More than 4m UK workers furloughed during coronavirus crisis - as it happened

Graeme Wearden and Jasper Jolly

from on 2020-04-27 17:10 (#52Q1A)

Rolling coverage of the latest economic and financial news

6.10pm BST

Millions of British workers have been furloughed during the coroanvirus crisis, with the government expected to pay 80% of the salaries of as much as 6% of the entire population.

Chancellor Rishi Sunak also unveiled more measures to support businesses, with a 100% government-backed "bounce back loan" of up to 50,000 for small businesses - following intense criticism that not enough funding was getting through to businesses.

5.51pm BST

Oil futures prices have fallen steeply again on Monday, with the US benchmark, West Texas Intermediate (WTI), losing 26%.

One barrel of WTI for June delivery will set back traders $12.38. Brent crude, the global benchmark, has fallen by 8% to $19.66.

The United States Oil Fund will exit its position in the front-month June crude oil futures contract and may need to hold more cash to satisfy potential margin requirements, the largest oil-focused US exchange-traded product (ETP) said on Monday.

After avoiding potentially catastrophic losses when May oil futures traded below $0 per barrel for the first time ever last Monday, USO has been scrambling to diversify its holdings into later-dated contracts, from the most heavily traded front-month contract.

5.33pm BST

The 4m people furloughed in the UK account for about 12% of the number of people in employment recorded in December to February by the Office for National Statistics.

And those furloughed account for about 6% of the entire UK population, which was estimated at 66.4m in 2018.

4.57pm BST

Labour has backed investor calls for companies to consider cutting executive pay if they have received government support during the coronavirus crisis.

The Investment Association has even suggested that companies could claw back bonuses from executives if they are forced to cancel dividend payouts.

Labour believes that the government is right to support business at this critical time, to safeguard jobs, livelihoods and our economy, but companies receiving state support should show responsibility on executive renumeration packages, so that they do not undermine public support for these measures.

4.39pm BST

European share indices have gained across the board.

The Euro Stoxx 600 rose by 1.6%, while London's FTSE 100 rose by a provisional 1.3%, at 5,829 points.

4.27pm BST

The new 100% government-backed loan scheme has come after intensive lobbying from business groups. They appear happy.

The Confederation of British Industry's director-general's reaction:

New 100% guaranteed loans for small businesses announced by @RishiSunak is a transformational step forwards. Small firms & entrepreneurs will now have a simple route to fast finance to stay afloat. Banks now need to continue their work to get the loans flowing as fast as possible

The chancellor has demonstrated he is listening to the concerns of our business communities and taking steps to get cash to the front line where it is needed.

This new route for our smallest companies to apply quickly and get a fast decision will be crucial to those who have struggled to get a CBILS loan.

This crucial new initiative should enable thousands of small businesses to access the working capital they need quickly, helping to protect the millions of jobs they provide in every part of the UK.

This step forward marks another decisive intervention from the Treasury and the business department, building on existing support in an innovative way. Swift delivery is now key, and we also look forward to working with government in the long-term to enhance market competition, including that provided by non-bank lenders.

4.14pm BST

Sunak's Twitter account has more details on his announcements on what he is calling "bounce back loans" for small businesses.

That adds to the pre-existing job retention scheme, business interruption loan scheme, Covid-19 corporate finance facility and various other bits and bobs like cash grants and bans on evictions.

1/ Today, we're announcing a new loan scheme. A simple, quick, easy solution for those in need of smaller loans.

Businesses can apply for new Bounce Back Loans up to a maximum of 50,000, or 25% of turnover, with the government paying the interest for the first 12 months. pic.twitter.com/aBYcUkR9sR

2/ We've been in close talks with the banks in recent days and these loans will be available from 9am next Monday.

There will be no forward-looking tests of business viability; no complex eligibility criteria; just a simple, quick, standard form for businesses to fill in.

3/ For most firms, loans should arrive within 24 hours of approval.

And I have decided, for this specific scheme, that the government will support lending by guaranteeing 100% of the loan.

4/ We shouldn't ask taxpayers to bear all the risk of lending almost unlimited sums to businesses who may have very little prospect of paying those loans back - and not necessarily because of coronavirus.

So I don't think it's right to provide 100% guarantees on all our schemes

5/ Instead, the new Bounce Back Loans carefully target that extraordinary level of state support at those who need it most.

And the 50,000 cap balances the risk to the taxpayer with the need to support our smallest businesses.

4.02pm BST

Labour's new shadow chancellor Anneliese Dodds has responded to Sunak in parliament, calling for changes to get money to businesses faster and allowing for part-time work.

To ensure as many people as possible have a job to go back to, we need a flexible furlough scheme. The chancellor told me previously it can't currently be made more flexible - but other countries have done this. Will he work to amend the furlough scheme, to allow workers to come back on a part-time basis?

Other countries are guaranteeing 100% of their SME loans and have stripped off normal commercial loan requirements. And while it's a relief to hear from the chancellor that there will now be a full guarantee for loans of up to 25,000, we need to know that normal commercial loan requirements will not continue to clog up the system. So will he also be changing the rules for the scheme, so we can get money to those SMEs that really need it?

3.46pm BST

Sunak said he remains unconvinced of backing all loans 100%. He does not think it is appropriate to back all loans to 100%.

The loan scheme has faced criticism for not getting money to enough businesses quickly enough, with concerns that banks are having to consider their own financial risk on the loans, which are currently only 80% guaranteed.

3.45pm BST

Chancellor Rishi Sunank has unveiled a new micro loan scheme. Small companies will be able to borrow up to 50,000 each, up to 25% of their turnover.

The loans will be available from 9am next Monday, he said. There will be no tests against businesses' future viability, no complex eligibility criteria, just a simple form, he said.

3.40pm BST

More than 20,000 coronavirus business interruption loans have now been approved, Sunak said.

3.39pm BST

Chancellor Rishi Sunak has revealed that more than 4m workers in the UK have been furloughed.

You can follow his statement to parliament live at the below link.

Watch my statement to the House on the measures we've put in place to protect jobs and businesses through coronavirushttps://t.co/iAeNcNUZvR

3.27pm BST

There was a time when every raised eyebrow during the Brexit negotiations could move the pound. Sars-Cov-2 has intervened, but the talks are still going on (via video), and the government is sticking doggedly to its plans to end the transition period at the end of 2020.

Michael Gove, the Cabinet Office minister, has popped up saying that the odds of a deal are better than two to one. It is entirely possible that they will be concluded in time, he said.

2.48pm BST

The S&P 500 index has also opened higher, gaining 17 points to 2,853 (up 0.6%).

As in Europe and Asia, shares are benefiting from hopes that some Covid-19 lockdowns will be eased in the coming weeks (despite the risk of a second spike in infections if policians move too early)

2.33pm BST

Wall Street has opened higher, despite the prospect of a sickening slump in growth this quarter.

The Dow Jones industrial average has gained 109 points, or 0.46%, to 23,884 as a new week's trading begins.

2.31pm BST

Alexandra Scaggs of Barrons has spotted that General Motors' banks pushed it to suspend its dividend (as flagged earlier).

so GM suspended its dividend & share buybacks

one interesting point that's not in the headlines: Banks wanted that as a condition for extending more credit to the company https://t.co/RWCWF4tvea

to me the press release reads like "hey we decided to stop doing these things"

and the filing reads like "our lenders asked us to stop doing these things before they would extend the repayment date on one of our loans" pic.twitter.com/wH5R4aCqDF

2.05pm BST

Here's another clip from Kevin Hassett's interview, in which he argues that growth will pick up in the third quarter of 2020.

"If the virus does start to go away in a way that makes it so most every state feels comfortable that it's safe to open up, we really could be looking at a pretty rapid recovery because the incomes are still there," says White House advisor Kevin Hassett. pic.twitter.com/IVNYZ9i0VR

1.48pm BST

More encouragingly, Kevin Hassett also predicted that growth will pick up in the third quarter of this year (after plunging in the current quarter).

He also told CNBC that US businesses are adapting to the crisis, and the challenge of physical distancing.

"At the beginning of this, there was rapid, rapid spread sadly in the places where there are a lot of essential workers. But the variance has really, really declined over time suggesting people have learned ... about safe practices,"

1.42pm BST

Blimey. One of Donald Trump's economic advisers has predicted that America will suffer its worst economic contraction since the Great Depression.

Kevin Hassett told CNBC that second-quarter GDP "is going to be the biggest negative number that we've seen since the Great Depression."

You're looking at something like minus 20%, minus 30% in the second quarter. And the question then is what happens next, and that's what we're focused on at the White House.

White House Economic Adviser Hassett says Q2 GDP will be the largest negative number since the great depression, likely 20-30% - CNBC

"The unemployment rate for the first week of May, we're going to see a number that's going to be 16, maybe 17% " for second quarter GDP it's going to be the biggest negative number that we've seen since the Great Depression," says Kevin Hassett, Senior Advisor to the President. pic.twitter.com/J3i4CKTMF8

1.11pm BST

Wall Street is expected to open higher in 90 minutes, following today's gains in Europe and Asia.

US Opening Calls:#DOW 23993 +0.93%#SPX 2864 +0.96%#NASDAQ 8887 +1.19%#RUSSELL 1250 +1.58%#FANG 3514 +1.36%#IGOpeningCall

1.07pm BST

Newsflash: US auto giant General Motors has suspended its dividend, and its share repurchasing programme, as part of a drive to "fortify its balance sheet".

* General Motors Suspends Quarterly Dividend

* General Motors Takes Other Significant Austerity Measures to Preserve Near-Term Available Cash

* General Motors: Remains Committed to Capital-Allocation Framework $GM (via DJ)

12.56pm BST

Wall Street's fear index has dropped to its lowest level since early March.

The VIX index, which measures volatility in the markets, has fallen below 36 points for the time in over seven weeks.

$VIX Volatility Index down to 35.93 pic.twitter.com/qg0EB331st

"Expectations of major volatility giving way to more calm and serene trading. This week marks the beginning of perhaps the most important four days in Q1 earnings season, with over a quarter of the S&P 500 reporting.

With big hitters across tech, travel, energy, and manufacturing all due to shed light on their coronavirus experiences, we will finally have a much better idea of exactly how this crisis has affected USA Inc.

12.32pm BST

French manufacturer Airbus isn't sharing today's optimism.

The aerospace giant has warned its 135,000 employees that it may not survive the coronavirus lockdown unless it takes immediate action .

"The survival of Airbus is in question if we don't act now."

12.11pm BST

After a risk-on morning, Europe's stock markets are all holding their gains.

Investors are shrugging off the record surge in French unemployment, and Boris Johnson's caution about lifting the UK's lockdown.

"Markets usually stop panicking when policy makers start to. Stocks recovered about half of their losses after massive fiscal and monetary easing was announced.

With sentiment back to neutral, the outlook from here depends on the uncertain path back to normality.

11.59am BST

Wall Street bank Morgan Stanley has warned that Europe's recession will be even deeper than first feared.

Morgan Stanley now expects eurozone GDP to shrink by 11% in 2020 -- a desperate plunge -- not the 5% previously forecast.

Morgan Stanley slashes euro zone 2020 GDP forecast to -11% from -5% as its coronavirus bear case becomes its base case. Euro zone budget deficit to widen to 10% of GDP, ECB to expand asset purchases by a further a1 trillion.

11.56am BST

Greece, which has been praised for implementing an early lockdown, is now getting ready to relax it.

Bloomberg explains:

The relaxation of restrictions in Greece designed to stop the spread of the Covid-19 virus will be gradual and targeted while the stages of lifting the measures will be spaced apart in order to evaluate their effectiveness, Government Spokesman Stelios Petsas said.

The first phase starting on May 4 will see the reopening of shops and hairdressers, churches will also open their door for personal worship while some schools will start operating in a second phase and travel between regions will be permitted on a gradual basis, Petsas said in Athens.

11.13am BST

Just in: Unemployment in France jumped sharply last month, as the Covid-19 lockdown hit its economy.

The number of French citizens filing jobless claims jumped by 246,100 in March, according to the Labour Ministry, to over 3.7 million people.

URGENT #chomage
Explosion des inscriptions en cati(C)gorie A i @pole_emploi en mars: +246.100, soit +7,1%, soit la plus forte hausse enregistri(C)e depuis la cri(C)ation de la si(C)rie en 1996. On retrouve le nombre d'inscrits de fin 2017, avec 3,732 millions en cati(C)gorie A!#COVID19

#Covid19 Hausse record (+7,1%, 246.100) du nombre de chimeurs en mars (Pile emploi)

10.45am BST

Global markets are also being cheered by another central bank stimulus package.

Earlier today the Bank of Japan tripled the amount of corporate debt it would buy, and pledge to buy unlimited amount of government bonds to help Japan's economy.

Bank of #Japan goes all in w/unlimited bond-buying. BOJ's prev guideline on govt debt was to increase holdings by $743bn per year. Removing guideline removes a possible limit on CenBank's purchases at a time when govt will issue new bonds to fund stimulus https://t.co/6ez2MIpEob pic.twitter.com/hWp36W9Lhk

10.26am BST

Global oil traders are braced for another gloomy week after crude prices slumped this morning despite plans for major oil production cuts from Friday.

The market jitters are most acute in the US where oil storage tanks are filled to the brim.

Brent Crude oil spot price continues its volatility and is down -7,9% this morning to just above $20, which is the bottom of the trading range at $20-23 since last Wednesday. Future prices are in the same range, markets settling for a low price range in the near future. #crudeoil pic.twitter.com/sF99ntMOui

"The storage clock is ticking for producers and we are approaching the final countdown if no further action is taken."

10.09am BST

Barclays has put out some data showing that 13% of consumer scams targeting its customers have been related to coronavirus.

The bank says consumers are falling victim to order scams for products like hand sanitiser and face masks, that on average leads to losses of around 209. This is according to data which the bank collected between 9-14 April.

Many of us are at home spending more time online using social media and browsing the internet. There is a risk people will be lured into purchasing items with a big discount or that are unavailable elsewhere.

Don't become a victim of these scams and always check who you're purchasing from and do your research before making a payment.

9.59am BST

Bangladesh's textile industry is returning to work today, in another sign that some lockdown measures are easing.

Reuters has the details:

More than 500 garment factories in Bangladesh that supply to global brands reopened on Monday after a month-long shutdown to curb the spread of the coronavirus, while in India calls grew for an easing of its lockdown which has caused deep economic pain.

Clothing manufacturers in Bangladesh's capital Dhaka and the port city of Chittagong have been permitted to resume work. Some of the world's biggest clothing firms including Gap, Zara-owner Inditex, and H&M source their supplies from Bangladesh.

9.50am BST

Boris Johnson's call for patience hasn't caused any ructions in the City.

The FTSE 100 is still solidly higher, up 1.5% or 85 points at 5837.

9.31am BST

Newsflash: Boris Johnson has urged Britain to contain its impatience about ending the lockdown, until the risk of a second peak in Covid-19 infections has receded.

So, I know it is tough, and I want to get this economy moving as fast as I can, but I refuse to throw away all the effort and the sacrifice of the UK people and risk a second major outbreak and huge loss of life and the overwhelming of the NHS.

And I ask you to contain your impatience, because I believe we are coming now to the end of the first phase of this conflict.

9.03am BST

After an hour's trading, Britain's FTSE 100 is up a healthy 98 points or 1.7% at 5850.

That's nearly its highest level in six weeks, a reminder that stocks have recovered from some of March's wild sell-off. At its worst moment, the index dropped below 5,000 points -- having been worth over 7,400 before the Covid-19 panic began.

8.59am BST

Italy's stock market is having a particularly good morning, with the FTSE MIB index jumping 2.3% in early trading.

Traders are relieved that credit rating agency Standard & Poor's agency didn't downgrade Italy's government debt on Friday night. That reprieve lowers the risk that Italy is plunged into 'junk' territory soon.

Italian and German yield spreads came in after S&P didn't downgrade Italian debt. This is good news for the ECB, which may well increase its pandemic asset purchase programme by a500bn this week.

8.33am BST

European stock markets are all higher in early trading, lifting the Stoxx 600 index up by 1.7%.

8.16am BST

Britain's FTSE 100 has jumped by 90 points at the start of trading, up 1.55% to 5841 points.

Nearly every stock is up. Travel companies are among the risers, with cruise operator Carnival gaining 4%, Intercontinental Hotels up 4.2% and IAG (which owns British Airways) gaining 3.8%.

8.15am BST

From Melbourne, IG analyst Kyle Rodda says that "positivity" about the prospect of the easing of social distancing measures in Australia lifted its stock market today (up 1.5%).

The Australian economy and the ASX200 is a long way from being anywhere what might be considered "out of the woods". However, to slightly mix metaphors, the light at the end of the tunnel has grown a little brighter for Australia.

Only 10 new COVID-19 cases across the country have so far been confirmed today, as the number of active cases falls to 1,052. It's prompted further talk from State and Federal leaders that some social distancing measures may be eased in coming weeks, as policymakers experiment with re-opening parts of the domestic economy.

8.06am BST

There's a big difference between easing a lockdown and ending it.

New Zealand's prime minister, Jacinda Ardern, says her country must remain vigilant - after moving swiftly to impose a tough lockdown that appears to have prevented a major Covid-19 outbreak.

"We are opening up the economy, but we're not opening up people's social lives."

7.50am BST

UK businesses are pushing the government hard for information on when the lockdown here might start to ease.

My colleague Zoe Wood explains:

The Institute of Directors said its 28,000 members were "clamouring" for information so they could start drawing up return-to-work plans. Jon Geldart, its director general, said it was in everyone's interests to kickstart the economy again once it is safe to do so.

"Directors from all parts of the UK need to make plans for riding out this tempest, but they can't get very far if they have no idea what will be happening in a few weeks' time," Geldart said.

7.48am BST

Here's a handy map showing which countries have already started to relax some of their coronavirus restrictions, and which are preparing to do so:

7.25am BST

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

The chancellor, Rishi Sunak, will underline the costs of shuttering the economy to tackle the crisis on Monday, as he makes a statement to the House of Commons on the Treasury's response to the crisis.

He will point to forecasts by the independent Office for Budget Responsibility that suggested a three-month lockdown could lead to a catastrophic 35% decline in GDP in the second quarter of the year.

Peak virus seemed to be the overriding theme of the week, with the rate of new cases and deaths falling in Europe and the United States, the COVID-19 epicentres. Plans appear to be accelerating also for partial reopening's around the world. New Zealand returns to work tomorrow, Australia plans a partial effort this week, New York has announced protocols for a mid-May reopening with some US states already tentatively opening.

European hotspots such as Italy, Spain, Germany and the UK are also planning partial reopenings or will be doing so this week.

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