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Ryanair has raised its passenger forecast following a recovery in summer bookings but reported a sharper first quarter loss, saying the coronavirus crisis “wreaked havoc” on Easter demand.

Europe’s largest airline by passenger numbers said it now expected to fly between 90 and 100 million people in its current financial year to the end of March 2022.

That was up from an earlier forecast of 80-100 million as it benefitted from a boost to summer holiday bookings and eyed a much improved winter season ahead.

It credited the improved guidance on a COVID-19 vaccine-led pick up in demand across EU nations – following in the footsteps of a recovery in the UK – though it refused to extend the range of its forecasts beyond the current year given continuing uncertainty.

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Ryanair boss delivers blunt verdict on ‘pingdemic’

Ryanair said a net loss of €273m (£234m) between April and June, up from the €185m red figure in the same period last year, reflected a disastrous Easter for travel though demand had picked up through May and June.

It carried 8.1 million passengers over the first quarter – up from just 0.5 million in the same three months of 2020 as the pandemic gathered speed.

While total revenue rose to €370m, thanks in part to additional charges on passengers for things like priority boarding and seat reservations, its bottom line was hurt by a surge in operating costs to €675m.

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Ryanair chief executive, Michael O’Leary, said: “COVID-19 continued to wreak havoc on our business during Q1 with most Easter flights cancelled and a slower than expected easing of EU Govt. travel restrictions into May and June.

“Significant uncertainty around travel green lists (particularly in the UK) and extreme Govt. caution in Ireland meant that Q1 bookings were close-in and at low fares.”

He added: “Following the 1st July rollout of EU digital Covid certificates (and the relaxation of the UK’s quarantine rules) for fully-vaccinated persons, our group has seen Q2 bookings recover strongly (albeit at low fares).

“We believe that FY22 traffic has improved to a range of 90m to 100m (previously guided at the lower end of an 80m to 120m passenger range) and (cautiously) expect that the likely outcome for FY22 is somewhere between a small loss and breakeven.

“This is dependent on the continued rollout of vaccines this summer and no adverse COVID variant developments.”

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Billions for ‘unproven’ carbon capture technology will have ‘very significant’ impact on energy bills, MPs warn

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Billions for 'unproven' carbon capture technology will have 'very significant' impact on energy bills, MPs warn

The government is spending £22bn on “unproven” technologies which will have a “very significant effect” on energy bills, according to an influential committee of MPs.

There has been no assessment of whether the programme to capture and store carbon from the atmosphere is affordable for billpayers, said a report from the Public Accounts Committee (PAC) of MPs.

The financial impact on households of funding the project has not been examined by government at all, the PAC said.

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Even if the state’s investment pays off, the technology is successful and makes money, there is no way for profits to be shared to bring down bills, it added.

Private sector investors, however, would recoup investment, according to committee chair Sir Geoffrey Clifton-Brown.

“All early progress will be underwritten by taxpayers, who currently do not stand to benefit if these projects are successful,” he said. “Any private sector funding for such a project would expect to see significant returns when it becomes a success.”

That’s despite the vast majority (two-thirds) of the £21.7bn investment coming from levies on consumers “who are already facing some of the highest energy bills in the world”, it said.

But there is no evidence to say the programme will be successful despite the government “gambling” its legally mandated net zero targets on the tech, committee chair Sir Geoffrey added.

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PM to invest £22bn in carbon capture

There are no examples of carbon capture, usage and storage (CCUS) operating at scale in the UK, according to the PAC report.

As part of its work, the PAC heard the technology may not capture as much carbon as expected.

International examples show the government’s expectations for its performance are “far from guaranteed”, it heard as part of its inquiry.

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A threat to net zero

This lack of proof of the technology working is a threat to the UK reaching its net zero 2050 emissions targets.

Last year the government downgraded the amount of carbon it expects to store each year as the goals were seen as “no longer achievable”, but no new targets have been announced, creating a shortfall in the path to net zero.

It is now “unclear” how the government will reach its goal, the PAC report said.

“Our committee was left unconvinced that CCUS is the silver bullet government is apparently betting on”, Sir Geoffrey said.

The £22bn investment was due to be made over 25 years and into five CCUS projects.

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Interest rate cut – but economic growth forecast slashed in blow to chancellor

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Interest rate cut - but economic growth forecast slashed in blow to chancellor

The Bank of England has cut interest rates by another quarter percentage point, bringing down the cost of borrowing to 4.5%.

And in a sign that households can expect more cuts in the months to come, two members of the Bank‘s Monetary Policy Committee said they would have preferred to reduce rates even more, by a full half percentage point.

Follow live reaction to interest rate cut in the Money blog

However, the Bank slashed its forecast for economic growth, forecasting that the economy will skirt clear of a formal recession only by the narrowest margin in the coming months, and downgraded its estimate of the economy’s ability to generate income. And in a further blow to the chancellor, it said her latest growth plans, unveiled in a speech last week, will add nothing to gross domestic product growth in its forecast horizon.

The Bank’s governor, Andrew Bailey, said: “It will be welcome news that we have been able to cut interest rates again today. We’ll be monitoring the UK economy and global developments very closely and taking a gradual and careful approach to reducing rates further.

“Low and stable inflation is the foundation of a healthy economy and it’s the Bank of England’s job to ensure that.”

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UK interest rate cut to 4.5%

The Bank’s forecasts seem to indicate that there will be at least two further rate cuts in the coming years and that that will be enough to bring inflation down towards its 2% target. However, investors are betting on more cuts.

The Monetary Policy Report and Bank forecasts released alongside the decision today signal that the economy is due to have another few years of weakness. They cut the forecast for economic growth this year, next year and the following year, as well as raising the inflation forecast. The Bank also said that the economy’s potential growth rate had dropped, down from 1.5% this time last year to 0.75% at the moment.

It said that while it expected last October’s budget to boost economic growth by 0.75%, thanks largely to greater public investment, it also expected the National Insurance rise to weigh down on activity, in particular by pulling down employment.

Analysis: Where do interest rates go from here?

It also warned that the tariffs threatened by Donald Trump on various economies posed a risk for economic growth in the coming years, though it has yet to incorporate them into its models.

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Interest rate path is tricky to navigate in tougher economy

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Interest rate path is tricky to navigate in tougher economy

Let’s start with the simple bit: interest rates have been cut – down by another quarter percentage point to 4.5%. But what happens next?

Not long ago, the answer was quite simple: the Bank of England would carry on cutting borrowing costs, one quarter point cut every three months, until they reached, say, 3.5%.

That, at least, was the expectation this time last year.

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But things have become more complex, more unpredictable in recent months.

Instead there are two paths ahead of us. One of them, let’s call it the high road, sees those borrowing costs being cut only gradually, down to 4% in a couple of years’ time.

Down the other road, the low road, the outlook is quite different: rates will be cut faster and more. They go down below 4%, perhaps as low as 3.5%, perhaps even lower.

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The funny thing about today’s splurge of information and forecasts from the Bank of England is that it’s not entirely clear whether we’re on the high road or the low road anymore.

Now, strictly speaking, the forecasts and fan charts produced by the Bank’s staff tend towards the former, more conservative view – the two cuts.

But then look at the voting patterns on the monetary policy committee (MPC), where two members, Swati Dhingra and Catherine Mann just voted for a full half percentage point cut, and you’re left with a different impression. That rates will go lower, and quickly.

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Britain has ‘huge potential’

And in truth, that’s what often happens when the economy is weakening.

When gross domestic product, the best measure of economic output, is flatlining or shrinking, when inflation is low (especially when you look beyond the temporary bump caused by energy prices) – that’s usually precisely the time the Bank slashes rates with abandon.

And that’s precisely the situation the UK finds itself in at the moment.

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But the problem is that a few things have complicated matters.

One is that the government decided to splurge more money in last October’s budget. That extra money sloshing around in the economy makes the Bank somewhat less willing to cut rates.

Another is that although the economy is weak, inflation is still high – indeed, the Bank actually raised its forecast for the consumer price index in today’s forecasts. Another is that the world economy has become a significantly more unstable place in recent months.

Germany is in recession. The US, under Donald Trump, is threatening tariffs on its nearest allies.

It’s not altogether clear whether the response to all this is lower interest rates.

Added to this, despite the chancellor’s best efforts, there is little evidence that her pro-growth policies are boosting economic growth – at least according to the Bank’s own forecasts.

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These are tricky waters to navigate.

All of which helps explains why it’s no longer quite as clear as it once was what happens next.

My suspicion is that the Bank will end up cutting rates, probably more than those two cuts baked into its forecasts. But such forecasts are even more fraught than usual.

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