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The City View: Michael Hewson on Germany’s Russian energy oversights and Merkel’s legacy

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Today Andy Silvester talks to Michael Hewson, Chief Markets Analyst at CMC Markets. They go through the latest IMF forecasts, which included downgrades and the worst growth forecast in the G7 for the UK; Germany’s exposure to energy price fluctuations, the mounting pressure to reduce its dependency on Russian oil and gas, and Angela Merkel’s legacy; and lower March consumer spending in the UK.

Andy also talks to City A.M.’s Energy Correspondent, Nicholas Earl. They discuss dire warnings from energy bosses in Parliament today, who warned of a severe impact in customer bills; and news of the collapsed energy firm Bulb’s CEO earning a £250,000 taxpayer-funded salary.

Episode transcript (auto-generated)

Andy Silvester 0:08 Good afternoon and welcome to the City View Podcast. I’m Andy Sylvester editor here at City and fresh from an Easter break spent predominantly at The Oval. I do hope you all had an equally enjoyable few days off, but it’s the grindstone we are though in a few minutes, I’ll be joined by Michael Hewson, Chief market analyst at CMC markets. We’ll look through the latest IMF forecasts none of which paint in particularly jolly picture for the future of the UK economy, at least in the near and medium term. But for now, I’m joined by Nicholas Earle our NG correspondent bits and pieces in the corporate news happening today, Nick, but nothing bigger than energy, feel like suddenly we start record even after Easter energy bosses up in Parliament today, one of whom was was bulbs, Hayden Wood, who will come back to in a minute, but for those companies that are still in business on their own two feet, rather than taxpayers, some pretty dire warnings of what’s to come.

Nicholas Earl 1:03 Yeah, that’s right — Eon’s chief executive, Michael Lewis is well there’s gonna be a severe impact this October, and he’s actually estimating a 50% increase in overall debt on his books from customer bills, which is a seismic rise, of course. And you also had similar gloomy tidings from Centrica who said a 10% of their customers are already late in their payments. And to capital we had EDF spouse who said that he estimates one pound and 12 being spent on energy bills by policy users will go to one pound in six October.

Andy Silvester 1:36 That’s going pretty grim. very grim. Indeed, for the economic recovery of the UK. Some of them are calling for a bit of a shift in government policy. Dangerous to ask for not quite a bailout but pretty close to a bailout for the energy companies will be paid to ordinary Brits. It does expose them at some point to a windfall tax rate, because we’ve got this slightly weird world where you’ve got shell and others being currently slammed for making huge amounts of money off commodity pricing beams, energy companies desperate for cash, you could see a world in which meddling politicians decided to meet those two together. And you’re all part that for now. Why don’t we talk quickly about bulbs Hayden wood to pharmacy while still the CEO of bulb. So just remind us before we talk about Hayden said today, reminders about the sorts of special circumstances of bulbs collapse, because there’s been more than 20 ng suppliers that have that have gone most of them have just folded their customers moved on to the supplier of last resort scheme, which in theory, at least means you know, if you turn your kettle on under one energy provider, by the time it finishes, it’s still you know, a new provider but your kettle still boils, slightly different vibe for Bulb.

Nicholas Earl 2:49 So Bulb were in what’s called a special administration process, which essentially means that they are in the in the public hands, at least least for the time being. This happened last November because basically, they’re too big to go through the supplier of last resort process with 1.7 million customers and pretty much in that sort of too big to fail........

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