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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 bell has rung on Wall Street and markets have opened higher - but the gains are pretty limited so far. | |
| Dow Jones: +0.8% | |
| Nasdaq: +1.6% | |
| 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: |
| My colleague Jillian Ambrose reports: | My colleague Jillian Ambrose reports: |
| US President Donald Trump has set out plans to stem the flood of oil into the global market by offering to spend $3bn buying up US oil to hold in the US government’s ‘strategic petroleum reserves’. Trump said he might also be willing to meddle in the oil price war between Russia and Saudi Arabia “at an appropriate time”. | US President Donald Trump has set out plans to stem the flood of oil into the global market by offering to spend $3bn buying up US oil to hold in the US government’s ‘strategic petroleum reserves’. Trump said he might also be willing to meddle in the oil price war between Russia and Saudi Arabia “at an appropriate time”. |
| Trump’s promised barrel buying spree, a tactic last used by the US in the 1970s, has already offered some respite to global oil markets after one of its steepest declines in history. The US oil price climbed from lows of just over $20 a barrel earlier this week to $27 a barrel, while the international benchmark - Brent crude - climbed from 17 years lows of $25 a barrel back up to $30 a barrel. | Trump’s promised barrel buying spree, a tactic last used by the US in the 1970s, has already offered some respite to global oil markets after one of its steepest declines in history. The US oil price climbed from lows of just over $20 a barrel earlier this week to $27 a barrel, while the international benchmark - Brent crude - climbed from 17 years lows of $25 a barrel back up to $30 a barrel. |
| However, analysts warn that support from the US, and other economic interventions from governments around the world, will not be enough to repair the growing imbalance in the markets. | However, analysts warn that support from the US, and other economic interventions from governments around the world, will not be enough to repair the growing imbalance in the markets. |
| Goldman Sachs said that the economic slowdown caused by the coronavirus could cut the world’s demand for oil by around 8 million barrels of oil a day meaning the US actions would be “much too small to offset the impact on the market over the longer-term”. | Goldman Sachs said that the economic slowdown caused by the coronavirus could cut the world’s demand for oil by around 8 million barrels of oil a day meaning the US actions would be “much too small to offset the impact on the market over the longer-term”. |
| US markets are expected to rise when Wall Street opens, with futures showing gains: | US markets are expected to rise when Wall Street opens, with futures showing gains: |
| Dow Jones: +3.7% | Dow Jones: +3.7% |
| S&P 500: +3.2% | S&P 500: +3.2% |
| Nasdaq: 4.6% | Nasdaq: 4.6% |
| Additional measures from the US Federal Reserve propped up Wall Street on Thursday and expectations that the central bank will do more is helping sentiment. | Additional measures from the US Federal Reserve propped up Wall Street on Thursday and expectations that the central bank will do more is helping sentiment. |
| US markets - like those in Europe - have been hammered over the past month as the escalating coronavirus crisis spooks investors. | US markets - like those in Europe - have been hammered over the past month as the escalating coronavirus crisis spooks investors. |
| The S&P 500 has fallen by nearly 30%, or more than $8tn, since hitting a record high last month. | The S&P 500 has fallen by nearly 30%, or more than $8tn, since hitting a record high last month. |
| Tesco has outlined some of the measures it is taking to help its staff and suppliers during the coronavirus crisis. | Tesco has outlined some of the measures it is taking to help its staff and suppliers during the coronavirus crisis. |
| The UK’s largest supermarket chain is closing its cafes and asking vulnerable staff including those pregnant and over 70 to take 12 weeks of paid holiday in its latest measures to support trading during the coronavirus outbreak. | The UK’s largest supermarket chain is closing its cafes and asking vulnerable staff including those pregnant and over 70 to take 12 weeks of paid holiday in its latest measures to support trading during the coronavirus outbreak. |
| The retailer is also setting aside the first hour of trading on Sundays at its large stores for NHS workers, asking them to bring ID with them. For the next three months, the retailer’s smaller suppliers will also now be paid in five days rather than a fortnight in a bid to help them with cash flow. | The retailer is also setting aside the first hour of trading on Sundays at its large stores for NHS workers, asking them to bring ID with them. For the next three months, the retailer’s smaller suppliers will also now be paid in five days rather than a fortnight in a bid to help them with cash flow. |
| Those staff who are sick or in self-isolation will get full pay and Tesco said that staff needing to take time out to care for children as a result of school closures would be able to use a variety of different options to cover leave including paid holiday, emergency leave and new unpaid school closure leave. | Those staff who are sick or in self-isolation will get full pay and Tesco said that staff needing to take time out to care for children as a result of school closures would be able to use a variety of different options to cover leave including paid holiday, emergency leave and new unpaid school closure leave. |
| M&S and Wetherspoons are not the only companies to issue statements today on Covid-19. | M&S and Wetherspoons are not the only companies to issue statements today on Covid-19. |
| My colleague Sarah Butler reports on Just Eat and Wickes owner Travis Perkins: | My colleague Sarah Butler reports on Just Eat and Wickes owner Travis Perkins: |
| Food delivery firm Just Eat is launching a £10m-plus package of support for restaurants over the next 30 days. The company said it would be handing back a third of all commission paid by independent restaurants, removing commission on orders which customers collect themselves from restaurants and waiving sign-up fees for new restaurants. It will also begin paying restaurants weekly and relaxing any restrictions on independent restaurants working with other delivery partners Andrew Kenny, UK Managing Director at Just Eat said: “These are some of the most challenging times the restaurants we work with have ever been through. We want to show our support and help them to keep their doors open.” | Food delivery firm Just Eat is launching a £10m-plus package of support for restaurants over the next 30 days. The company said it would be handing back a third of all commission paid by independent restaurants, removing commission on orders which customers collect themselves from restaurants and waiving sign-up fees for new restaurants. It will also begin paying restaurants weekly and relaxing any restrictions on independent restaurants working with other delivery partners Andrew Kenny, UK Managing Director at Just Eat said: “These are some of the most challenging times the restaurants we work with have ever been through. We want to show our support and help them to keep their doors open.” |
| Travis Perkins has suspended its dividend to shareholders and paused the demerger of its Wickes DIY chain as it said it expected the trading environment to change “quickly and materially” in the coming weeks. The building supplies group said sales rose by 2.4% in the year to date and it had not see a significant sales impact from the coronavirus so far but was taking “prudent decisions in order to successfully navigate this period of turmoil.” It has withdrawn market guidance on profits for the year. | Travis Perkins has suspended its dividend to shareholders and paused the demerger of its Wickes DIY chain as it said it expected the trading environment to change “quickly and materially” in the coming weeks. The building supplies group said sales rose by 2.4% in the year to date and it had not see a significant sales impact from the coronavirus so far but was taking “prudent decisions in order to successfully navigate this period of turmoil.” It has withdrawn market guidance on profits for the year. |
| David Madden, analyst at CMC Markets, says the rebound in European markets is a “welcome change of pace” after a period of heavy selling: | David Madden, analyst at CMC Markets, says the rebound in European markets is a “welcome change of pace” after a period of heavy selling: |
| The pound’s revival means that it has climbed above 1985 lows agains the dollar. | The pound’s revival means that it has climbed above 1985 lows agains the dollar. |
| Kenneth Broux, currency strategist at Societe Generale, says the intervention from the Bank of England on Thursday was well-timed: | Kenneth Broux, currency strategist at Societe Generale, says the intervention from the Bank of England on Thursday was well-timed: |
| The Competition and Markets Authority has launched a Covid-19 taskforce to tackle the excessive prices being charged by some people for in-demand products such as hand sanitiser. | The Competition and Markets Authority has launched a Covid-19 taskforce to tackle the excessive prices being charged by some people for in-demand products such as hand sanitiser. |
| It will identify “harmful sales and pricing practices” as they emerge and “warn firms suspected of exploiting these exceptional circumstances – and people’s vulnerability – through unjustifiable prices or misleading claims.” | It will identify “harmful sales and pricing practices” as they emerge and “warn firms suspected of exploiting these exceptional circumstances – and people’s vulnerability – through unjustifiable prices or misleading claims.” |
| So this is designed to tackle traders who might have bulk bought items such as loo roll with the intention to resell them at a higher price to take advantage of the higher demand. | So this is designed to tackle traders who might have bulk bought items such as loo roll with the intention to resell them at a higher price to take advantage of the higher demand. |
| The CMA has already contacted traders and platforms regarding excessive pricing of hand sanitiser, it said. | The CMA has already contacted traders and platforms regarding excessive pricing of hand sanitiser, it said. |
| Andrea Coscelli, the CMA’s chief executive, said: | Andrea Coscelli, the CMA’s chief executive, said: |
| Responding to suggestions that he should not be issuing pronouncements on how to deal with coronavirus, Wetherspoons boss Tim Martin said he was entitled to make public statements on the outbreak. | Responding to suggestions that he should not be issuing pronouncements on how to deal with coronavirus, Wetherspoons boss Tim Martin said he was entitled to make public statements on the outbreak. |
| “We’re a democracy aren’t we? I’m obviously not an expert, nor am I an economist, but i’ve got a view and that’s all I can say. People can accept it or not. Even if you’re not an epidemiologist you can look at what other countries do and weigh up what’s happened.” | “We’re a democracy aren’t we? I’m obviously not an expert, nor am I an economist, but i’ve got a view and that’s all I can say. People can accept it or not. Even if you’re not an epidemiologist you can look at what other countries do and weigh up what’s happened.” |
| The pub chain has said its 870 UK pubs will stay open but with precautions in place, such as no standing at the bar, frequent surface wipedowns and customers asked to sit far apart from each other where possible. | The pub chain has said its 870 UK pubs will stay open but with precautions in place, such as no standing at the bar, frequent surface wipedowns and customers asked to sit far apart from each other where possible. |
| But Martin warned that a long-term shutdown could be terminal for any pub company. | But Martin warned that a long-term shutdown could be terminal for any pub company. |
| “Even if you’ve got the greatest pub company in the world, you depend on the doors being open. If they shut for long enough the entire hospitality industry, never mind Wetherspoons will be in serious trouble.” | “Even if you’ve got the greatest pub company in the world, you depend on the doors being open. If they shut for long enough the entire hospitality industry, never mind Wetherspoons will be in serious trouble.” |
| JD Wetherspoon has seen a significant change in customer behaviour since the prime minister Boris Johnson advised people to stay away from pubs and restaurants in an attempt to slow the spread of Covid-19. | JD Wetherspoon has seen a significant change in customer behaviour since the prime minister Boris Johnson advised people to stay away from pubs and restaurants in an attempt to slow the spread of Covid-19. |
| The pub group, which operates 874 pubs, said its sales declined 4.5% in the week to Sunday 15 March. | The pub group, which operates 874 pubs, said its sales declined 4.5% in the week to Sunday 15 March. |
| Sales then declined at a “significantly higher rate” after Johnson’s warning on Monday, Wetherspoon said. | Sales then declined at a “significantly higher rate” after Johnson’s warning on Monday, Wetherspoon said. |
| Shares are up 27% this morning at 715p, as investors welcomed the pub chain’s decision to cut its dividend and cut capital spending - measures which it said (when combined with the government’s business rates holiday) would provide sufficient liquidity to “maintain operations at a substantially lower level of sales”. | Shares are up 27% this morning at 715p, as investors welcomed the pub chain’s decision to cut its dividend and cut capital spending - measures which it said (when combined with the government’s business rates holiday) would provide sufficient liquidity to “maintain operations at a substantially lower level of sales”. |
| Jaguar Land Rover and Bentley Motors have become the latest British carmakers to suspend production at their UK factories as the disruption from the coronavirus outbreak spreads. | Jaguar Land Rover and Bentley Motors have become the latest British carmakers to suspend production at their UK factories as the disruption from the coronavirus outbreak spreads. |
| JLR and Bentley both said that production at their plants will not start again until 20 April at least, with the restart dates under constant review. | JLR and Bentley both said that production at their plants will not start again until 20 April at least, with the restart dates under constant review. |
| Almost every major carmaker around Europe has paused production, in response to an expectation of massively reduced demand in all key markets, and the health implications for their workers all factors. | Almost every major carmaker around Europe has paused production, in response to an expectation of massively reduced demand in all key markets, and the health implications for their workers all factors. |
| JLR, which is owned by India’s Tata Motors, is the UK’s largest manufacturer of cars, with 35,500 UK employees. The closure affects its main car assembly sites at Castle Bromwich, Solihull and Halewood, as well as engine manufacturing at Wolverhampton. Non-manufacturing employees will work from home. | JLR, which is owned by India’s Tata Motors, is the UK’s largest manufacturer of cars, with 35,500 UK employees. The closure affects its main car assembly sites at Castle Bromwich, Solihull and Halewood, as well as engine manufacturing at Wolverhampton. Non-manufacturing employees will work from home. |
| Bentley, which is owned by Volkswagen, the world’s largest carmaker, said that some “core operations” will continue in its plant in Crewe, with social distancing measures enforced among its 4,500 employees. | Bentley, which is owned by Volkswagen, the world’s largest carmaker, said that some “core operations” will continue in its plant in Crewe, with social distancing measures enforced among its 4,500 employees. |