Stock Groups

Britain deploys army to deliver fuel amid panic buying and shortages


British soldiers at the BP fuel station in Hemel Hempstead on Monday, October 4, 2021.

Bloomberg | Bloomberg | Getty Images

LONDON — British soldiers have begun delivering fuel in the U.K., as panic buying of gasoline continues in some parts of the country.

Operation Escalin will see around 200 military personnel deployed to ease the fuel shortage caused by an acute shortage of truck drivers. On Monday, soldiers were seen in combat fatigues at a BP refinery near Hemel Hempstead in England.

Last week has seen the deployment of Army tanker driver. The government’s Reserve Tanker Fleet —  driven by civilians — was deployed on Tuesday to deliver gasoline.

The U.K. has seen a surge in gasoline purchases in recent weeks, which has led to long lines at gas stations. Some of the stations have even been closed. The situation in the majority of parts has improved, but there are still severe shortages in London and the southeast.

According to estimates, the U.K. is facing a shortage of 100,000 truck drivers. This has led to disruption in fuel supply and food delivery. Brexit, regulatory changes, and the Covid-19 pandemic all contribute to the problem.

To ease logistical problems in the trucking sector, the government also used the army.

The economy is a ‘warning sign’

Kallum Pickering is a senior economist with Berenberg Investment Bank and said that Britain’s current fuel crisis is a warning sign for its economic prospects.

Pickering wrote Monday that the U.K.’s ongoing panic buying “highlights” the situation [country’s]The current state of the world is dismal, but there are also the possibilities for much worse things in the future.

He stated that, although structural shortages in the U.S. as well as a dearth of truck drivers were also a concern for major European economies, panic buying by those same countries was a U.K. problem.

“The whole episode begs to ask the question why the U.K. is, once more, seeming to be getting hit worse than other economies,” said he. I believe that the U.K.’s panicked and hyperventilated state partly reflect a decline in confidence among the public about the government’s ability to handle the economy and resolve problems when they do arise.

Pickering noted that panic buying could become a feature of the U.K. economy — which he described as “unnerving.”

Berenberg says that the U.K. is still on a strong recovery path despite the current supply problems. According to Berenberg, the bank’s 2021 outlook is for the GDP growth to be 6.9%. However, its 2022 forecast has been lowered to 5% growth.

Berenberg anticipates the U.K. to see an inflation peak in May at a slightly higher rate year on year, and that it will continue longer than expected. In the fourth quarter, Berenberg expects Britain’s quarterly inflation to rise by 4%.

Pickering stated that worsening inflation pressures could lead to Bank of England raising interest rates sooner than originally expected.

He wrote that “We expect the BoE will raise the bankrate to 0.255% in May 2022, instead of August 2022.” After a 25-basis point increase in August (versus November), we expect that the BoE will now begin a passive dewind of its balance sheet after the November 2022 Monetary policy Report.