Markets rise ahead of UK budget as UK services sector stabilises – business live

Rolling coverage of the latest economic and financial news

• Latest: UK economy stabilised in February, PMIs show
• FTSE 100 jumps 1% ahead of Budget
• Markets boosted by stimulus hopes
• But China's services companies see slower growth

12.05pm GMT

It's nearly time for the Budget speech... and we'll be live-blogging it all here:

Related: Budget 2021 live: Johnson faces Starmer at PMQs before Sunak unveils measures to protect jobs

11.26am GMT

Back in the City, shares in airlines, hospitality firms, housebuilders and banks are continuing to rally as traders anticipate fresh help for the economy in the Budget.

British Airways' parent company, IAG, is up 5%, followed by Whitbread (4.8%) which runs the Premier Inn hotel chain.

With business lifelines expected to be extended and a dose of extra support expected to be administered to ailing shops, pubs and restaurants, there has been a buoyant start for hospitality and landlords in early trading in London. Airlines, who have relied heavily on the furlough scheme are also higher given the likelihood it will be extended into the Autumn.

Expectations that the VAT cut to 5% will linger for longer for the hospitality industry helped boost Whitbread, which is reliant on bookings in its hotels and Thyme restaurants for its Premier Inn chain.

11.06am GMT

The imminent extension of the UK's furlough scheme until September is being generally welcomed.

Jane Fielding, head of employment at law firm Gowling WLG, points out that it doesn't specifically target the industries most hit by the lockdowns, but will give wider breathing room':

This extension of the scheme will give employers further time to plan in the hope and expectation that the impact of the vaccine programme and subsequent lockdown easing will allow them to trade more normally.

An alternative approach would have been for the government to target the support to specific industries hardest hit by the pandemic, but clearly this wider support will give more breathing space not just to those industries but all employers and their staff continuing to face challenges.

Employers should now be in a position where they can properly plan and prepare for the coming months, hopefully removing the need for any knee-jerk reactions. It will be interesting to see whether the Chancellor is looking to provide targeted support for those sectors that continue to be restricted from operating, enabling a more nuanced approach than the current scheme

As employers look to welcome staff back in the coming months they will also need clarity around whether the funding for Covid-19 workplace testing, currently set to end on 31 March 2021, will be extended and if this cost needs to be factored in to their projections."

10.41am GMT

UK-listed insurer group Hiscox has said it regretted the uncertainty and anguish" suffered by customers who faced disputes when claiming business interruption insurance to cover losses suffered in the pandemic.

My colleague Julia Kollewe explains:

Hundreds of thousands of small businesses that were forced to close during the pandemic won a historic victory" in January when the UK's supreme court threw out the appeals from six insurance companies and largely supported the arguments made by the Financial Conduct Authority in a test case and a policyholder action group. Firms could receive insurance payouts of more than 1bn collectively.

Hiscox said it had begun paying claims and hired more claims handlers to speed up the process, with about one in three of its 34,000 UK business interruption polices paying out.

Related: Insurer Hiscox hit by loss after paying out for Covid-related claims

10.23am GMT

Having stabilised in February, the UK economy seems certain to contract this quarter as the lockdown continues to hit growth.

But the fast vaccine rollout should spur a recovery, argues Matthew Ryan, senior market analyst at UK fintech Ebury:

Despite a modest downward revision to the preliminary estimate, this morning's services PMI remained at a four-month high 49.5 in February, having rebounded strongly from the dismal print in January. While renewed confidence in the sector is undoubtedly encouraging, the economy remains firmly on course to enter into another sharp contraction in Q1, with the UK still stuck in one of the strictest lockdowns in Europe.

Investors are, however, focusing on the positives, namely the UK's extraordinarily rapid vaccine rollout. This has raised hopes of a return to near normalcy by mid-2021 and lifted the pound to the top of the G10 FX performance tracker so far this year. It is for this reason that we think the UK economy could be set to outperform most of its European counterparts during the remainder of 2021."

9.47am GMT

The UK economy stabilised last month, after a sharp fall in activity in January as the latest lockdown restrictions hit companies.

That's according to data firm IHS Markit's latest PMI survey, which shows that private sector activity only dipped marginally in February after a slump in January.

A degree of stability returned to the UK service sector after the sharp downturn in output at the start of 2021. Restrictions on travel, leisure and hospitality due to the national lockdown continued to curtail overall activity, but there were some pockets of growth in technology and business services.

New business volumes fell only slightly during February, with the rate of contraction easing considerably from that seen at the start of the third national lockdown in January. Subdued demand was mainly attributed to a lack of sales opportunities and hesitancy among clients due to the pandemic. Survey respondents also cited Brexit-related difficulties as a factor holding back sales to customers in the European Union.

Latest data indicated that new work from abroad continued to fall sharply. While the rate of decline slowed since January, it remained sharper than that seen for total new orders. International travel restrictions were the most commonly cited reason for lower exports, followed by regulatory and supply chain issues that had arisen since Brexit.

UK services economy stabilised in February as output and employment fell at much slower rates and pockets of growth were seen in sectors such as technology and business services. Read more: https://t.co/iKorlC33Di pic.twitter.com/dKaeoXVyJo

9.33am GMT

Covid-19 lockdowns are dragging the eurozone into a double-dip recession, according to the latest survey of European companies.

Eurozone service sector firms have reported another fall in activity, with new orders continuing to drop last month.

A fourth successive monthly drop in business activity puts the eurozone economy on course for a double-dip recession, though an easing in the rate of decline underscores how the latest downturn appears far less severe than the initial hit from the pandemic last year.

While many hospitality-based companies in the service sector continue to struggle due to COVID-19 related restrictions, manufacturing is faring well and alleviating the overall economic impact of lockdown measures.

Eurozone PMI data pointed to a further decline in private sector activity during February. Service sector weakness more than offset strong manufacturing growth. Germany and Italy were the only two covered countries to see an increase in output. Read more: https://t.co/CXmGS09Z58 pic.twitter.com/pQfJ5SZfDX

9.18am GMT

Robert Alster, CIO at wealth manager Close Brothers Asset Management, says Rishi Sunak must tread carefully' as he considers tax changes:

We're not expecting too many surprises when the Chancellor takes to his feet to deliver one of the most widely leaked budgets in history. The key focus will clearly be continued support for the economy, as we navigate our way out of lockdown. Businesses will be listening closely for the approach to business rates and VAT cuts in the coming months.

The question is how Rishi Sunak will balance the need for short term support while addressing the long term problem of the deficit. In recent weeks, speculation about tax rises has been rife. Specifically, a reform of capital gains tax, increasing corporation tax and potential stealth' taxes in the form of income tax band freezes.

Can't wait to find out what's going to be in #Budget2021!

(Aside from 5 billion restart grant scheme, 400M budget boost for culture and arts, 300m sports recovery package, 150m Community Ownership Fund, 520m Help to Grow' for SMEs, Thalidomide survivor funding...

...10m for veterans' mental health, 1.65 billion for COVID vaccine rollout, sovereign green savings bond, Lord Hill report on reforms to London stock market listings per Sky News, Immigration reforms - fast-track visas for certain sectors, 5 billion restart grant scheme...

...375 million Future Fund: Breakthrough', 12 billion capital & 10 billion of guarantees for UK infrastructure investment bank, 100 million crackdown on COVID fraudsters, new mortgage guarantee scheme, 15 billion extension to furlough, other support schemes...

...income tax freezing of 12,500 / 50,000 thresholds, corporation tax increase plan, 3-month extension to Stamp Duty Holiday, SEISS grants of up to 7.5k)

Apart from those things, should be a total surprise!

9.08am GMT

The publisher of the Daily Mail has acquired the renowned weekly science and technology magazine New Scientist in a 70m cash deal - the latest round of consolidation in the publishing sector.

Related: Daily Mail owner buys New Scientist magazine in 70m deal

9.07am GMT

Rishi Sunak will pave the way for sweeping reforms of the stock market to attract more fast-growing companies to list in the UK, amid the growing risk to London's status as a leading financial centre after Brexit.

In a development to coincide with the budget on Wednesday, the chancellor will publish the findings of a landmark review into UK listings rules to boost Britain's attractiveness as a place for firms to grow and be taken public.

Related: Sunak to reform stock market to shore up City of London's position

Churchill Capital IV Corp has provided the most vivid example of the pitfalls. Its shares had risen as much as 548% from its IPO, for a market valuation of almost $17 billion, following a Reuters report last month that it was nearing a deal to merge with luxury electric vehicle startup Lucid Motors at a roughly $12 billion valuation.

But the shares dropped 42% last week, wiping out over $8 billion in market value, after the deal was announced with a last-minute private investment that diluted stock market investors.

8.56am GMT

The domestically-focused FTSE 250 index, which contains more UK companies than the FTSE 100, has also gained over 1% this morning.

Software group Micro Focus is leading the way, up 15% after announcing an agreement with Amazon Web Services to help customers migrate their mainframe applications and workloads to the cloud.

8.34am GMT

The London stock market has made a strong start to Budget Day, with shares jumping in early trading.

The FTSE 100 index has gained 76 points, or 1.15%, to 6690 points in early trading, as it continues to recover from last week's selloff.

Industries like leisure, hospitality and aviation were given some much needed help by the year-long relief on business rates, but extra help is needed. It would not come as a surprise if those sectors saw further relief seeing as activity levels are unlikely to return to normal until the summer. Airlines, pub chains, hotel groups, leisure groups, event companies and transport firms have arguably been the hardest hit by the health crisis, so they might be in for special treatment as they won't be out of the woods for a long time.

As a reaction to the pandemic, VAT was slashed from 20% to 5% but that is due to come to an end later this month. Mr Sunak could well maintain a low rate for longer as a way of encouraging spending, so hospitality stocks could be in for a lift.

8.18am GMT

Over in China, services sector growth has slowed to a ten-month low as the pandemic continued to hit demand.

Service providers were generally optimistic about the economic recovery, and were especially confident that both the domestic and overseas epidemics would fade."

China Caixin services PMI extend decline for the third consecutive month, to the lowest since May 2020, as the growth of supply and demand in the service sector continued to slow down, employment situation deteriorated and inflationary pressure increased.#PMI #services pic.twitter.com/4FqxDCphc5

8.04am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

More than a year into the Covid-19 pandemic, the prospect of more government spending continues to support the financial markets.

European Opening Calls:#FTSE 6668 +0.81%#DAX 14117 +0.55%#CAC 5846 +0.62%#AEX 667 +0.52%#MIB 23230 +0.63%#IBEX 8408 +0.63%#OMX 2079 +0.57%#STOXX 3728 +0.55%#IGOpeningCall

Related: UK budget to extend furlough until end of September

Related: From forecasts to furlough: what to expect in the budget

One reason late nights are expected and that will make the job of Democratic leadership more challenging is that senators are walking into a legislative minefield later this week since the relief bill is being considered under budget reconciliation rules that allow a free-flowing amendment process, meaning senators can force votes on as many amendments as they like.

That means if two Democrats break ranks, they could amend the bill with the backing of 49 Republicans.