Supply chain crisis could last months, admits Boris Johnson

Supply chain crisis could last months, admits Boris Johnson
Government will do ‘whatever it can’ to prevent failure of further energy companies

The supply chain chaos causing empty shelves in Britain’s supermarkets could last months, Boris Johnson has admitted.

The prime minister promised the government will do “whatever we can” to keep gas supplies flowing and prevent the collapse of energy companies battered by the sharp spike in wholesale prices.

But while insisting the crisis – which has triggered knock-on effects including a carbon dioxide shortage threatening meat production and the distribution of frozen food – would be “temporary”, he was unwilling to give an assurance that it would not last for months.

Instead, he told reporters: “It could be faster than that, it could be much faster than that. But there are problems with shipping, with containers, with staff. There are all sorts of problems that affect the entire world.”

Mr Johnson made clear that the government is ready to step in to avoid the failure of further energy firms after four ceased trading in recent days.

“I have no doubt that supply issues will be readily addressed,” said the prime minister. We’re very confident in our supply chains.

“But in the meantime, we will work with all the gas companies to do whatever we can to keep people’s supplies coming, to make sure they don’t go out of business and to make sure we get through the current difficult period.”

The prime minister declined to say whether official action could include a temporary suspension of the energy price cap which has forced suppliers to sell gas to customers at less than it was costing them.

“I want to give a general reassurance that the problems we are seeing are temporary,” said Mr Johnson. “They are caused by the resurgence of the global economy as Covid starts to retreat in parts of the world.

“Particularly in Asia, there is a phenomenal demand for gas, LNG (liquid natural gas) in particular. And you’re seeing that demand affect supply around the world. That’s basically what’s going on.

“As the world starts firing on all cylinders – to use a hydrocarbon metaphor – things will start to smooth out.”

An unsustainable increase in gas prices was blamed for the closure of two fertiliser plants operated in the north of England by US company CF Industries, which produce CO2 as a byproduct. The gas is deployed as a preservative in fresh food packaging and frozen goods and used by meat processors to stun chickens and pigs before slaughter.

The blow to the food industry heightens pressure from a 100,000 shortfall in numbers of lorry drivers in the wake of Brexit and the Covid pandemic, which had already led distributors to reduce the range of items supplied to shops.

But Mr Johnson played down suggestions that EU withdrawal was to blame for empty shelves, insisting that supply chain problems were being felt world-wide.

“The gas supply issue is global, the HGV issue is in the US as well as Europe,” he said. “So we’re seeing these same sorts of problems everywhere. But I think market forces will be very, very swift in sorting it outing we’re going to do whatever we can to help.”

He compared the world economy’s emergence from the pandemic to the hero of Jonathan Swift’s novel Gulliver’s Travels tearing himself free of the ropes which bound him down in Lilliput.

“The guy-ropes are pinging off Gulliver and it’s standing up,” said Mr Johnson. It’s going to take a while, as it were, for the circulation to adjust.”

He added: “The economy is now bouncing back very strongly. That’s producing stresses and strains across the world in supply chains. We’re experiencing bottlenecks in all kinds of things, huge stresses, as the world wakes up from Covid.

“It’s like everybody going to put the kettle on at the end of a TV programme. You’re seeing huge stresses on the world supply systems. But you’re also seeing businesses bouncing back strongly”

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