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Sept. 28, 2021, 9:48 a.m. EDT

A ‘plague of locusts’ may be next, jokes Bank of England chief as country grapples with fuel and food shortages

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By Barbara Kollmeyer

“I must say that when I heard that we were suffering a shortage of wind to generate power, I was tempted to ask, ‘And when are the locusts due to arrive?'”

That was Bank of England Gov. Andrew Bailey joking in a speech late Monday as he summed up the “hard yards” facing the U.K., which include supply chain woes from COVID-19 and the country’s post-Brexit adjustment that have led to energy and food shortages.

“A number of these supply bottlenecks are not obviously a product of COVID, though others are. It is also possible that the economic fragility created by COVID has amplified the impact of other shocks — either that or the gods really are against us. I think it is more likely COVID amplifying at work,” said Bailey.

As for monetary policy, Bailey said the bank would “step in and adjust policy as needed,” stating that the shocks the economy has been seeing are likely temporary. The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.6562% climbed to above $1.37 following last week’s policy meeting , in which one member switched to a group that prefers stopping bond purchases immediately, and a majority said rates could rise as early as this year.

But the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.6562% was down nearly 1% to $1.3571 on Tuesday, as the dollar /zigman2/quotes/210598269/delayed DXY -0.45% surged amid soaring bond yields and expectations for tighter U.S. monetary policy. In step with higher Treasury yields, the yield on the 10-year U.K. gilt /zigman2/quotes/211347177/realtime BX:TMBMKGB-10Y -2.03% jumped nearly 7 basis points to 0.933% , the highest level since May 2019.

Energy woes for the country continued as as natural gas prices jumped 11% to a record of 223.94 pence a therm. And, the front-month Brent crude topped $80 a barrel as an oil rally continued . The country has seen a run on petrol stations as a shortage of truck drivers to transport fuel has caused shortages and pumps to run dry.

Read: U.K. puts army tanker drivers on standby to help with fuel shortages

The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -2.05% was flat at 7,064 as other European indexes saw sharp declines, as it drew support from the heavily weighted energy sector. Surging alongside oil prices, Shares of BP /zigman2/quotes/202286639/delayed UK:BP -2.02% /zigman2/quotes/207305210/composite BP -1.18% rose 2.8% and Royal Dutch Shell rose 3.6%.

One company standing out on the downside was Go-Ahead Group /zigman2/quotes/201418493/delayed UK:GOG -1.78% . Those shares slid 24% after the transportation company said the U.K. Department for Transport has appointed the “operator of last resort” to take over its Southeastern franchise on Oct. 18, when its current agreement expires.

The company said it had erred over related profit share of the Southeastern unit, and its chief financial officer, Elodie Brian, has resigned with immediate effect. Go-Ahead said it will have to delay its financial results for the year ended July 3 again.

/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.2425
+0.0081 +0.6562%
Volume: 0.0000
May 19, 2022 8:11a
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/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.2425
+0.0081 +0.6562%
Volume: 0.0000
May 19, 2022 8:11a
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/zigman2/quotes/210598269/delayed
US : U.S.: ICE Futures U.S.
103.35
-0.46 -0.45%
Volume: 0.00
May 19, 2022 8:02a
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/zigman2/quotes/211347177/realtime
add Add to watchlist BX:TMBMKGB-10Y
BX : Tullett Prebon
1.83
-0.04 -2.03%
Volume: 0.00
May 19, 2022 1:12p
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,285.29
-152.80 -2.05%
Volume: 267,068
May 19, 2022 12:57p
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/zigman2/quotes/202286639/delayed
UK : U.K.: London
413.80 p
-8.55 -2.02%
Volume: 14.08M
May 19, 2022 12:57p
P/E Ratio
N/A
Dividend Yield
4.25%
Market Cap
£81.59 billion
Rev. per Employee
£1.92M
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/zigman2/quotes/207305210/composite
US : U.S.: NYSE
$ 31.11
-0.37 -1.18%
Volume: 11.21M
May 18, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
4.15%
Market Cap
$101.53 billion
Rev. per Employee
$2.62M
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/zigman2/quotes/201418493/delayed
UK : U.K.: London
996.00 p
-18.00 -1.78%
Volume: 12,184
May 19, 2022 12:47p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£448.05 million
Rev. per Employee
£122,834
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