NEWS DIGEST 28.05.2022: Saturday business news

Good morning. Today’s news comes from NewsNow – the business section.

Rishi Sunak’s energy bill support may prompt the Bank of England to push up interest rates even further, City experts warned. The Chancellor has vowed to give every household £400 to help with bills. If they spend the money on other goods, prices will rise, adding to the cost of living crisis. Paul Dales, at Capital Economics, said: ‘It won’t relieve all the pain and may mean the Bank of England has to pull the interest rate lever harder to reduce inflation. The Bank pushes up rates – now at 1 per cent – to tame prices by encouraging people to save, not spend.’ Simon French, an economist at Panmure Gordon, agreed the Bank could push up rates faster but noted that the big drivers of UK inflation were from supply chain hold-ups. For this reason, Sunak’s package should cause ‘minimal additive inflation fears’ – City experts warn Chancellor Rishi Sunak’s energy bill support may prompt Bank of England to push up interest rates even further (This is MONEY.co.uk Business & markets)

Westmill Energy Farm (5 of 7), Watchfield 28 July 2011 by Brian Robert Marshall is licensed under CC-BY-SA 2.0

Elon Musk is being sued by Twitter investors for driving down the social network’s share price in an effort to cut the price of his $44bn (£35bn) takeover. Mr Musk has illegally attempted to “mitigate personal [financial] risks to himself by engaging in unlawful conduct that moved the price of Twitter’s stock down,” according to a lawsuit filed in California. William Heresniak filed the lawsuit on behalf of himself and other Twitter shareholders against the Tesla billionaire and Twitter itself. The lawsuit claims Mr Musk is making false statements and engaging in “market manipulation” to negotiate a cut-price deal. Twitter’s shares have fallen heavily in recent weeks, despite Mr Musk agreeing to buy the company for $54.20 a share, after he said he had put the deal on hold and suggested he should get a discount due to the number of fake accounts on the service – Elon Musk sued by Twitter investors for ‘driving down takeover price’ (The Telegraph ~ Tech)

Shell has slammed the British government’s windfall tax, saying while it “understands the worry for millions [of people]” about the cost of living it will create “uncertainty” about investment. After BP said the tax may force it to reconsider its UK investment plans, Shell is the latest energy giant to come out against the levy. A spokesperson told City A.M. : “We understand the worry for millions of people about how high energy costs are challenging their household budgets – and the need for support to help make ends meet.” Shell – alongside rival oil and gas giants such as BP and Equinor – has enjoyed record profits in first three months of trading this year, with earnings rising to £9.13bn during the first quarter of trading in 2022. Its spending commitments will boost government plans to increase the UK’s renewable and nuclear energy generation capacity, alongside further North Sea oil and gas exploration, to reduce the country’s reliance on overseas imports following Russia’s invasion of Ukraine – Shell: ‘We understand worry for millions – but windfall tax creates uncertainty’ (City A.M.)

May 27 – Evidence U.S. inflation is cooling will not budge Federal Reserve policymakers from half-point interest rate hikes planned for upcoming meetings in June and July, but may prompt a shift to smaller rate hikes come September if the trend continues. The broad hope at the Fed is to get through this era of price shocks and uncertainty with, at worst, a slowdown in the pace of growth, rather than an out-and-out recession that causes a dramatic rise in unemployment. Traders of futures contracts tied to the Fed’s policy rate kept bets that the central bank will downshift to quarter-point rate hikes in September. Fed policymakers also say they are watching inflation expectations closely for signs that current high inflation are getting entrenched into American household and business psychology. Fed staff continue to see headline PCE inflation moderating to 4.3% by the end of the year and to 2.5% by the end of next year as a “historically large” tightening of financial conditions was felt throughout the economy, the Fed meeting minutes this week showed – Cooling U.S. inflation builds case for September slowdown in Fed rate hikes (Reuters ~ Macro Matters)

EasyJet is to cancel more than 200 flights over the next 10 days, causing disruption for families heading abroad on half-term holidays. The issue affected airports across the UK. A further 20 EasyJet flights were cancelled on Friday morning, with a “small number” of TUI flights also delayed, including three for more than 24 hours. In a statement the airline said: “We are very sorry for the late notice of some of these cancellations and inconvenience caused for customers booked on these flights however we believe this is necessary to provide reliable services over this busy period.” Customers are being informed from today and provided with the option to rebook their flight or receive a refund and can apply for compensation in line with regulations. The airline will still be operating around 1,700 flights per day over the next week. Around 8,000 flights are expected to depart from UK airports over the weekend – EasyJet to cancel more than 200 half-term flights from Gatwick (BBC News ~ Business)

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