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Pound falls to $1.22 as Brexit sparks Marmite price row – business live Pound falls to $1.22 as Brexit sparks Marmite price row – business live
(about 1 hour later)
2.19pm BST
14:19
Politics professor Philip Cowley has trawled through some recent polling data, and found that Liberal Democrat voters will be particularly hurt by the Tesco-Unilever standoff.
It's Lib Dems who are hurting most. #Marmite pic.twitter.com/lcD4p1hVwD
But a jump in poultry prices could cause Theresa May’s party some grief:
This'll get real if chicken is affected. pic.twitter.com/6QcT0UxhTH
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1.59pm BST
13:59
Labour MP Stephen Kinnock says the Marmite price wars show that Brexiteers’ optimism about leaving the EU was ill-founded.
“When the plunging pound stops you from getting PG Tips and Marmite in the supermarket, you’re truly starting to feel the first tremors of Brexit.
“David Davis’s claims that there were no downsides to Brexit are colliding with economic reality. The best thing the Government can do for economic confidence and the pound is to commit now to starting the upcoming negotiations on the basis of securing full and unrestricted access to the single market.”
One clarification: Tesco has insisted that Unilever products are still available in stores today, but not from its website.
1.55pm BST
13:55
The Press Association has been out and about, snapping Unilever products on Tesco shelves:
1.51pm BST
13:51
Reality is starting to bite about the practical impact of leaving the EU, writes our columnist Polly Toynbee.
Unilever says all its prices must rise by 10% – which is still less than the 15% fall in the pound, so expect worse to come.
The Unilever spat with Tesco over who pays is just a sideshow, as other retailers warn of steep price rises, as we import so many essentials. BT’s chairman says imported phones and broadband hubs are already up 10%. Each day the Financial Times reports more banks declaring they are moving significant functions abroad, while car manufacturers look to invest elsewhere in the EU for their new models.
As prices rise, the great majority of the population, whose incomes have been stagnant for nearly a decade, will see their living standards fall....
Here’s her full take:
1.11pm BST1.11pm BST
13:1113:11
We could get an explosion of rows between retailers and suppliers over price hikes early next year, reckons Markus Kuger of Dun & Bradstreet, the credit and risk firm.We could get an explosion of rows between retailers and suppliers over price hikes early next year, reckons Markus Kuger of Dun & Bradstreet, the credit and risk firm.
He says UK firms are on “high alert”, and need to assess the impact of the weaker poudn on their customers and supplier now.He says UK firms are on “high alert”, and need to assess the impact of the weaker poudn on their customers and supplier now.
Companies, and particularly retailers, will be keen to reach the end of the year with little or no price increase. What happens in the new year is yet to be seen: Article 50 is likely to be invoked, and consumers will likely begin to feel the impact of the falling value of the pound.Companies, and particularly retailers, will be keen to reach the end of the year with little or no price increase. What happens in the new year is yet to be seen: Article 50 is likely to be invoked, and consumers will likely begin to feel the impact of the falling value of the pound.
12.37pm BST12.37pm BST
12:3712:37
Money transfer firm AFEX has cut its forecast for the pound, as the push towards Brexit continues.Money transfer firm AFEX has cut its forecast for the pound, as the push towards Brexit continues.
Analyst Trevor Charsley reckons sterling will lose another 5% over the next five months, even if a legal challenge launched today succeeds.Analyst Trevor Charsley reckons sterling will lose another 5% over the next five months, even if a legal challenge launched today succeeds.
“Sterling is going to remain under severe pressure in the near term as it continues to act as the release valve for market sentiment over the Brexit process. At the moment, the UK government is facing a legal challenge over parliamentary approval for Brexit.“Sterling is going to remain under severe pressure in the near term as it continues to act as the release valve for market sentiment over the Brexit process. At the moment, the UK government is facing a legal challenge over parliamentary approval for Brexit.
If the government loses in the high court, there will be pandemonium and the possible start of a constitutional crisis while if it wins, the ‘hard’ Brexit course will be pursued and we’ve already seen what the market thinks of that. Either way it’s a lose-lose for sterling.If the government loses in the high court, there will be pandemonium and the possible start of a constitutional crisis while if it wins, the ‘hard’ Brexit course will be pursued and we’ve already seen what the market thinks of that. Either way it’s a lose-lose for sterling.
We think that we could see Sterling reach $1.15 against the Dollar by the end of Q1 2017.”We think that we could see Sterling reach $1.15 against the Dollar by the end of Q1 2017.”
UpdatedUpdated
at 12.38pm BSTat 12.38pm BST
12.05pm BST12.05pm BST
12:0512:05
Prime minister Theresa May’s spokeswoman has confirmed that the government aren’t taking sides between Tesco and Unilever.Prime minister Theresa May’s spokeswoman has confirmed that the government aren’t taking sides between Tesco and Unilever.
“It is a decision for companies how they market and sell their products ... It is a commercial decision.”“It is a decision for companies how they market and sell their products ... It is a commercial decision.”
11.53am BST11.53am BST
11:5311:53
Conservative backbench MP David Davies* has launched a one-man Marmite boycott.Conservative backbench MP David Davies* has launched a one-man Marmite boycott.
So Unilever using Marmite prices to punish us for Brexit. toast-spread fight back starts here. From now on It's Aussie made Vegemite for me. pic.twitter.com/vHHxNeoloySo Unilever using Marmite prices to punish us for Brexit. toast-spread fight back starts here. From now on It's Aussie made Vegemite for me. pic.twitter.com/vHHxNeoloy
* - Not to be confused with David Davis, the Brexit secretary, whose views on yeast-based spreads are unknown* - Not to be confused with David Davis, the Brexit secretary, whose views on yeast-based spreads are unknown
11.51am BST11.51am BST
11:5111:51
Wise words from the Bishop of Burnley:Wise words from the Bishop of Burnley:
The real story here is not Tesco v Unilever but rising food prices and impact on the poor. Let's hope the food banks are Brexit-ready.The real story here is not Tesco v Unilever but rising food prices and impact on the poor. Let's hope the food banks are Brexit-ready.
Is the disappearance of Marmite from Tescos really more important than the laying-waste of Aleppo?Is the disappearance of Marmite from Tescos really more important than the laying-waste of Aleppo?
Here’s our latest piece on the atrocities taking place in Syria’s second-largest city:Here’s our latest piece on the atrocities taking place in Syria’s second-largest city:
Ground down by savagery – the agony of AleppoGround down by savagery – the agony of Aleppo
11.33am BST11.33am BST
11:3311:33
Professor Andrew Fearne, of the University of East Anglia’s Norwich Business School also expects more Brexit price rows.Professor Andrew Fearne, of the University of East Anglia’s Norwich Business School also expects more Brexit price rows.
The price dispute between Tesco and Unilever is the first of many stand-offs that are inevitable as the implications of Brexit kick in and companies try to navigate a sustainable way forward.The price dispute between Tesco and Unilever is the first of many stand-offs that are inevitable as the implications of Brexit kick in and companies try to navigate a sustainable way forward.
The problem is that some companies will use the exchange rate as a vehicle for negotiating price rises that are a) avoidable and b) could leave some of their customers un-competitive, if they agree to pay more when others refuse.The problem is that some companies will use the exchange rate as a vehicle for negotiating price rises that are a) avoidable and b) could leave some of their customers un-competitive, if they agree to pay more when others refuse.
11.03am BST11.03am BST
11:0311:03
The government isn’t keen to be dragged into the Tesco-Unilever Brexit price battle:The government isn’t keen to be dragged into the Tesco-Unilever Brexit price battle:
*Breaking*Leader of House David Lidington: "it's not for the Government to intervene" in dispute between 2 commercial companies.#Marmite*Breaking*Leader of House David Lidington: "it's not for the Government to intervene" in dispute between 2 commercial companies.#Marmite
However, Lidlington may smell a Marmite-scented rat:However, Lidlington may smell a Marmite-scented rat:
BREAK David Lidington, Cabinet minister tells MPs: "The ingredients (of Marmite) are not imported but are manufactured and supplied here."BREAK David Lidington, Cabinet minister tells MPs: "The ingredients (of Marmite) are not imported but are manufactured and supplied here."
UpdatedUpdated
at 11.16am BSTat 11.16am BST
10.57am BST10.57am BST
10:5710:57
High street chain WH Smith has revealed that it is also facing a hit from the slide in sterling.High street chain WH Smith has revealed that it is also facing a hit from the slide in sterling.
The company took out a hedge against a stronger dollar, but it runs out next year, meaning imported stationary will cost more. The company took out a hedge against a stronger dollar, but it runs out next year, meaning imported stationery will cost more.
CEO Stephen Clarke says Smiths is hoping to negotiate better prices from suppliers, and squeeze costs where possible.CEO Stephen Clarke says Smiths is hoping to negotiate better prices from suppliers, and squeeze costs where possible.
“Since June 24, we have been talking to our suppliers and factories, looking at how we can reduce cost that might come through by consolidation of factories or through other productivity initiatives.”“Since June 24, we have been talking to our suppliers and factories, looking at how we can reduce cost that might come through by consolidation of factories or through other productivity initiatives.”
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at 2.12pm BST
10.48am BST10.48am BST
10:4810:48
The government responds....The government responds....
David Lidington tries to calm fears of marmite shortage - reassures Jeremy Corbyn there is a "wealth" of organic alternatives in IslingtonDavid Lidington tries to calm fears of marmite shortage - reassures Jeremy Corbyn there is a "wealth" of organic alternatives in Islington
UpdatedUpdated
at 11.02am BSTat 11.02am BST
10.46am BST
10:46
The Marmite crisis has spread to the House of Commons, with shadow leader of the House Valerie Vaz raising the issue:
FINALLY THE ACTION WE NEED: Labour's Valerie Vaz demands the Govt does everything it can to keep Marmite on supermarket shelves.
That didn't take long - Valerie Vaz mentions the national marmite shortage in the Commons. Says "first week back and there's a crisis..."
Updated
at 10.46am BST
10.34am BST
10:34
The Breaking View’s team at Reuters reckon that Tesco has the upper hand in the Brexit price war.
The maker of Dove soap wants supermarkets like Tesco to pay more for its goods as the pound weakens. They can’t easily pass that cost on to shoppers.
Grocers have two reasons to play tough: Unilever’s 15% operating margin, and their access to the consumer.
10.21am BST
10:21
Expert: More Brexit price rows are coming
There’s a serious risk that more suppliers and retailers will clash over price rises in the months ahead.
That’s because the financial safety measures that some companies took, to insulate themselves from a sterling crash, would typically only last a few months.
Roy Williams, managing director of supply chain firm, Vendigital, explains:
“More disputes over prices are likely in the coming months, as many of the currency hedges that suppliers put in place to protect them from exchange rate changes, start to run out. Ultimately, the effect of these cost increases will be felt by consumers.”
Williams also has some sympathy for Unilever:
“Anyone that thinks Unilever is just trying it on, are wrong. The cost pressures facing many UK suppliers are very real at the moment. Deep falls in the value of the pound since the EU referendum are cutting deeply.
“However, Unilever may not have thought its position through carefully enough. Pursuing across-the-board price increases from customers is a blunt attempt to offset rising costs and this kind of approach would not stand up to detailed cost analysis by Tesco.
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10.14am BST
10:14
A handy list of what’s at stake:
Tesco products at risk:MarmitePot NoodleBen & Jerry'sComfort conditionerHellmann’s mayoKnorr cubesPersilDove Colman’s mustard
10.08am BST
10:08
Bernstein analyst Bruno Monteyne reckons Tesco would typically hold one to two-week’s worth of stock. So it might avoid serious shortages in stores, if it can kiss and make up with Unilever quickly.
Monteyne adds:
“While politicians can deny reality, a shampoo produced on the continent is now 17 percent more expensive.
This isn’t about Tesco or Unilever but about all UK retailers and suppliers.”
9.58am BST
09:58
The pound has dipped by 0.25% against the euro this morning, to €1.106.
That means sterling has shed more than 15% against the single currency since June’s referendum (when one pound bought you €1.30).
That has a serious knock-on effect on a company, such as Unilever, which reports its financial results in euros.
Updated
at 9.59am BST
9.50am BST
09:50
Tesco runs short on Marmite and other Unilever goods: share your photos
Is your local Tesco out of Marmite? What about Persil, Surf, Dove, Comfort, Ben & Jerry’s ice cream, Elmlea, Colman’s, Helmann’s, Knorr, Bertolli, Flora, Comfort and Pot Noodle?Guardian Witness want to know if the row between Tesco and Unilever is causing problems in the aisles.
Has there been a run on marmite and other staples in your local supermarket? Share your photos of empty shelves with us - we’ll post a selection of them in the blog.
9.40am BST
09:40
Today’s selloff is pushing the pound close to the levels hit on Tuesday evening, when sterling suffered quite a wobble.
It’s currently trading at $1.216, down 17% since June’s referendum.
9.22am BST
09:22
Conservative MP Sir Gerald Howarth has warned Unilever not to try to profiteer from the slump in sterling.
He said the firms’s reputation would be damaged “if they seek to use the fall in the pound to exploit the consumer”.
(that’s via the Press Association)
9.18am BST
09:18
The sight of Pot Noodles, PG Tips teabags and Knoor stock cubes vanishing from Tesco’s shelves could be the moment when the pound’s vicious tumble hits home to the public.
Currency expert Kit Juckes, of French bank Societe Generale, says:
Yesterday, the implications of the pound’s fall on prices and retailer margins hit home for the wider public as the country’s leading supermarket engaged in a war over prices with its highest-profile supplier of branded goods.
Either UK consumers will eat store-branded yeast extract, or they’ll pay more for Marmite, or the impact of the pound’s fall will be shared between supplier and retailer.
And other Marmite substitutes are available:
So this is what sovereignty looks like. #Brexit #Marmite pic.twitter.com/6RMajJ8rwo