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Boris Johnson to brush off petrol queues as ‘change of direction’

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Boris Johnson to brush off petrol queues as ‘change of direction’

Boris Johnson will brush off petrol queues and empty shelves as evidence of a “change of direction” towards a high-wage economy on Wednesday, as he closes a Conservative conference at which supply shortages have barely been acknowledged.

The prime minister channelled Margaret Thatcher on Tuesday to insist “there is no alternative” but to press ahead with the post-Brexit transition to a labour market less reliant on immigration.

Asked whether the UK was facing a crisis, Johnson said “no”. “It’s not the job of government to come in and try and fix every problem in business and industry,” he said.

Despite warnings from business groups of rising prices and continued shortages of key products in the run-up to Christmas, he will tell the party faithful in Manchester that a bright future lies ahead.

“That is the direction in which this country is going – towards a high-wage, high-skill, high-productivity economy that the people of this country need and deserve, in which everyone can take pride in their work and the quality of their work,” he is expected to say.

“We are not going back to the same old broken model with low wages, low growth, low skills and low productivity, all of it enabled and assisted by uncontrolled immigration.”

Downing Street sources insisted the prime minister’s approach was not “Panglossian optimism” but a determination to ride out the disruption.

Senior Conservatives said focus group and polling evidence is so far telling them the public do not blame the government for the supply crunch, and is “giving them the benefit of the doubt”, for the time being.

But one cabinet minister privately warned that if shortages persist, support for the government could drain away rapidly. Another frontbencher said they were concerned about complacency, pointing out that the petrol shortage was still gripping their constituency.

In the US earlier this month, the prime minister insisted market forces would resolve petrol shortages, but within days of his return ministers had suspended competition laws in the energy sector and called in the army.

Johnson and his top team have eschewed showy announcements at the four-day gathering in Manchester in favour of repeatedly hammering home the message that they are “getting on with the job” of levelling up the UK.

In a nod to the concerns of southern Tories that levelling up is a hard sell in their constituencies, the prime minister will reframe it as a way of alleviating overcrowding.

He will claim the policy will “take the pressure off parts of the overheating south-east while simultaneously offering hope and opportunity to those areas that have felt left behind”.

Business groups have been irked by the government’s insistence that it is up to the private sector to resolve the supply chain problems that have beset a string of industries.

James Martin, the director of policy at the British Chambers of Commerce, said: “Business supports the government’s ambition to move to a sustainably high-skilled, high-wage economy which does more to harness homegrown skills and talents, but this is a huge transition that will not happen overnight … Simply riding it out is not an option.”

Business groups pointed out that firms are facing massive increases in a number of upfront cost pressures, including raw materials and shipping, with an impending rise in national insurance contributions coming on top.

Martin warned that prices would have to rise. “Given the strains that business is being placed under, it is almost inevitable that many will have to raise their prices to remain viable and our own data suggests that this process is already underway.”

Johnson played down fears about inflation on Tuesday, saying: “People have been worrying about inflation for a very long time. I’m looking at robust economic growth.”

Inflation was running at 3% last month, and domestic energy prices are expected to continue rising sharply in the coming months. Cash-strapped consumers are also about to be hit by the £20 a week cut in universal credit and the 1p increase in national insurance contributions.

The National Farmers’ Union vice-president, Tom Bradshaw, said: “Farm businesses have done all they can to recruit staff domestically, but even increasingly competitive wages have had little impact because the labour pool is so limited – instead only adding to growing production costs. A solution to this crisis will need the right people with the right skills and training available in rural areas where many roles are based.”

He called for a short-term Covid recovery visa, alongside a permanent seasonal workers scheme, which would give farmers time to invest in the skills and recruitment of a domestic workforce.

Tony Danker, the director general of the CBI, told BBC Radio 4’s Today programme: “We’ve got labour shortages, high gas prices, supply chain pressures, we need government and business working together to solve this. The idea that one side alone can solve what is a pretty significantly stressful moment for the global economy, I just don’t think that’s helpful.”

The latest official figures showed average earnings increasing by 6.8% in the year to July; but the Office for National Statistics warned that “interpretation should be taken with caution,” because the growth partly reflects workers returning from furlough.

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Naira depreciates further to N614/$ at parallel market

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Naira depreciates further to N614/$ at parallel market

The Nigerian naira has dropped to N614 against the dollar at the parallel section of the foreign exchange market.

The figure signifies a depreciation of N7 or 1.2 percent compared to the N607 it traded last two weeks.

Bureaux De Change operators (BDCs), popularly known as ‘abokis’, who spoke to TheCable in Lagos on Tuesday, said they purchase the greenback at N608/$, make a gain of N6, and then sell at N614.

At the official market, the naira also depreciated by 0.21 percent to close at N421/$ on Monday, according to information obtained from FMDQ OTC Securities Exchange — a platform that oversees official foreign-exchange trading.

Nigeria operates multiple exchange rate windows ranging from the importers and exporters window (I&E) window, where forex is traded between exporters, investors, and purchasers of forex, the SMEIS window where forex is sold to importers, and others.

International organisations such as the World Bank and the International Monetary Fund (IMF) have constantly advised the Central Bank of Nigeria (CBN) to unify the official and parallel market exchange rates.

But Godwin Emefiele, the CBN governor, had said that despite advice offered by IMF and the World Bank, developing economies such as Nigeria had the liberty of adopting “homegrown solutions to their economic problems.

According to him, the managed floating exchange rate, which allows the CBN to intervene in the market when there is a supply shock, would be in place as long as supply exceeds demand.

“They want us to free the exchange rate. And you do know that this has some impacts on the exchange rate itself,” he had said.

“When you allow that to happen, you will have an uncontrollable spiral on the naira.

“But what managed float means is that we have some measures in place to help control the spiral.”

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FG, states in trouble, as NNPC again fails to remit, despite N470.61bn revenue

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FG, states in trouble, as NNPC again fails to remit, despite N470.61bn revenue

These are challenging times for the federal and state governments as one major source of income to the federation account seems to be totally cut off.

On Monday, The National Petroleum Company Limited (NNPC) revealed it failed to remit monies to the federation account in May 2022 despite making N470.61 billion.

This is the fifth straight month NNPC has failed to credit the federal account while exporting crude at an average price of $100 per barrel.

Details of the June FAAC report obtained by The Harmattan News showed NNPC since the start of the year made N1.897 trillion, over N234.1 billion more than the expected revenue.

Sadly, however, NNPC said all the revenue had gone into various expenditure which includes petrol subsidy, oil search, Pipeline Security & Maintenance cost, National Domestic Gas Development and Nigeria Morocco Pipeline cost among others.

As expected, the bulk of the expenditure, N1.27 trillion, went toward recovery (also known as petrol subsidy).

In fact, NNPC said it has budgeted another N617 billion for petrol subsidy in June.

The report reads: “The Value Shortfall on the importation of PMS recovered from May 2022 proceeds is N327,065,907,048.06 while the outstanding balance carried forward is N617bn .”

“The estimated Value Shortfall of N845,152,863,012.97bn (consisting of arrears of N617bn plus estimated May 2022

Value Short Fall of N227,721,200,478.23) is to be recovered from June 2022 proceed due for sharing at the July 2022 FAAC Meeting,” it added.

The development means states have a tough road ahead and will have to look inwards to cover for the drop in federal allocations.

Already, some states have announced plans to slash workers’ salaries over dwindling income.

Kano Sate has already announced plans to slash workers’ salaries, following in the foot steps of the Ekiti State government that announced civil servants’ and political appointees’ salaries will be slashed in response to the present economic reality in the country.

Ekiti went further to suspend minimum wage implementation with no date of resumptions.

The Harmattan News had recently reported that pension contribution from governments dropped to a 16-year low in the first quarter of 2022.

From recent developments, it is more likely the figure will tank further.

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Nigerian govt to auction N225bn bond as search for funds continues

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Nigerian govt to auction N225bn bond as search for funds continues

Federal government bonds worth N225 billion would be auctioned today, Monday, June 20, 2022, by the Debt Management Office (DMO) at the primary market.

The debt instrument is being sold by the central government to raise funds to finance the 2022 budget deficit and in today’s exercise, the DMO is offering the notes in three tenors.

The debt office is anticipated to sell the FGN bonds at double digits to make the asset class more attractive to investors.

In a circular published on its website and obtained by The Harmattan News, all three maturities are re-opening, meaning they are from the previously sold bonds.

The circular noted that N75 billion worth of a 10-year bond with maturity in 2025 would be offered for sale at the auction. Another N75 billion worth of a 10-year note maturing in 2032 is up for grabs and N75 billion worth of a 20-year instrument with maturity in 2042 would be sold.

Intending subscribers would be expected to reach out to primary dealer market makers to buy the bonds for N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

The interest would be paid by the government semi-annually, while the bullet repayment will be done on the maturity date.

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