Worst fall in UK retail employment since financial crisis as Covid-19 takes toll – as it happened

Jasper Jolly

from on 2020-08-25 13:52 (#57A3X)

Rolling live coverage of business, economics and financial markets as retailers expect accelerating job losses

2.52pm BST

Economists are worried about the UK's economic prospects going into the winter, and hopes of a swift recovery will not have been helped by grim readings from retail employers.

Retailers cut jobs during the year to August at the fastest rate since 2009, with an even sharper decline anticipated for the figures to September, according to a survey of the industry.

2.35pm BST

The administrators for Wirecard, the German payments company whose fall from grace has been truly spectacular, are planning to cut more than half its staff, according to Bloomberg.

Wirecard AG's administrator Michael Jaffe is set to axe more than half of the disgraced company's German employees as he seeks to reduce cash outflows to protect creditors.

The current staff level of 1,500 will fall to somewhere between 500 and 600, including a few hundred voluntary departures, a person familiar with the matter said.

2.09pm BST

The FTSE 100 has dragged back into the red for today, dipping by 0.1% at the time of writing.

Losses are broad-based, with the biggest faller Standard Chartered, down by only 1.7%.

2.06pm BST

Oil prices have gained more ground today, with producers in the Gulf of Mexico braced for storms.

Brent crude oil futures prices have gained 1.4% today, pushing up to near $46 per barrel.

12.51pm BST

The pound has been relatively unmoved over August - hardly a surprise given that many traders take time off and big corporate transactions also quieten down - but today there is a bit of life: it's up by 0.6% against the US dollar at $1.3137.

Investors appear to be ignoring the fairly grim reading from the CBI's distributive trades survey (or have already priced it in), and the dollar has also slipped slightly following positive trade talks between China and the US, which boosted risk appetite.

GBP positioning is a good indication of how investors are currently keeping a highly complacent approach to the Brexit story. While the collapse of Brexit negotiations late last week will only be mirrored in next week's CFTC positioning report - and we may see the rebuild of some GBP shorts - sterling's positioning is still far from the levels it hovered around when markets were pricing in a no-deal Brexit.

In our view, this continues to highlight how GBP is underpricing the risk of a no-deal outcome of current UK-EU trade negotiations, which in turn flags a non-negligible risk of more stress being built into sterling in the coming weeks.

12.01pm BST

A British music tech startup has struck a surprise $70m deal to buy Napster, one of the pioneers of the music streaming revolution.

11.48am BST

It looks like worse is to come for UK retail employees, according to the CBI's lead economist.

Probably the most stark result of our August #retail survey - fastest pace of job cuts since 2009. Chimes with multiple media reports of retailers cutting jobs, amid challenging trading conditions (also highlighted by the survey). On the jobs front, looks like worse is to come... https://t.co/xMVvikYhhK

Marks & Spencer - 7,000 jobs
18 August: Food, clothing and homewares retailer cuts jobs in central support centre, regional management and stores.

Our latest Distributive Trades Survey shows that retail sales volumes fell slightly in the year to August, after stabilising last month. However, the decline was not as severe as that seen during the early stages of lockdown in April and May #DTS https://t.co/46qyhBZAsD pic.twitter.com/URjwGiGVcZ

#CBI distributive trades survey unexpectedly indicates a loss of momentum in #UK #retail sales in August and sharp loss of jobs in sector. https://t.co/7sg5IJeRNA

11.36am BST

Some more data from the CBI distributive trades survey: retail sales fell slightly in the year to August, and a sharper fall is expected next month, adding to the concerns about the UK's economic recovery.

On balance 6% of retailers reported a fall in sales in the year to August, compared with a 4% positive balance in July, the CBI said. The expectation for the next month is significantly worse, with a balance of 17% of retailers expecting a decline.

11.10am BST

Retail employment fell at the fastest rate since February 2009 in the year to August, with an even sharper decline anticipated in the year to September as the pandemic prompts a wave of redundancies, according to a survey of major retailers.

A negative balance of 45% of 63 large retailers said employment had declined, a severe deterioration from the 20% in May, according to the Confederation of British Industry (CBI).

The furlough scheme has proved effective at insulating workers and businesses in some of the worst-hit sectors during the pandemic, but these findings reinforce fears that many job losses have been delayed rather that avoided.

Indeed, the latest survey shows that trading conditions for the retail sector remain tough, even against the backdrop of business slowly returning. Firms will be wary of deteriorating household incomes and the risk of further local lockdowns potentially hitting them in the pocket for a second time.

10.39am BST

So how much will Ant Group be worth?

The company was started by Alibaba founder Jack Ma and has a dominant position in China's financial services industry.

ANT GROUP SAID TO BE SEEKING MARKET VALUATION ABOVE $200B, SOURCES SAY https://t.co/hDj6myl0Sh

10.22am BST

Ant Group, Alibaba's fintech arm and China's dominant mobile payments firm, has filed for a dual stock market listing in Hong Kong and on Shanghai's Nasdaq-style STAR Market.

The initial public offering could raise as much as $30bn (23bn) which would make it the largest ever, Reuters reported.

JUST IN: First look at Ant Group's financials ahead of its massive IPO. For the 6 months ended June 30:

REVENUE: 72.53 billion RMB ($10.5 billion), up 38% yoy

PROFIT: 21.92 billion RMB ($3.1 billion), up 1,058% yoy pic.twitter.com/XHRo20KdTv

10.14am BST

The early stock market bounce from earlier appears to be fading somewhat: the FTSE 100 is only up by 0.1% at mid-morning at 6,111 points.

Germany's Dax is performing better, up 0.6% after economic indicators suggested that a recovery is underway - albeit a fragile one.

10.10am BST

Consumers spending more on their homes compared with other sectors, and pent up demand following lockdown have helped push homeware retailer DFS Furniture's trading beyond the firm's expectations.

10.06am BST

More info on that AstraZeneca trial: the pharmaceutical group has started a clinical trial of a drug to help prevent and treat Covid-19, with the first volunteers already receiving doses.

9.59am BST

Newsflash: The Co-operative Bank is set to cut 350 jobs and cut 18 branches.

Our people have shown great dedication and commitment to our customers over the past few months, so we are very sorry to announce this news today. Unfortunately, we're not immune to the impact of recent events, with the historically low base rate affecting the income of all banks and a period of prolonged economic uncertainty ahead, which means it's important we reduce costs and have the right-sized operating model in place for the future.

At the same time, we are responding to the continuing shift of more and more customers choosing to bank online, with lower levels of transactions in branches, a trend which has been increasing for some time, across the banking sector and more broadly.

Breaking: The Cooperative Bank is the latest lender to announce job cuts, with plans to slash 350 roles and shut 18 branches. That's about 11% of their 3,175 staff

It's blaming low interest rates, economic uncertainty and the shift to digital banking

9.44am BST

We knew that a recovery from the April nadir was coming, but economists are intently studying early indicators for signs of how fast activity will come back.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said Ifo's business climate indicator is slightly less upbeat" than the headline improvement suggested. He said:

The main lift to the headline increase came from the current assessment gauge, rising to 87.9 from 84.5 in July, while the rebound in the expectations index appears to be petering out. [...]

As with the PMIs, however, the key test in the next few months will be whether it stabilises at its current level, having already rebounded significantly. If it does, it will indicate the recovery is ongoing.

9.34am BST

A back-of-the-envelope calculation suggests a 7% bounceback would leave the German economy 3.4% smaller than it was in the first quarter of the year by the end of the third quarter.

And remember, German's economy was already relatively weak even before the pandemic, flirting with recession in recent years. Here is quarter-on-quarter GDP since the third quarter of 2017.

9.24am BST

Here's a handy graph showing that V shape" for which everyone is hoping.

German Business Morale Ifo surprised by the upside especially after disappointing PMI: Ifo business rose to from 90.4 in Jul to 92.6 in Aug vs 92.1 expected. Current Assessment Component beat forecasts w/87.9 vs 86.2, while Expectations Component at 97.5 lower than expected 98. pic.twitter.com/2EHuoDqdv3

9.11am BST

The German business climate improved in August, according to the closely followed Ifo index.

The index rose from a reading of 90.5 in July to 92.6 in August, the research institute said. That was higher than the 92.2 reading expected by economists.

8.57am BST

Good news for Devon: Infrastrata, the company that stepped in to save Belfast's Harland & Wolff shipyard, has bought the historic Appledore shipyard on the river Torridge.

8.47am BST

Finablr, the embattled payments group, has delayed its accounts amid a probe into potential wrongdoing.

The company had announced on 23 June that it had changed its accounting reference date to 28 February, giving it until 28 August to publish its financial statements.

The company is currently unable to adhere to this deadline and will provide an update on the anticipated publication date when it is able to do so.

8.28am BST

Germany's recession was not quite as deep as previously thought, according to revised GDP figures, but it was still the worst in the history of the reunified country.

Output plunged by 9.7% quarter-on-quarter, compared to the 10.1% reading previously reported by Germany's federal statistics office.

German second quarter
GDP -9.7%
Consumer spending -10.9%
Investments -7.9%
Exports over -20%
H1 deficit of 3.2%

"Economy in a deep slump from which it will only slowly recover"#Germany #GDP #recession https://t.co/w4BJJMZmkK pic.twitter.com/PZUabUeZ6S

The contraction of the economy was somewhat milder than in the first estimate, illustrating how difficult it currently is to capture the lockdown-driven swings in any economy with traditional macro models. [...] The only good thing about all this data is that it provides a final glance in the rearview mirror.

Looking ahead, it does not take a rocket scientist to predict that the economy will have one of its best quarterly performances ever in the third quarter.

8.07am BST

Good morning, and welcome to our live coverage of business, economics and financial markets.

Investors appear to have taken heart from an easing in US-China trade tensions, after officials from both sides reaffirmed their commitment to reaching a deal.

Details scant for now, but tone of US/China Phase One trade deal discussion was clearly constructive, global equities clearly responding to the news positively pic.twitter.com/EKitO5s6zq

Monday night's theme was officially the land of promise', but the collection of speeches offered an almost apocalyptic vision of what's at stake in November's elections

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