Jeremy Hunt ‘poised’ to U-turn on energy bill support; oil falls on reports UAE considering leaving Opec – business live | Business

The report that the United Arab Emirates is considering leaving Opec is “far from the truth,” a source with direct knowledge of the matter has told Reuters.

In the financial markets, the oil price is falling following a report that the United Arab Emirates is considering leaving the Opec cartel.

The Wall Street Journal reports that relations between Saudi Arabia and the UAE have deteriorated as the two countries clash over oil and the direction of the Yemen war

Once close friends, the WSJ says, the two biggest Arab economies are “increasingly competing for money and power”, having led an Arab military coalition that intervened in Yemen in 2015.

The UAE pulled most of its ground forces from Yemen in 2019 but still fears being sidelined from discussions about its future as Saudi Arabia pursues direct talks with Houthi rebels on ending the war, Gulf officials told the Journal.

Two of the biggest oil producers in the world, the Saudis and Emiratis have also had behind-closed-doors arguments over energy issues, it says.

The WSJ report states:

Within the Saudi-led Organization of the Petroleum Exporting Countries, the U.A.E. is obligated to pump much less than it is capable of, hurting its oil revenue. It has long pushed to pump more oil, but the Saudis have said no, OPEC delegates have said.

Now, said Emirati officials say, the U.A.E. is having an internal debate about leaving OPEC, a decision that would shake the cartel and undermine its power in global oil markets.

The Opec group sets production targets agreed by its members. Last October it made deep output cuts, in a snub to Joe Biden’s White House which was pushing for more oil to lower gasoline prices.

The WSJ reports that US officials said the Emiratis told them privately that they wanted to pump more, in line with Washington’s wishes, but faced resistance from Saudi Arabia.

Brent crude has dropped by over 1.5% today to $83.34 per barrel, with US crude also down 1.5% at around $77 per barrel.

UK housebuilder Vistry Group has told hundreds of employees they may lose their jobs as the company cuts costs in the midst of Britain’s housing slump, Bloomberg reports.

They say:

The London-listed homebuilder is weighing as many as 19 job cuts in each of its business units, with reductions expected to be in the region of 200, according to people with knowledge of the plans.

The firm has begun redundancy consultations with affected employees in the roughly 5,000-strong workforce, said the people, who asked not to be identified because the plans aren’t public.

Yesterday it emerged that larger rival Taylor Wimpey is planning to cut jobs, as the housebuilder warned of slowing sales.

Ireland’s domestic economy has fallen into a technical recession, new official statistics show.

Modified Domestic Demand (MDD), a broad measure of underlying domestic activity in the Republic of Ireland that covers personal, government and investment spending, fell by 1.3% in October-December.

That follows a 1.1% drop in the third quarter of the year – meaning two consecutive quarters of contraction, the technical definition of a recession.

MDD is used to strip out the impact of multinational companies based in Ireland, and ‘aircraft-related globalisation effects’, which can bolster gross domestic product statistics.

According to the Central Statistics Office, Ireland’s GDP rose by 0.3% in the final quarter of last year, a sharp downgrade on the 3.5% growth initially recorded.

For 2022 as a whole, Ireland’s GDP increased by 12.0%, the narrower Gross National Product (GNP) measure grew by 6.7%, while MDD increased by 8.2% last year.

The CSO’s assistant director general with responsibility for Economic Statistics, Jennifer Banim, says:

“The impacts of the conflict in Ukraine, the rise in inflation, and the continued unwinding of the COVID-19-related restrictions varied across the sectors of the economy in 2022 and today’s results show the overall annual impact and the underlying quarterly variations.

Full story: UK suppliers told to prepare two sets of bills as u-turn nears

Alex Lawson

Britain’s energy suppliers are expecting the government to U-turn on a planned cut to energy support for households – but have been told by officials to prepare two sets of bills for next month, my colleague Alex Lawson explains.

Chancellor Jeremy Hunt is under pressure to extend the energy price guarantee, a government policy which aims to limit annual household bills to £2,500 until the end of March.

Hunt, who is due to deliver the budget on 15 March, had been planning to make the guarantee less generous from April, raising it to £3,000. One-off support of £400 is also due to end in April.

Although, as flagged at 10.16am, Hunt is now said to be poised to extend the government’s £2,500 energy price guarantee until July.

Energy suppliers have been contacted by government officials with two sets of rates for units of gas and electricity – depending on whether Hunt decides to extend the support, Alex explains.

More here.

The Times are reporting that Jeremy Hunt is “poised” to extend the government’s £2,500 energy price guarantee for a further three months, rather than lift it to £3,000 as planned.

The move, which is expected by energy companies, is an effort to limit increases in people’s bills until the summer, and would protect households from a 20% hike in bills.

A three-month extension would take us to July, when analysts expect Ofgem’s price cap to drop to around £2,100 per year (for a typical household), well below the government’s current guarantee.

The Times’s Steven Swinford says:

The energy price guarantee limits gas and electricity tariffs so that the typical household bill is no more than £2,500 a year. That ceiling was due to rise to £3,000 a year from April.

The Times has been told that Hunt will retain the guarantee for three more months until wholesale prices have fallen so far that it becomes unnecessary.

The government has told energy companies to prepare for the £2,500 energy price guarantee to remain in place. It will cost the government about £3 billion.

A Treasury spokesman said no decision had been made. However, a Whitehall source confirmed that the guarantee was now expected to remain at £2,500.

The UK’s service sector returns to growth in February as business activity expanded at fastest pace since June 2022, a survey of purchasing managers has found.

Services firms reported that business activity and incoming new work both rose last month, for the first time since August 2022, as fears of an imminent recession fade.

Signs of a turnaround in client confidence, helped by reduced political uncertainty and hopes that inflationary pressures would continue to ease in the months ahead lifted the sector, according to the S&P Global / CIPS UK Services PMI.

The Services PMI, which measures activity in the sector, jumped to 53.5 in February, up from 48.7 in January and above the 50-point mark that shows stagnation.

Tim Moore, economics director at S&P Global Market Intelligence, says:

“UK service providers moved back into expansion mode in February as fading recession fears and improving business confidence resulted in the strongest rise in new orders since May 2022.

However, elevated borrowing costs and stretched household finances remained constraints on growth.

There was “clear evidence” that input price inflation has peaked, with the latest increase in average cost burdens the weakest since June 2021, Moore explains, adding:

Service sector firms commented on lower fuel bills and transportation costs, alongside a gradual easing of broader inflationary pressures due to falling wholesale gas prices. However, many businesses also noted historically strong wage inflation and sharply rising food costs, especially those operating in the hotels and restaurants sector.

However, firms only cut the charges of their own services marginally.