Crypto News: Johnson in grave danger

Welcome to The Readout, the new daily newsletter from Bloomberg UK.

A lot has changed in Westminster this afternoon. A member of Prime Minister Boris Johnson's own government said to me: "All anybody is talking about is how to get him out."

A week ago Johnson was riding high overseas, but the handling of the Pincher affair has made it more likely next week's elections to the Conservative backbench 1922 Committee will return a slate of MPs prepared to change rules to allow a new confidence vote. One opponent says Johnson would lose — a result that could even trigger a summer leadership contest.

One cabinet minister is among those not so sure. They argue that changing the rules is more complex than Johnson's gung-ho opponents claim. They believe that holding a leadership contest in an autumn with inflation at 11% would be mad. Others question the timing should Labour's leader Keir Starmer be fined, and have to resign, shortly.

But Johnson is in grave danger. One former ally described being associated with the prime minister as "humiliating". His MP critics are in a rush. They see a political window closing this summer before constituents feel an economic chill.

This is where we are as The Readout hits your inboxes at 5pm on Tuesday. With a febrile atmosphere in Westminster, things will no doubt change — fast.

Tuesday's cabinet meeting did not look like a happy place. Photographer: Ian Vogler/Getty Images

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The stories you need to know about this evening

The Bank of England said the global outlook has "deteriorated materially"
Germany rushed through a law allowing it to bail out gas companies
The euro slid to a 20-year low against the US dollar

What I've been hearing from City and government sages is today illustrated in glorious multi-graph reality by Bloomberg Opinion's Paul J. Davies.

Paul writes that investors have dropped the shares of big banks because of fears about rising living costs and interest rates, yet households in the US, UK and much of Europe are showing "few signs of financial strain." As he puts it:

The world feels fragile ... But underpinning households — and potentially Western economies more broadly — is the huge amount of savings and debt reduction during the Covid crisis. People started this year with spare cash equivalent to more than 13% of 2019's gross domestic product in the UK.

Check it out:

"Things are not yet flashing red", a government source agrees. "People are paying their mortgages and not in too much trouble."

Natwest CEO Alison Rose was out publicly in June talking about "strong demand" for mortgages. The Bank of England governor said this morning he will be kicking the tires on bank resilience in September, evaluating the possibility of a "deep" recession and of further increases in interest rates. New stats today show house asking prices up 9.3% from a year earlier, though only 0.3% up in June. There are certainly signs of cooling to come.

Whitehall officials echo this sense that the real squeeze on middle-income households isn't yet here. While they point me to an increase in customers seeking mortgage advice, importantly they also say people are not yet refinancing.

Officials are also waiting to see what role the Covid "buffer" savings play. (Paul's piece refers to similar savings after WWII, but concludes there was no peacetime splurge). Early signs in March suggested then that households were eating into their savings.

I remember working in Number 11 Downing Street two years ago. Then, with inflation low, the concern was how to encourage people to spend. Since the UK is an economy that relies on "social consumption" — people enjoying going out — Chancellor Rishi Sunak needed some of this to return.

Back then the high levels of savings were a worry. Now, ahead of the autumn, have they become the economy's airbag?

London's property market is in flux with house prices continuing to rise and flats declining in value. Flats are down more than 11% from their peak in August 2020, with the median sale now less than £400,000, according to an analysis of UK Land Registry data for April by Bloomberg News. The figures, which are smoothed to remove outlier transactions, show the median price paid for a house reached a new high of almost £634,000.

For more detail, explore our map to find trends where you live.

Get ahead of the curve

State of emergency. A severe heat wave and drought is taking its toll on agriculture and threatening power supplies in Italy.

Trouble ahead for stocks. An economic slowdown bodes ill for the fate of equity investments, John Authers writes for Bloomberg Opinion.

Cheap oil by Christmas? The price of crude oil could collapse to $65 a barrel by the end of this year, analysts at Citigroup think.

Flying NHS doctors. The health service will trial using drones to deliver medicines.

Peak TV is over. Hollywood studios and major streaming services are cutting back on programming after years of unfettered growth.

One key story, every weekday

The war in Ukraine catalyzed the gas crisis by taking out a crucial chunk of supply. Photographer: Dwayne Senior/Bloomberg

Natural gas is the hottest commodity in the world right now. Shortages are rippling throughout the global economy, threatening recessions and a further wave of inflation. Prices in Europe are up some 700% in Europe since the start of last year, pushing the continent to the brink of recession.

Gas is at the heart of a dawning era of confrontation between the great powers, one so intense that in capitals across the West, plans to fight climate change are getting relegated to the back-burner.

In short, natural gas now rivals oil as the fuel that shapes geopolitics. And there isn't enough of it to go around.

Read The Big Take.

Your early warning system for the day ahead

Midnight National insurance starting thresholds will increase to £12,570, a change the Treasury has said will benefit 30 million UK workers.

7 a.m. Trading updates: Robert Walters, Topps Tiles.

9:10 a.m. Huw Pill, Bank of England chief economist, speaks at Kings College London on the role of central banks.

12 p.m. Prime Minister's Questions

3 p.m. Boris Johnson faces questions at parliamentary Liaison Committee.

Follow all tomorrow's corporate news in The London Rush, live on Bloomberg UK from 8 a.m.

Please send thoughts, tips and feedback to readout@bloomberg.net. You can follow Allegra on Twitter. The Readout is edited by Adam Blenford.