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| Pound jumps and markets rebound as firms await wage rescue plan - business live | Pound jumps and markets rebound as firms await wage rescue plan - business live |
| (32 minutes later) | |
| The pound is up as European markets rebound and the UK waits for details of the chancellor’s plan to protect wages in response to Covid-19 | The pound is up as European markets rebound and the UK waits for details of the chancellor’s plan to protect wages in response to Covid-19 |
| The US Federal Reserve has made yet another intervention to support the US economy, this time expanding support to municipal bond markets, which are key for the funding of local city authorities. | |
| Local government authorities are on the front line of the battle against coronavirus disruption in many countries, leading to fears from investors that they could come under financial pressure. | |
| Here’s the statement from the Fedearl Reserve: | |
| Jasper Jolly here, taking over from Angela for the next few hours. | |
| Wall Street has extended its earlier gains, with sentiment boosted by the news that US taxpayers will have an extra 3 months to file their returns and expectations of further measures. | |
| The latest from US markets: | |
| Dow Jones: +2% or 399 points at 20,486 | |
| Nasdaq: +2.8% or 200 points at 7,343 | |
| S&P 500: +1.6% or 39 points at 2,448 | |
| Ford has become the latest car maker to announce temporary factory closures in the UK due to the coronavirus pandemic. | |
| The US manufacturer does not make cars in the UK but said its engine-making plants at Dagenham and Bridgend, which produced 1.1m engines between them last year, would be suspended from next Monday and Wednesday respectively. | |
| The shutdown will also be extended across the remainder of the business, barring a small number of employees, a decision affecting 12,900 UK staff, with around 5,000 of them in direct manufacturing.All employees will receive pay at least equivalent to their base wage. | |
| Airlines have been taking further measures to secure their businesses, faced with virtually no flights operating during April and May - at the very least. | Airlines have been taking further measures to secure their businesses, faced with virtually no flights operating during April and May - at the very least. |
| British Airways pilots will take half of April and May as unpaid leave, unions have agreed. | British Airways pilots will take half of April and May as unpaid leave, unions have agreed. |
| EasyJet has asked pilots and cabin crew to take three months’ unpaid leave, and reduce terms and conditions, according to the BBC. | EasyJet has asked pilots and cabin crew to take three months’ unpaid leave, and reduce terms and conditions, according to the BBC. |
| Ryanair staff across the board will be taking a 50% pay cut for April and May, boss Michael O’Leary told the FT. | Ryanair staff across the board will be taking a 50% pay cut for April and May, boss Michael O’Leary told the FT. |
| Air New Zealand was promised loans of up to NZ$900m (£438m) by the NZ government to ensure its survival. | Air New Zealand was promised loans of up to NZ$900m (£438m) by the NZ government to ensure its survival. |
| Analysts aired fresh doubts over Norwegian Air despite credit guarantees from the Oslo government worth up to 6bn kroner (£450m). | Analysts aired fresh doubts over Norwegian Air despite credit guarantees from the Oslo government worth up to 6bn kroner (£450m). |
| Cathay Pacific subsidiary HK Express is ending all flights. Cathay, the main Hong Kong carrier, has already axed more than 90% of its schedule. | Cathay Pacific subsidiary HK Express is ending all flights. Cathay, the main Hong Kong carrier, has already axed more than 90% of its schedule. |
| Air Canada is temporarily laying off more than 5,000 flight attendants. | Air Canada is temporarily laying off more than 5,000 flight attendants. |
| The Guardian US has more on the decision to extend the tax deadline by three months: | The Guardian US has more on the decision to extend the tax deadline by three months: |
| Americans will have an extra three months to file their taxes, to ease the pressure on finances caused by Covid-19. The deadline has been extended to 15 July. | Americans will have an extra three months to file their taxes, to ease the pressure on finances caused by Covid-19. The deadline has been extended to 15 July. |
| The measure was announced on Twitter by US Treasury secretary Steve Mnuchin: | The measure was announced on Twitter by US Treasury secretary Steve Mnuchin: |
| The City regulator has told banks and building societies that they must not repossess people’s homes during the coronavirus crisis, and cannot charge fees for payment holidays granted as a result of the pandemic. | The City regulator has told banks and building societies that they must not repossess people’s homes during the coronavirus crisis, and cannot charge fees for payment holidays granted as a result of the pandemic. |
| In guidance to lenders, the FCA said: “Firms should not commence or continue repossession proceedings against customers at this time, given the unprecedented uncertainty and upheaval they face, and government advice on social distancing and self-isolation.“This applies irrespective of the stage that repossession proceedings have reached and to any step taken in pursuit of repossession. Where a possession order has already been obtained, firms should refrain from enforcing it.”The FCA said that lenders should offer three-month payment holidays to struggling buyers, and were not expected to investigate customers’ circumstances before saying yes. They said banks could continue to charge interest but were not allowed to levy any other fees. | In guidance to lenders, the FCA said: “Firms should not commence or continue repossession proceedings against customers at this time, given the unprecedented uncertainty and upheaval they face, and government advice on social distancing and self-isolation.“This applies irrespective of the stage that repossession proceedings have reached and to any step taken in pursuit of repossession. Where a possession order has already been obtained, firms should refrain from enforcing it.”The FCA said that lenders should offer three-month payment holidays to struggling buyers, and were not expected to investigate customers’ circumstances before saying yes. They said banks could continue to charge interest but were not allowed to levy any other fees. |
| Here is our full story on the competition watchdog’s decision to launch a Covid-19 taskforce. | Here is our full story on the competition watchdog’s decision to launch a Covid-19 taskforce. |
| The Competition and Markets Authority aims to identify traders that are unfairly raising prices on goods in short supply, such as hand sanitiser and loo roll. | The Competition and Markets Authority aims to identify traders that are unfairly raising prices on goods in short supply, such as hand sanitiser and loo roll. |
| Kevin Loane, economist at the consultancy Fathom, says there is likely to be an unprecedented spike in US unemployment: | Kevin Loane, economist at the consultancy Fathom, says there is likely to be an unprecedented spike in US unemployment: |
| He says the lockdown in California, which could be swiftly followed by New York, may cause an unprecedented rise in jobless claims: | He says the lockdown in California, which could be swiftly followed by New York, may cause an unprecedented rise in jobless claims: |
| The bell has rung on Wall Street and markets have opened higher - but the gains are pretty limited so far. | The bell has rung on Wall Street and markets have opened higher - but the gains are pretty limited so far. |
| Dow Jones: +0.8% | Dow Jones: +0.8% |
| Nasdaq: +1.6% | Nasdaq: +1.6% |
| S&P 500: +0.9% | S&P 500: +0.9% |
| As employees, employers and investors await the chancellor’s package of measures to protect pay and jobs during Covid-19 - expected later this afternoon - the ONS has published the latest snapshot on the public finances. | As employees, employers and investors await the chancellor’s package of measures to protect pay and jobs during Covid-19 - expected later this afternoon - the ONS has published the latest snapshot on the public finances. |
| The figures show a slightly better borrowing picture than expected in February. The government borrowed around £300m last month, that’s roughly half the amount in the same month a year ago.Borrowing has however been steadily rising, by around £4.2bn more so far this year than the same period a year earlier. And attention is turning to the damage the coronavirus outbreak will cause. | The figures show a slightly better borrowing picture than expected in February. The government borrowed around £300m last month, that’s roughly half the amount in the same month a year ago.Borrowing has however been steadily rising, by around £4.2bn more so far this year than the same period a year earlier. And attention is turning to the damage the coronavirus outbreak will cause. |
| Rishi Sunak’s emergency measures to combat the economic fallout - £12bn at last week’s budget topped up with a further £20bn in spending this week - will cause the deficit to explode in the next financial year. | Rishi Sunak’s emergency measures to combat the economic fallout - £12bn at last week’s budget topped up with a further £20bn in spending this week - will cause the deficit to explode in the next financial year. |
| Analysts at Capital Economics estimate borrowing as a percentage of the UK economy could balloon to 8% of GDP, a massive jump from official estimates for a deficit worth around 2.5% of GDP, as government spending dramatically rises and the economy and tax receipts fall off a cliff. For context, borrowing reached peaked at around 10% of GDP following the 2008 financial crisis. | Analysts at Capital Economics estimate borrowing as a percentage of the UK economy could balloon to 8% of GDP, a massive jump from official estimates for a deficit worth around 2.5% of GDP, as government spending dramatically rises and the economy and tax receipts fall off a cliff. For context, borrowing reached peaked at around 10% of GDP following the 2008 financial crisis. |
| Asda has announced it will hire more than 5,000 temporary employees who have been laid off due to Covid-19. | Asda has announced it will hire more than 5,000 temporary employees who have been laid off due to Covid-19. |
| Chief executive Roger Burnley said: | Chief executive Roger Burnley said: |
| Lidl meanwhile said it would create 2,500 jobs across its 800 stores. The roles will be temporary and will pay at least £9.30 an hour, the German supermarket chain said. | Lidl meanwhile said it would create 2,500 jobs across its 800 stores. The roles will be temporary and will pay at least £9.30 an hour, the German supermarket chain said. |
| Christian Härtnagel, chief executive at Lidl in the UK, said: | Christian Härtnagel, chief executive at Lidl in the UK, said: |
| Time for a market update: | Time for a market update: |
| FTSE 100: +1.7% at 5,236 | FTSE 100: +1.7% at 5,236 |
| Germany’s Dax: +4.5% at 8,996 | Germany’s Dax: +4.5% at 8,996 |
| France’s Cac 40: +5.4% at 4,064 | France’s Cac 40: +5.4% at 4,064 |
| Italy’s FTSE Mib: +1.7% at 15,727 | Italy’s FTSE Mib: +1.7% at 15,727 |
| Spain’s Ibex: +3.7% at 6,634 | Spain’s Ibex: +3.7% at 6,634 |
| Europe’s Stoxx 600: +2.9% at 296 | Europe’s Stoxx 600: +2.9% at 296 |
| More on the prospect of a UK recession from my colleague Richard Partington: | More on the prospect of a UK recession from my colleague Richard Partington: |
| The early signs from the British economy are not looking good as the coronavirus causes mass disruption. | The early signs from the British economy are not looking good as the coronavirus causes mass disruption. |
| According to the consultancy Capital Economics, the number of people dining out plunged by 91% on a year earlier on Wednesday, cinema ticket receipts were down 56% to just £5.6m last weekend, and retail sales were down 11% last week compared to a year ago. | According to the consultancy Capital Economics, the number of people dining out plunged by 91% on a year earlier on Wednesday, cinema ticket receipts were down 56% to just £5.6m last weekend, and retail sales were down 11% last week compared to a year ago. |
| Given the scale of the crisis, analysts reckon it’s pretty obvious the economy is already shrinking. But it will be several weeks before official figures confirm the extent of the damage. These early indicators give a bit of a sneak preview - and it doesn’t look good. | Given the scale of the crisis, analysts reckon it’s pretty obvious the economy is already shrinking. But it will be several weeks before official figures confirm the extent of the damage. These early indicators give a bit of a sneak preview - and it doesn’t look good. |
| Capital Economics forecast a 15% drop in GDP in the second quarter - a level unprecedented in modern history – GDP fell by 6% in the financial crisis and 8% in the Great Depression. The hopes are the plunge won’t last as long as either of those two episodes. | Capital Economics forecast a 15% drop in GDP in the second quarter - a level unprecedented in modern history – GDP fell by 6% in the financial crisis and 8% in the Great Depression. The hopes are the plunge won’t last as long as either of those two episodes. |
| Andrew Wishart, UK economist at the consultancy, says: “We know that these indicators are going to get worse. Their real value will be showing us how quickly the economy is getting back to normal after the virus is under control. We expect the recession will be short-lived and the recovery will be fairly fast.” | Andrew Wishart, UK economist at the consultancy, says: “We know that these indicators are going to get worse. Their real value will be showing us how quickly the economy is getting back to normal after the virus is under control. We expect the recession will be short-lived and the recovery will be fairly fast.” |
| The International Monetary Fund has posted a blog on China and the impact of Covid-19. | The International Monetary Fund has posted a blog on China and the impact of Covid-19. |
| There are some positives: | There are some positives: |
| You can read the full blog post here. | You can read the full blog post here. |
| Oxford Economics has updated its forecasts for the UK economy, taking into account the social distancing measures announced by the government. | Oxford Economics has updated its forecasts for the UK economy, taking into account the social distancing measures announced by the government. |
| The research group now expects the UK to fall into a deep recession in the first half of 2020, with gross domestic product shrinking by 1.4% in 2020 as a whole (the economy grew by 1.4% in 2019). | The research group now expects the UK to fall into a deep recession in the first half of 2020, with gross domestic product shrinking by 1.4% in 2020 as a whole (the economy grew by 1.4% in 2019). |
| It adds: | It adds: |
| Here is our full story on Wetherspoons: | Here is our full story on Wetherspoons: |