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Bank of England's Haldane sees V-shaped recovery, but fears 1980s-level jobless surge - business live Bank of England's Haldane sees V-shaped recovery, but fears 1980s-level jobless surge - business live
(32 minutes later)
Rolling coverage of the latest economic and financial news, as BoE chief economist says Covid-19 recovery is underwayRolling coverage of the latest economic and financial news, as BoE chief economist says Covid-19 recovery is underway
In a blow to film fans, the UK’s largest chain of cinemas has pushed back its scheduled reopening date by three weeks.
Cineworld is delaying its reopening until the end of July, rather than the 10th, due to delays in getting hold of new titles.
My colleague Catherine Shoard explains that cinema bosses are under pressure to ensure patrons comply with rules to prevent the spread of Covid-19:
Andy Haldane’s comments are timely - a few minutes ago, Boris Johnson announced plans to boost infrastructure spending to help “level up” the UK and limit the damage caused by the recession.Andy Haldane’s comments are timely - a few minutes ago, Boris Johnson announced plans to boost infrastructure spending to help “level up” the UK and limit the damage caused by the recession.
An upbeat-sounding Johnson pledged £5bn for infrastructure spending, plus reforms to the planning rules to speed up home-building an extensions, and to help builders convert commercial properties to homes.An upbeat-sounding Johnson pledged £5bn for infrastructure spending, plus reforms to the planning rules to speed up home-building an extensions, and to help builders convert commercial properties to homes.
The PM said:The PM said:
Johnson has suggested he’s channelling the spirit of Franklin D. Roosevelt -- however, today’s plan is more like Small Potatoes than New Deal. These days, £5bn simply isn’t a lot of money. It’s about 0.2% of the UK economy.Johnson has suggested he’s channelling the spirit of Franklin D. Roosevelt -- however, today’s plan is more like Small Potatoes than New Deal. These days, £5bn simply isn’t a lot of money. It’s about 0.2% of the UK economy.
As Alan Custis, Head of UK Equities at Lazard Asset Management, puts it:As Alan Custis, Head of UK Equities at Lazard Asset Management, puts it:
Andy Haldane has also warned that the Covid-19 pandemic could drive up Britain’s ‘natural rate of unemployment’.Andy Haldane has also warned that the Covid-19 pandemic could drive up Britain’s ‘natural rate of unemployment’.
Reuters has the details:Reuters has the details:
CNBC’s Sam Meredith has been number-crunching, and found that more than a dozen major stock markets are still down over 10% this year, despite the surge in stocks since the end of March.CNBC’s Sam Meredith has been number-crunching, and found that more than a dozen major stock markets are still down over 10% this year, despite the surge in stocks since the end of March.
Greece, Spain and Russia are deepest into correction territory, while the UK market is still down almost a fifth (despite clawing back 10% in the last quarter).Greece, Spain and Russia are deepest into correction territory, while the UK market is still down almost a fifth (despite clawing back 10% in the last quarter).
He writes:He writes:
You can read Andy Haldane’s speech yourself, here. Haldane-watchers will be disappointed that there are no references to cricket, or dogs chasing frisbees.You can read Andy Haldane’s speech yourself, here. Haldane-watchers will be disappointed that there are no references to cricket, or dogs chasing frisbees.
Here’s some early reaction, first from economist John Hawksworth:Here’s some early reaction, first from economist John Hawksworth:
Sam Tombs of Pantheon Economics agrees that there are plenty of risk ahead, which could force the Bank to act again.Sam Tombs of Pantheon Economics agrees that there are plenty of risk ahead, which could force the Bank to act again.
Here’s Andy Bruce of Reuters:Here’s Andy Bruce of Reuters:
And Andy Verity of the BBC:And Andy Verity of the BBC:
Haldane’s webinar also shows how the Bank of England has dramatically expanded its balance sheet, to pump money into the UK economy and cushion the recession.Haldane’s webinar also shows how the Bank of England has dramatically expanded its balance sheet, to pump money into the UK economy and cushion the recession.
He reminds us that the Bank’s monetary policy committee boosted its stock of asset purchases by £200bn in March, when it also cut interest rates from 0.75% to 0.1%. It added another £100bn of bond-buying this month (which Haldane opposed).He reminds us that the Bank’s monetary policy committee boosted its stock of asset purchases by £200bn in March, when it also cut interest rates from 0.75% to 0.1%. It added another £100bn of bond-buying this month (which Haldane opposed).
Add in other measures, and the Bank’s balance sheet is on track to hit 45% of (2019) UK GDP by the year-end, more than double its previous high-water mark, Haldane says, adding:Add in other measures, and the Bank’s balance sheet is on track to hit 45% of (2019) UK GDP by the year-end, more than double its previous high-water mark, Haldane says, adding:
Andy Haldane has also revealed that the Bank of England’s policymakers haven’t discussed the idea that it might start unwinding its asset-purchase scheme before raising interest rates.Andy Haldane has also revealed that the Bank of England’s policymakers haven’t discussed the idea that it might start unwinding its asset-purchase scheme before raising interest rates.
Last week, BoE governor Andrew Bailey suggested that it made sense to sell some of the government bonds bought under the QE scheme, before hiking borrowing costs. That would be a reversal of his predecessor, Mark Carney’s view.Last week, BoE governor Andrew Bailey suggested that it made sense to sell some of the government bonds bought under the QE scheme, before hiking borrowing costs. That would be a reversal of his predecessor, Mark Carney’s view.
But it sounds like there’s nothing official yet (and I guess any decision is someway off...)But it sounds like there’s nothing official yet (and I guess any decision is someway off...)
The Bank of England’s chief economist has warned that Britain must avoid a return to the mass unemployment that scarred the country during the Thatcher government.The Bank of England’s chief economist has warned that Britain must avoid a return to the mass unemployment that scarred the country during the Thatcher government.
In a webinar this morning, Andy Haldane argues that the UK economy is now recovering from the deep economic shock caused by Covid-19.In a webinar this morning, Andy Haldane argues that the UK economy is now recovering from the deep economic shock caused by Covid-19.
Haldane cites various ‘fast-track’ indicators, such as payment data, energy demand, traffic flow, high street footfall, and consumer spending:Haldane cites various ‘fast-track’ indicators, such as payment data, energy demand, traffic flow, high street footfall, and consumer spending:
He also points to the monthly Purchasing Manager Index surveys which show a pick-up in growth in China (as we saw this morning).He also points to the monthly Purchasing Manager Index surveys which show a pick-up in growth in China (as we saw this morning).
This, Haldane argues, suggests we actually are experiencing a V-shaped recovery, after the worst four-month slump on record from January-April:This, Haldane argues, suggests we actually are experiencing a V-shaped recovery, after the worst four-month slump on record from January-April:
But he also cites the risk of a surge in unemployment, if firms decide to lay staff off when the government’s furlough scheme ends.But he also cites the risk of a surge in unemployment, if firms decide to lay staff off when the government’s furlough scheme ends.
Haldane (the only Bank policymaker not to vote to extend its stimulus programme this month) says:Haldane (the only Bank policymaker not to vote to extend its stimulus programme this month) says:
He also points out that 9 million workers are currently furloughed, 2.5m self-employed people are receiving support, and eight million are working fewer hours than usual.He also points out that 9 million workers are currently furloughed, 2.5m self-employed people are receiving support, and eight million are working fewer hours than usual.
The trio of government-backed loan schemes led by commercial banks – covering bounce back loans, CBILS and the scheme for larger businesses known as CLBILS - hit a milestone, with over 1 million firms granted emergency funding so far.The trio of government-backed loan schemes led by commercial banks – covering bounce back loans, CBILS and the scheme for larger businesses known as CLBILS - hit a milestone, with over 1 million firms granted emergency funding so far.
Government data released this morning showed that banks had approved over 1 million loans worth £42.9bn as of 28 June. Over 1.3 million businesses have applied. More details here.Government data released this morning showed that banks had approved over 1 million loans worth £42.9bn as of 28 June. Over 1.3 million businesses have applied. More details here.
The recovery in the stock market is partly thanks to stimulus measures such as the UK government’s Job Retention Scheme - without which many firms would have slashed their workforces.The recovery in the stock market is partly thanks to stimulus measures such as the UK government’s Job Retention Scheme - without which many firms would have slashed their workforces.
New figures show that this scheme is now supporting 9.3m workers, who are currently furloughed on 80% of their wages (up to £2,500 per month). That’s an increase of around 100,000 in the last week, suggesting that some firms are still struggling even as the economy reopens.New figures show that this scheme is now supporting 9.3m workers, who are currently furloughed on 80% of their wages (up to £2,500 per month). That’s an increase of around 100,000 in the last week, suggesting that some firms are still struggling even as the economy reopens.
The total cost of the furlough scheme has now reached £25.5bn. It runs until the end of October, but today is the last day to add new workers to the list. The scheme is also being ‘tapered’ from August, with employees picking up more of the wage bill.The total cost of the furlough scheme has now reached £25.5bn. It runs until the end of October, but today is the last day to add new workers to the list. The scheme is also being ‘tapered’ from August, with employees picking up more of the wage bill.
Air cargo demand remained extremely weak in May, according to the latest data from industry body IATA.Air cargo demand remained extremely weak in May, according to the latest data from industry body IATA.
IATA reports that cargo tonne-kilometres (a measures of how much stuff was flown around the world) slumped by 20.3% last month compared to the previous year.IATA reports that cargo tonne-kilometres (a measures of how much stuff was flown around the world) slumped by 20.3% last month compared to the previous year.
Global capacity contracted by 34.7% during the month, as many aeroplanes remained grounded during the pandemic.Global capacity contracted by 34.7% during the month, as many aeroplanes remained grounded during the pandemic.
IATA says that activity appears to be picking up from Aprils lows, as some economies eased out of their lockdowns. However, it’s still hard to predict the length, or severity, of the recession.IATA says that activity appears to be picking up from Aprils lows, as some economies eased out of their lockdowns. However, it’s still hard to predict the length, or severity, of the recession.
The last six months have been pretty grim for savers.The last six months have been pretty grim for savers.
The emergency cut in UK interest rates, to just 0.1%, has prompted banks and building societies to slash their own rates - meaning income on savings is extremely thin.The emergency cut in UK interest rates, to just 0.1%, has prompted banks and building societies to slash their own rates - meaning income on savings is extremely thin.
Comparison site Moneyfacts.co.uk has calculated that variable rate savings accounts have dropped by the largest amount seen over the first six months of any year since 2009.Comparison site Moneyfacts.co.uk has calculated that variable rate savings accounts have dropped by the largest amount seen over the first six months of any year since 2009.
Rachel Springall, finance expert at Moneyfacts, says savers will feel “frustrated and disappointed”, as their incomes are hit by the Coronavirus pandemic and base rate cuts.Rachel Springall, finance expert at Moneyfacts, says savers will feel “frustrated and disappointed”, as their incomes are hit by the Coronavirus pandemic and base rate cuts.
Just in: the eurozone has crept away from deflation, as consumers are hit by rising food prices.Just in: the eurozone has crept away from deflation, as consumers are hit by rising food prices.
Prices across the single currency region rose by 0.3% per year in June, up from just 0.1% y/y in the previous month. Food, drink and alcohol price continued to rise steeply, while energy prices remained much lower than a year ago.Prices across the single currency region rose by 0.3% per year in June, up from just 0.1% y/y in the previous month. Food, drink and alcohol price continued to rise steeply, while energy prices remained much lower than a year ago.
Statistics body Eurostat says:Statistics body Eurostat says: