the times | Tuesday May 24 2022 33
Business
Mehreen Khan Economics Editor, Davos
Arthi Nachiappan
The world economy is at risk of a food
crisis as a result of unprecedented
supply disruption caused by the war in
Ukraine, the head of the International
Monetary Fund has warned.
Kristalina Georgieva, the IMF’s
managing director, told the World
Economic Forum in Davos that global
“anxiety around access to food at
reasonable prices is hitting the roof”.
Global wheat, maize, and vegetable
oil prices have rocketed since Russia’s
invasion of Ukraine disrupted the
production and transport of vital crops
from the region.
“We have had commodity price
shocks in many countries. We have
seen oil prices decline, but food prices
continue to go up and up,” Georgieva
said. “We can shrink our use of petrol
when [economic] growth slows, but we
have to eat every day.”
Andrew Bailey, governor of the
Bank of England, also warned last
week of an “apocalyptic” rise in
inflation if Ukraine’s farmers failed to
grow, store and sell crops to countries
that are net importers of food. Inflation
in western economies had hit multi-
decade highs, driven mainly by the
soaring costs of energy, and could climb
further if the food crisis did not abate,
he said.
A group of 50 chief economists sur-
veyed by the World Economic Forum
warned that the world was heading for
its worst food crisis on record, which
would hit most severely the poorest
food-importing regions such as sub-
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$112.87 (+1.29)Apr 20May 3 10 17 Apr 22 May 2 10 17 Apr 20 May 2 10 17 Apr 22 May 2 10 17 Apr 20May 2 10 17 Apr 20May 2 10 17The chief executive of Klarna has told
staff that 10 per cent of them will lose
their jobs as consumer confidence falls
and amid scrutiny of the Swedish “buy
now, pay later” company’s business
model.
Sebastian Siemiatkowski informed
workers at Europe’s largest unlisted
technology business, which has 6,500
staff, that rampant global inflation
Klarna lays off 10% of staff as consumer confidence tumbles
David Byers Assistant Money Editor accelerated by the war in Ukraine had
vastly reduced consumer confidence
and had transformed its prospects since
last autumn, when the company made
its projections for this year.
“When we set our business plans for
2022 in the autumn of last year, it was a
very different world than the one we
are in today,” Siemiatkowski, 40, told
staff in a recorded video message,
which was shared with all of them
simultaneously yesterday evening and
then was posted as a blog on the
company’s website. “While crucial to
stay calm in stormy weather, it’s also
crucial not to turn a blind eye to reality.”
He confirmed that 10 per cent of the
staff — about 650 people — would be
affected and that all “Klarnauts” who
were set to lose their jobs would be
contacted for a one-to-one conversa-
tion in the coming days.
He said that staff who would be laid
off would be offered compensation, butthat this would be different depending
on what jurisdiction in which they
worked.
Klarna, which is 17 years old, is by far
the biggest operator in the buy now, pay
later sector, where shoppers can buy
goods and services on credit for no
extra cost and pay by instalments.
Last week, it emerged that billions
could be wiped off the valuation of the
business, which has 16 million users in
Britain. According to The Wall StreetJournal, it is seeking a new round of
investment that could lead to its valua-
tion being brought down by a third,
from $46 billion to $30 billion. The
company, which said that the Journal’s
report was “pure speculation”,
announced operating losses of
SwKr6.58 billion (£533 million) in 2021.
Klarna employees were all asked to
work from home this week “in consid-
eration of the privacy of the people
affected by these changes”.IMF chief warns of unprecedented disruption
World ‘is on
the brink of
food crisis’
Saharan Africa, the Middle East and
north Africa.
Tomas Dvorak, at Oxford Econ-
omics, the consultancy, said that a
prolonged conflict in Ukraine would
heap further inflationary pressure on
countries and would lift core inflation
through higher shop prices. “Food
prices could push in the opposite direc-
tion, propping up headline inflation
and even pass through into core infla-
tion if adverse geopolitical develop-
ments were to persist,” he said.
The warning comes as Britain faces a
growing cost-of-living crisis. Bailey said
that the Bank’s rate-setters would take
into account the drag of the cost of
living on the economy when making
decisions about interest rates in future.
He warned that Britons faced a “very
big negative impact” on take-home pay
because of rises in the price of imports
such as energy.
Speaking on a conference panel for
the European Money and Finance
Forum in Vienna, Bailey rejected
criticism that the Bank had allowed
inflation to rise by letting demand get
“out of hand”.
“The facts simply do not support
this,” he said. “On the latest number,
UK GDP in March was only 0.6 per
cent above its pre-Covid level and it is
substantially below the path it was
expected to follow pre-Covid.”
The latest figures from the Organisa-
tion for Economic Co-operation and
Development show growth in the G7
group of leading economies, which in-
cludes America, Britain, Germany and
France, declined in the first quarter by
Continued on page 36, col 1Office rents soar along Crossrail route
Tom HowardThe long-awaited arrival of the
Elizabeth Line has tempted companies
to base themselves outside of London’s
traditional office hubs, sending office
rents soaring in some of the capital’s
lesser-known business areas.
The Elizabeth Line, or Crossrail as it
was known, opens to the public today,
having first been announced 14 years
ago. The 62-mile line runs through the
middle of London, connecting Berk-
shire to Essex and southeast London. It
means that commuters will be able to
get from Paddington to Canary Wharf
in 16 minutes, about half the present
time.
In the lead-up to its opening, compa-
nies were venturing further away fromthe usual office bases in the City of
London or West End, which has put a
rocket under rents in some of the capi-
tal’s smaller office markets.
Since 2008, when Crossrail was first
announced, rents in Clerkenwell and
Shoreditch, on the northern and eastern
edges of the City, have surged by 123 per
cent, according to Cushman & Wake-
field, the property agent. In Paddington,
rents on prime office buildings have
risen by 45 per cent over that time.
In contrast, Cushman found that
office rents in the City had moved
21 per cent higher since 2008. In the
West End, they have nudged only 2 per
cent higher. Historically, these were
London’s best-performing areas for
office rents.
Even in Reading, where the ElizabethLine stops, office rents have climbed by
38 per cent since 2008. In Slough and
Maidenhead, two other new Crossrail
stations to the west of London, office
rents have risen by 52 per cent and
30 per cent, respectively.
Patrick Scanlon, head of UK offices
insights at Cushman & Wakefield, said
that the building of the Elizabeth Line
had helped in “changing the dynamic
of London’s commercial real estate
market”.
He added: “It encouraged occupiers
to consider new locations and real
estate developers to deliver high-quali-
ty office schemes in new areas of the
capital which previously had been
largely ignored. Much of this was due to
the prospect of improved connectivity
from east to west.”ALAMYA
start-up founded
by Euan Blair will
train 5,000
apprentices at
charities and small
businesses after gaining
apprenticeship levy
funding from large
companies (Hannah
Prevett writes). Blair, 38,
started Multiverse in 2016
to get young people into
apprenticeships. The
£30 million bill for its
training will be covered by
levy funding from firms
such as Morgan Stanley,
Amazon and Deloitte.
All companies with an
annual payroll bill above
£3 million must pay
0.5 per cent into the levy.
“Big businesses want to
support these
organisations, but you
can’t just ‘donate’ skills. So
instead, they can donate
apprenticeship levy
funding,” he said.Blair start-up
gives boost to
apprentices