him and his exchange, Bankman-Fried stole FTX customer deposits, and used billions of dollars in stolen funds for a variety of purposes.”

In December, Bankman-Fried was charged with eight counts of fraud, money laundering and other charges over the collapse of the now-bankrupt exchange. He has pleaded not guilty.

Prosecutors say Bankman-Fried used the stolen customer funds to plug losses at Alameda Research, his hedge fund.

Alameda’s former chief executive, Caroline Ellison, and a former FTX executive, Gary Wang, have both pleaded guilty to fraud charges and agreed to cooperate with the investigation.

Last month, Bankman-Fried insisted that he didn’t steal funds or stash billions away.

Video: Coffey says people should 'cherish' turnips amid tomato shortages

Here’s a video clip of Thérèse Coffey, Defra secretary of state, telling MPs that British people should “cherish the specialisms” in UK food production, as they struggle to buy salad vegetables in the current shortages.

As covered earlier, Coffey’s point is that consumers want a ‘year-round choice’, a demand which supermarkets and growers round the world try to meet.

Without that, we would be on a winter diet of turnips, not being able to enjoy tomatoes (as we used to be able to, anyway).

As Coffey puts it… the UK should “cherish the specialisms” it has in food, adding that a “lot of people would be eating turnips right now” under a seasonal food model – rather than thinking about lettuce, tomatoes and similar produce, which are now rationed at several supermarkets.

Asked whether the supermarkets imported too many products, and Britons should shift to seasonal eating, Coffey replies:

“It’s important to make sure that we cherish the specialisms that we have in this country.

“A lot of people would be eating turnips right now rather than thinking necessarily about aspects of lettuce and tomatoes and similar, but I’m conscious that consumers want a year-round choice and that is what our supermarkets, food producers and growers around the world try to satisfy.”

And as flagged earlier, Coffey predicted the current shortages could last from two to four weeks.

Updated

In the economic world, the US grew a little slower than first thought at the end of last year.

US GDP has been revised down, to show the economy grew at an annual rate of 2.7% in October-December, down from a first estimate of 2.9% annualised growth.

That’s effectively a quarterly growth rate of almost 0.7% – still better than the UK, which stagnated in Q4 2022.

The data shows that consumer spending was lower than first thought, while core inflation pressures remain strong.

Theresa Coffey suggests people would be eating turnips right now under seasonal eating

Defra secretary of state Theresa Coffey has suggested that UK shoppers would be eating turnips this winter, not hoping to buy tomatoes, without overseas imports.

Coffey was asked by Conservative MP Selaine Saxby whether she agreed that supermarkets import “far too many” products, and the UK should be eating more seasonably to support British farmers.

Coffey said that it was important to “cherish the specialisms that we have in this country”, and told MPs:

“A lot of people would be eating turnips right now rather than thinking necessarily about aspects of lettuce, and tomatoes and similar.

But I’m conscious that consumers want a year-round choice and that is what our supermarkets, food producers and growers around the world try to satisfy.”

This may be a gift to the Daily Star, who could potentially reprise their efforts with Liz Truss and a lettuce…. perhaps with turnip-lover Baldrick and a cunning plan…..

Updated

Sky: Government to shake up Ofgem's board

Sky News are reporting that the government is preparing to overhaul the board of energy regulator Ofgem, by replacing a slate of directors this year.

The energy regulator has faced intense criticism over its handling of the prepayment meters scandal, on top of the collapse of a swathe of the energy supply chain industry in 2021 and 2022.

And with several executives’ terms expiring this year, or having expired already, Grant Shapps – the Secretary of State for the Department for Energy Security and Net Zero – is apparently pushing for new blood.

Here’s the story:

Sky News understands that the Department for Energy Security and Net Zero (ESNZ) has begun recruiting a new chair for the watchdog, as well as four non-executive board members.

The Ofgem board currently comprises Professor Martin Cave, who will step down as chairman in October when his five-year term expires, a slate of independent directors and Jonathan Brearley, its chief executive.

Two non-executives who have already departed will be replaced, while two more - Lynne Embleton and John Crackett - have terms expiring later this year.

A further two board members are due to serve until 2025.

An Ofgem spokesperson said its chairman “will not be seeking reappointment for the role”.

More here.

Households face 'crunch point' when bills rise in April

Households are heading for a “crunch point” in April as energy bill support is set to fade away and the moratorium on force-fitting prepayment meters ends, MPs have been warned this morning.

Citizens Advice said households are going to come under increased pressure, with averge costs set to rise during the summer when energy use is lower.

It comes as household bills are set to soar by around £500 on average, hitting £3,000 per year for the typical home from April.

Bills are currently set at £2,500 for the average home – and households have also been getting vouchers for £400 spread over six months.

Meanwhile, energy suppliers have been banned from installing prepayment energy meters under warrant after concerns about their behaviour were raised. But that ban will come to an end in a little over a month.

Andy Manning, principal economic regulation specialist at Citizens Advice, said:

“We’ve got the moratorium on forced installations of prepayment meters at the moment, but that’s due to expire at the end of March. The end of March is also when the support schemes fall away, so it seems there’s a real crunch point when we get to April 1.”

Speaking to MPs on the Public Accounts Committee, he said the situation is “of concern”.

Updated

Consumers should see ‘significant volumes’ of British tomatoes by end of March

British Tomatoes being grown in huge greenhouses/ glasshouses in the Worcestershire countryside.
British Tomatoes being grown in huge greenhouses/ glasshouses in the Worcestershire countryside. Photograph: Simon Hadley/Alamy

UK tomato growers have reassured customers that there should be “significant volumes” of British tomatoes on supermarket shelves by the end of March, as retailers impose buying limits to cope with a shortage.

The British Tomato Growers Association (BTGA) said shortages are mainly down to a lack of imports but the local growing season is due to begin soon.

The BTGA said in a statement:

“Many people have commented on the current lack of fresh tomatoes in some supermarket stores.

“Whilst this is predominantly a consequence of the lack of imported product at this time of year, the British season will soon begin and we expect significant volumes of British tomatoes on shelves by the end of March and into April 2023.

“The British tomato season runs from the end of March until November each year.”

Updated

Spanish farmers blame the weather and Brexit for UK salad shortages

The head of Spain’s largest farming association has pointed to Brexit and its impact on transportation, bureaucracy and border controls as the underlying cause of the UK salad crisis, saying there has been no major drop in production among his members.

Alfonso Gálvez – who serves as general secretary of Asaja, which represents farmers in the Murcia region, said he was puzzled by media reports of weather-induced shortages.

“I’ve seen these articles but I don’t understand why they’re talking about shortages here in Spain,” he said, adding:

“Things are normal here so far this season so I don’t know if it’s more a problem of UK logistics since the Brexit regulations came into effect.

There’s enough produce to supply the market and the vegetable season is happening pretty normally.”

While he acknowledged that rising costs had led to a drop in production for some growers – and frosts had affected some artichoke and lettuce crops – Gálvez said those issues were not serious or widespread enough to have significantly reduced market supplies.

The UK shortages, he suggested, may have more to do with bureaucracy and logistics than the weather.

Here’s the full story, by our correspondent in Madrid, Sam Jones:

Updated

BoE's Mann: We have an inflation problem

British businesses’ and households’ inflation expectations for the year ahead remain too high for the Bank of England to be confident about inflation returning swiftly to its 2% target, Bank of England policymaker Catherine Mann has warned.

In a Q&A session after her speech this morning:

“We have an inflation problem. That’s the bottom line.”

Inflation was 10.1% in January, more than five times the Bank’s target of 2% per year.

Having spoken about the continued need for higher interest rates, Mann added:

“I don’t think we are in a restrictive stance, particularly.”

UK retailers brace for sales fall in March

UK retailers expect sales volumes to fall next month, after holding steady in February, as rising cost of living eats away at disposable incomes.

The Confederation of British Industry’s (CBI) distributive trades index has risen to +2 this month from -23 in January. Economists had predicted a smaller recovery, to -13.

But a measure of expected sales in the month ahead fell to -18 from -15.

Martin Sartorius, CBI principal economist, says:

“Whilst retail sales volumes were largely unchanged in the year to February and slightly above seasonal norms, firms remain pessimistic about their business outlook and are bracing themselves for yet another fall in sales next month”

SNP MP Amy Callaghan challenges the government on claims that food shortages are a Europe-wide problem.

Callaghan asks Thérèse Coffey:

There are no reported shortages of food in France, Germany and other European net-food importers.

Isn’t this a problem created by inward-looking little England, and this British government?

Coffey replies “no it’s not”.

Labour MP Luke Pollard says that in 2023, Britain has food rotting in the fields, children going hungry, and food rationing in the supermarkets. He says the latter problem isn’t due to panic-buying – although “a lettuce lasts longer than the last prime minister”.

Pollard says Coffey must show more leadership and grip.

Q: What is her plan to properly address the food shortages, which is a serious issue for families up and down the country?

Coffey agrees that this is a serious issue, but accuses Pollard of a lack of knowledge and bandwagon-jumping.

There are no crops in the fields to pick now, she says, that’s why the UK relies on imports.

Labour MP Barry Sherman warns Coffey that Britain faces “a national emergency”, in which lower-income families are struggling to afford basic food stuffs such as eggs and milk.

Coffey says that competition between supermarkets has kept food prices down, but this has led to farmers signing fixed price contracts with supermarket chains (which can be uneconomical as inflation rises).

People should be careful not to create public anxiety about food shortages, suggests Thérèse Coffey.

Asked about the danger that panic buying leads to food waste, the DEFRA secretary of state says people should reflect on the impact of warnings of shortages.

Before Christmas, one industry person said there would be a shortage of free-range turkeys, Coffey tells MPs. Consumers heard this, responded, and the UK ended up with a glut and prices fell.

People do need to be careful when we’re talking about the resilience of the food supply chain.

Coffey reiterates that the problem with food supplies is temporary, and will be fixed in two to four weeks.

Updated

Q: Will the government reclassify what counts as an ‘energy intensive’ industry, to provide more support for agriculture?

Thérèse Coffey replies that her department will continue to make the case for support for the sector, citing industrial glasshouses as an emerging industry that could be helped.

But, she points out that wholesale gas price have fallen from their highs last year, which should lead to lower energy bills.

Minister: UK food shortages to last two to four weeks

Thérèse Coffey, Defra secretary of state, has predicted that the UK’s fruit and vegetable shortages could last another two to four weeks.

Responding to the urgent question in parliament, Coffey says UK supermarkets have restricted supplies to ensure that “everyone still has access to enough of the different fruit and vegetables” available.

And she predicts that the shortages could last at least a fortnight, and possibly up to a month, saying:

I’m led to believe by my officials, after discussion with industry and retailers, we anticipate this situation will last about another two to four weeks.

It’s important that we try and make sure we get different sourcing options, and that’s why the department has already been in discussion with retailers, and why there will be further discussions led by ministers as well.

Coffey continues to blame unseasonal weather overseas for the shortages, saying “even if we can’t control the weather”, it is important to ensure supplies are not frustrated in the way they have been by “these unusual weather incidents”.

Conservative MP Desmond Swayne jokes that if he’d known that voting for Brexit would cause frost in Morocco, he could have made a different decision.

[reminder, former Sainsbury’s CEO Justin King warned this morning that UK farming had been significantly disrupted by the exit from the European Union].

Updated

Labour blames UK food shortages on government "indifference and dithering"

Thérèse Coffey, Defra Secretary of State, is now answering an urgent question on the UK’s food shortages.

Coffey tells MPs that the UK has a “highly resilient food supply chain”, as demonstrated in Covid-19, and well equipt to handle disruption.

She says seasonal weather problems in Spain and North Africa have hampered production and harvest, leading to the shortages of a “small number” of fruit and vegetables items.

But, she says, the industry shuold be able to mitigage supply problems though alternative sources.

Coffey says Ireland and other parts of Europe are facing very similar supply issues too, adding:

I wish to reiterate that food security does remain resilient, and we continue to expect industry to be able to mitigage supply problems through alternative sourcing options.

Coffey reiterates that farming minister Mark Spencer will meet with retailers next week, to discuss their contractual models, plans to return to normal supplies, and their contengency plans to deal with supply chain problems.

Farmers and growers around the world have faced “significant pressures” due to the Ukraine war and avian flu, and the energy price shock, Coffey continues.

Shadow Defra secretary of state, Jim McMahon MP, is not impressed, saying the minister’s statement is “completely detatched” from the reality being faced on the ground.

Responding to Coffey, he says there is public concern about the availability of food, and dismisses the suggestion that the problem is all down “exernal forces “.

McMahon says he met farmers in Lancashire who are trying to recover from avian flu, who told him there isn’t any DEFRA scheme to help them restart.

There have been a billion fewer eggs on the shelves in the last year than before the pandemic, McMahon says, adding:

We literally had Pancake Day this week, and you couldn’t buy eggs to make your pancakes.

“Indifference and dithering” by government is threatening food security, McMahon warns, who also pointed out that food security is an issue of national security.

Updated

Government urged to hold COBRA meeting on food shortages

The government has been urged to hold a COBRA meeting to address food shortages, as it emerged the farming minister is not meeting supermarkets until next week (see earlier post).

When asked in parliament today how she is responding to empty shelves in supermarkets, environment secretary Therese Coffey said:

“Defra is working very closely with the industry to understand the issues with the supply chain, there have been particular issues in Spain and North Africa before Christmas and shortly after, and indeed officials are already working with food retailers and the minister will be meeting them early next week specifically to talk through certain actions for supermarkets.”

MPs have said this is not good enough. Liberal Democrat Cabinet Office Spokesperson Christine Jardine said:

“People are rightly alarmed about the chronic shortage of fruit and vegetables in our shops, but it seems the government has no urgent plan to fix it.

“This government has created chaos in the economy, an NHS on its knees, now they’re responsible for worsening food shortages through their failure to back British farming.

“We need an urgent COBRA meeting, together with food experts, supermarkets and farmers, to hammer out an urgent solution to this crisis.

“Ministers cannot just sit on their hands while food supply chains across the country grind to a halt.”

A quarter of British firms expect to raise prices in March

One in four UK firms plan to hike their prices next month, as they continue to pass on rising costs to consumers.

The Office for National Statistics’s latest realtime data found that a quarter of trading businesses expect to raise the prices of goods or services they sell in March 2023.

Energy prices remain the top reason these businesses are considering doing so, with 35% reporting this, the ONS says.

That may concern Bank of England policymakers, and chimes with Catherine Mann’s warning this morning about inflationary pressures building.

The ONS also found that last month, 29% of trading businesses reported lower turnover compared with December 2022, while only 16% reported that their turnover was higher.

Updated

Thérèse Coffey, Secretary of State for Environment, Food and Rural Affairs, had told parliament that officials in her department are working with food retailers on the issue of shortages.

Taking oral questions from MPs this morning, Coffey says she is aware that many MPs are concerned by the reports about the availability of food products this week.

DEFRA is “working closely with the industry” to understand the issues with the supply chain, she says.

Coffey points to the weather, citing the “particular issue in Spain and North Africa” before and after Christmas.

The farming minister [Mark Spencer] will hold a meeting very early next week, to talk about the situation facing supermarkets, she adds.

Coffey also points out that the UK normally imports 90 to 95% of food at this time of year, such as tomatoes – one of the products being rationed at major supermarkets.

My colleague Helena Horton has more details from the session:

Updated

BoE's Mann: Too soon to stop interest rate increases

Newsflash: A Bank of England policymaker is warning that more interest rate increases are needed to tackle inflation.

Catherine Mann, one of the more hawkish members of the Bank’s Monetary Policy Committee, says she believes that “more tightening is needed”, and cautions that “a pivot” on monetary policy is not imminent.

In a speech to Resolution Foundation this morning, Mann is arguing that financial conditions that are now looser than will be needed to prevent inflation becoming embedded in wages and prices.

Mann says she is worried that this could lead to “extended persistence of inflation into this year and the next.”

Mann is one of the seven MPC policymakers who voted to raise UK interest rates to 4% this month, from 3.5% (the other two voted for no change).

In December, Manne was a lone voice calling for a 75 basis point increase, when the MPC also lifted rates by half a percent, from 3% to 3.5%.

Today, Mann explains that failing to tackle the cost of living crisis now will mean inflation will remain higher for longer.

We have an inflation remit, and we will achieve it one way or another.

Failing to do enough now risks the worst of both worlds – the higher inflation and lower activity of the ‘purple’ regime – as monetary policy will have to stay tighter for longer to ensure that inflation returns sustainably back to the 2% target.

The MPC meets to set interest rates next month, when the money markets anticipate a quarter-point rate rise, to 4.25%.

Updated

Analyst: Food shortages due to 'abject policy failure'

The UK food system has been hindered by “abject policy failure and inept policy implementation” by the government, according to one leading retail analyst.

Clive Black, an analyst at Shore Capital, writes that shortages of salad in UK supermarkets come after Defra did “pretty much nothing” to help growers when costs for British glasshouses producing tomatoes, cucumbers and other delicate crops surged in the light of the war in Ukraine.

As explained earlier, ex-Sainsbury’s chief Justin King also warned that domestic production had been hit by the lack of help on energy costs.

Black said that problems with pork and egg production have also been allowed to gather pace, as the “advisory context” in which Defra operates is “not up to scratch”.

In a note published today, Black writes:

“The treatment of the food sector is not acceptable, it is time for necessary change... big change,”

He argues that the “security shots across the bows” of the Ukraine war and Avian Influenza “have not been recognised by a complacent and incapable Defra.”

A third of hospitality firms at risk of going under

Almost one in three UK hospitality firms are at risk of collapse this year, as rising inflation hits the industry, a new survey has found.

Trade body UKHospitality reports that cost pressures, ongoing labour shortages and Covid-19 debt have left many hospitality businesses in a perilous position.

It’s Quarterly Tracker has found that sales across the industry exceeded pre-Covid 19 levels last year, up 4.2% in 2022 compared to 2019. But in real terms, accounting for inflation, they were down 13%.

The survey found that 32% of businesses are at risk of failure in the next year.

UKHospitality chief executive Kate Nicholls says today’s report show the challenging position the sector is in.

The demand from the public is quite clearly there, with revenue exceeding pre-Covid levels, but there is no way venues can take advantage of this demand as they drown amidst price rise after price rise.

“Without action, we can see just how stark the year ahead could be with a third of businesses at risk of failure. Venues are simply unable to pass prices onto the consumer at the same rate they are experiencing their own costs rise.

UKHospitality is urging chancellor Jeremy Hunt to provide more help to the sector, by reforming business rates and the Apprenticeship Levy, and through more support on energy bills.

“We know one of the Government’s key priorities is cutting inflation and growing the economy, which we support. Hospitality is a prime sector to achieve this, with a track record of delivering rapid growth.

“Intervening in the energy market to stop unscrupulous behaviour by energy suppliers, reforming the Apprenticeship Levy and tackling disproportionate business rates would signal his commitment to the everyday economy and its ability to lift the nation out of its economic slump.

Shares in Aberdeen-based energy services and consulting firm John Wood Group have jumped by over 30% this morning, after it rejected three takeover approaches from Apollo Global Management.

John Wood Group told the City last night it had rebuffed all unsolicited proposals from the US firm – the latest attempted private equity raid on a UK company.

The most recent approach in late January valuing it at £1.59bn, worth 230p per share in cash.

Shares in Wood Group have jumped to 203p this morning, up 31% or 48p.

Yellen steps up calls for increased economic aid to Ukraine at G20 meeting

U.S. Treasury Secretary Janet Yellen has stepped up calls for more financing support to Ukraine, ahead of the first anniversary of the full-scale Russian invasion tomorrow.

Speaking in Bengaluru, India, where G20 finance leaders are gathered for a meeting, Yellen said it was vital to keep supporting Ukraine.

Yellen explained:

“As President Biden has said, we will stand with Ukraine in its fight – for as long as it takes.

Continued, robust support for Ukraine will be a major topic of discussion during my time here in India.”

Yellen also said it was critical for the International Monetary Fund to “move swiftly” towards a fully financed loan programme for Ukraine, Reuters reports.

The US is thought to be preparing a new $10bn support package for Ukraine, including military aid and budget support.

Yellen is also urging other leading economies to move faster in resolving debt crises that threaten a growing number of countries.

Development experts have accused some of the world’s most powerful hedge funds and other investors are holding up vital help for crisis-hit Sri Lanka, which defaulted for the first time in its history last year.

Rolls-Royce shares surge as new CEO pushes turnaround

Shares in Rolls-Royce, the UK engineering firm, have surged by up to 19% after its new CEO pledged to turn the company’s fortunes around after beating profit forecasts.

Tufan Erginbilgic, who took over at the start of January, told shareholders that Rolls-Royce is “capable of much more”.

Erginbilgic is pushing through a transformation programme to deliver further performance improvements from 2023.

Rolls-Royce, which makes and service jet engines, grew its operating profits to £837m last year, a 63% increase on 2021’s £513m. Pre-tax losses, though, swelled to £1.5bn from £294m.

The company expects higher operating profits and cash flows in 2023.

Shares have jumped 20p to 127p, their highest level since January 2021.

Erginbilgic says Rolls-Royce must now “move at pace” to create a “high-performing, growing and competitive business”, saying:

While our performance improved in 2022, we are capable of much more. Our transformation programme will improve our efficiency and commercial outcomes, and deliver a sustainable reduction in working capital. This will require a winning culture, underpinned by more effective performance management and a shared determination to deliver cash and reduce debt. Our success will enable us to reward investors for their support and invest in future growth.

Our transformation programme is already underway and is moving at pace. It will include a strategic review so that we can prioritise our investment towards the most profitable opportunities. We will report the findings together with our medium-term goals in the second half of this year.”

Rolls-Royce’s maintainance revenues benefitted from an increase in flying hours last year, as airlines recovered from the shock of the pandemic.

Engine flying hours were at 65% of pre-pandemic 2019 levels, and are expected to hit to 80-90% of 2019 levels this year as China relaxes travel restrictions.

Adam Vettese, analyst at social investing network eToro, says:

“Tufan Erginbilgic struck an optimistic and ambitious tone in his first full-year results statement as CEO of Rolls-Royce, outlining his aim to turn around the troubled engineering giant.

“That is a far cry from a recent statement in which he called Rolls a ‘burning platform’, due to the company’s ability to burn through cash on wasteful projects in recent years.

“Erginbilgic has promised to overhaul the firm, but things have not got off to a bad start under his watch.

“There has been a strong uptick in profitability, revenue and free cash flow on an underlying basis, indicating a business that is once again growing.

Updated

Looking ahead, BAE Systems predicts its earnings per share would rise by 5% to 7% in 2023.

Sales are expected to increase by 3% to 5%, as the Ukraine conflict drives demand for defence equipment and weapons.

BAE cautions that it is “subject to geopolitical and other uncertainties”.

Shares in BAE have dipped by 2.2% in early trading, but the company’s value has surged since Vladimir Putin launched the full-scale invasion of Ukraine.

Victoria Scholar, Head of Investment at interactive investor, explains:

“BAE Systems reported underlying earnings per share up 9.5% to 55.5 pence for 2022, ahead of analysts’ expectations for 53.9 pence and a record order intake of £37.1 billion. The defence business raised its annual dividend by 7.6% and saw sales increase by 4.4% to £23.3 billion.

BAE Systems issued upbeat 2023 guidance for sales up 3% to 5% and full-year earnings per share outlook up 5% to 7%.

BAE Systems was one of the best performers on the FTSE 100 in 2022 in what the company describes as ‘an elevated threat environment’.

2022 saw a sharp increase in demand for defence technologies to support national security. Britain’s biggest defence company has seen growth on the top and bottom line as well as a fall in net debt and increased free cash flow. CEO Charles Woodburn also said the company has been successfully navigating the macroeconomic headwinds from supply chain issues and inflationary pressures.

Shares in BAE Systems are up around 50% over a one-year period, and up almost 5% year-to-date until Wednesday’s close.”

BAE Systems secures record orders amid Ukraine war

On the eve of the first anniversary of the Ukraine war, defense firm BAE Systems has reported a surge in profits and orders last year.

BAE, which makes fighter jets, combat ships, weapons systems such as naval guns, munitions, communications systems and the US Army’s Armored Multi-Purpose Vehicle, says it expects growth this year too as geopolitical tensions remain high.

BAE, the UK’s biggest defence company, grew its underlying earnings by 9.5% in 2022, financial results published this morning shows.

Orders hit a record, at over £37bn, a £15bn increase on 2021 when BAE took £21.5bn of new business.

That included a £4.2bn contract from the UK government to build the second batch of Type 26 frigates for the Royal Navy. That contract, awarded in November, is expected to support 1,700 British jobs over the next decade at BAE Systems sites in Govan and Scotstoun, Glasgow.

BAE tells the City:

While it is tragic that it took a war in Europe to raise the awareness of the importance of defence around the globe, BAE Systems is well positioned to help national governments keep their citizens safe and secure in an elevated threat environment.

BAE shareholders will benefit from the booming defence business, with the company’s dividend being increased by 7.6%.

Chief executive Charles Woodburn says BAE has delivered “another year of strong results”:

Our employees have done an outstanding job to effectively manage supply chain and inflationary pressures whilst delivering critical capabilities and driving efficiencies for our customers.

“Our diverse geographic footprint, deep customer relationships and highly relevant, leading defence technologies mean we’re well positioned to support national security requirements in an elevated threat environment.

“Our record orders and financial performance give us confidence in delivering long-term growth and to continue investing in new technologies, facilities and thousands of highly skilled jobs, whilst increasing shareholder returns.”

Updated

A shopper was barred from buying 100 cucumbers in a Lidl store this week, Metro reports, due to the rationing on fruit and veg.

Personal trainer Lisa Fearns, who makes detox drinks to sell online, says she was told that she was buying too many cucumbers, having regularly bought 100 from Lidl in the past.

Here’s the story:

Personal trainer Lisa Fearns, 49 – who filled a Lidl trolley to make detox drinks for her business – said that as she paid the manager ‘came running out of the back saying I’m buying too much fruit and veg and I can’t purchase that much.’

The mum from Kirby, Merseyside, has bought a huge number of cucumbers every week for the past three years to make the drinks she sells online.

Fearns took her custom to Aldi, where staff didn’t object to her defying its limit of three per person by picking up six cucumbers. “They didn’t say anything,”, she adds.

Justin King also explains that supermarkets are now restricting sales of fruit and vegetables to prevent restaurants and even greengrocers snaffling their stocks.

These “fair purchase policies” have been deployed, he tells the Today programme, because “overall, the country is short” of supplies.

Most supermarkets have actually got very good supplies, King says, but wholesale markets are “bare at the moment”.

That means restaurants and high street greengrocers will start to buy off supermarket shelves if their own supplies are disrupted, retail veteran King explains:

What often happens is that, in the early hours of opening…. traders come in and grab armfuls and whisk them off to their businesses.

Introduction: UK "did rather bring" food shortages on itself, Justin King says

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

Britain brought its shortages of fruit and vegetables upon itself, a former supermarket CEO has warned this morning.

Justin King, who ran Sainsbury’s for a decade, says the government’s failure to support the food industry with its soaring energy costs led to the restrictions on purchases of products such as tomatoes, pepper and cucumbers at major supermarkets.

King told Radio 4’s Today Programme that terrible weather in key sourcing locations [such as Spain and North Africa] have hit production, but to understand the problem we must “go further back”.

King points out:

This is a sector that’s been significantly disrupted by Brexit.

He also criticises the government for not providing energy support help to UK salad and vegetable growers.

Historically, salad veg has been grown 52 weeks of the year under glass in Britain, such as at Thanet Earth, the large agriculture and plant factory in Kent.

The government, though, chose not to support this sector from an energy point of view this winter.

This has had consequences, King says:

We are uniquely exposed to imports at this time of year.

There is a genuine shortage, but we did rather bring this problem on ourselves.

Yesterday, Tesco and Aldi joined Asda and Morrisons in rationing certain fresh produce lines.

Q: But isn’t this down to global pressures on fuel, the cost of fertiliser, energy costs for heating costs, rather than brexit?

This is a sector that is “very integrated across Europe”, King points out.

The UK could have chosen to subsidise the energy costs for this sector this winter, as it did for other industries. King points out that the National Farmers Union warned months ago that this problem was evident.

In December, the NFU did indeed warn that UK fruit and veg growers werer under massive pressure due to soaring energy costs and workforce shortages. It said then that “a lack of fairness for farmers and growers throughout the supply chain” could lead to more empty shelves.

NFU president Minette Batters urged the government to take food security seriously this week, at their annual conference.

Also coming up today

The UK government is now preparing to help more than 300 energy-intensive companies to cope with the extremely high cost of power.

Kemi Badenoch, the business secretary, is expected to announce new measures today to support employers in sectors most exposed to high energy costs, such as steel, metals, paper and chemicals.

Dubbed the British Industry Supercharger, it could cut the disparity in the price that UK heavy industry pays for electricity compared to European rivals.

My colleague Alex Lawson explains:

Ministers have moved to level the playing field on energy costs between British manufacturers and their European competitors after years of concerns that domestic firms faced an unfair disadvantage.

The “British Industry Supercharger” scheme aims to improve conditions for 300 companies – employing 400,000 workers – in sectors including steel, metals, chemicals and paper manufacturing.

Financial markets are digesting minutes of the US Federal Reserve’s latest meeting, released last night.

They show that the vast majority of policymakers backed its decision to slow the pace of US interest rate rises to 0.25 percentage points.

The agenda

  • 9.30am GMT: Bank of England policymaker Catherine Mann gives a speech on ‘The results of rising rates: Expectations, lags and the transmission of monetary policy’, to the Resolution Foundation

  • 10am GMT: Eurozone inflation report for January

  • 11am GMT: CBI Distributive Trades survey of UK retail

  • 1.30pm GMT: US GDP report Q4 2022 (second estimate)

  • 1.30pm GMT: US weekly jobless report

Updated

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