Markets lose steam as UK businesses call for larger lockdown support package - as it happened
Rolling coverage of the latest economic and financial news as England and Scotland enter tough Covid restrictions
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2.55pm GMT
Non-essential businesses have been forced to close across England and Scotland overnight after being plunged into new national lockdowns following a spike in Covid cases.
Airlines have been cancelling UK flights in light of lockdown measures.
2.34pm GMT
US stocks are broadly flat, with the Nasdaq and S&P 500 edging into the red at the start of trading.
Here are the initial prints:
U.S. markets open slightly lower https://t.co/RXflxPn4Mk pic.twitter.com/f55OtlQqAj
2.30pm GMT
The mayor of London, Sadiq Khan, has also called on the chancellor to extend VAT relief and offer targeted support for businesses in the night-time economy:
The Chancellor's financial support package for businesses is a step in the right direction, but much more is needed to bridge the gap for the millions of people whose livelihoods have been directly affected by this pandemic. My statement: pic.twitter.com/K6eLBruxc7
2.01pm GMT
While bitcoin is still trading below Sunday's all-time of $38,000, JP Morgan has predicted that the cryptocurrency could trade as high as $146,000 if it solidifies its reputation as an alternative to gold.
Bitcoin's competition with gold haas already started in our mind.
Considering how big the financial investment into gold is, a crowding out of gold as an alternative' currency implies big upside for bitcoin over the long term.
We note that the spectacular bitcoin rally of the past few weeks has moved bitcoin into more challenging territory, not only in terms of its positioning backdrop but also in terms of its valuation.
1.37pm GMT
The chairman of the Federation of Small Businesses Mike Cherry has joined calls for a broader package of support for businesses that he says matches the scale of the economic damage we are seeing" due to Covid lockdowns.
These funds come after a disappointing festive period and are followed by a last minute lockdown and do not go far enough to match the scale of the crisis that small firms are facing.
There remain too many groups who need more support to weather this storm such as the newly self-employed, those in supply chains and company directors.
"For many [the new funds] just won't be enough for businesses who are already under the cosh and on the brink."https://t.co/SEPBJdMI3Z
This lockdown is expected to last for some time, even when restrictions ease, many small firms will be unable to function at 100 per cent, if at all. Which is why the government should create a Spring Economy Plan to help firms get through to drive a vaccine-enabled recovery.
After clawing their way through 2020, the start of the new year looks set to be an even worse one for many.
1.13pm GMT
Lloyd's of London, the world's biggest and oldest insurance market, has closed its underwriting room for the second time in its history.
1.06pm GMT
Berenberg's senior economist Kallum Pickering adds that the UK government may have to extend some programmes like government-backed loans and furlough to ensure the private sector survives lockdown.
Fiscal policy tools such as the various coronavirus business loan schemes as the well as the furlough scheme (due to end 30 April) may need to be extended once again to further support private sector cash-flow and jobs.
While markets may begin to price in a higher chance that the BoE will soon cut the bank rate below zero, it remains unlikely, in our view.
To support confidence, the BoE may announce an increase in the pace of ongoing asset purchases - it has plenty of scope to achieve this within its current plan to buy 150bn of gilts until the end of 2021.
12.50pm GMT
Kallum Pickering, senior economist at Berenberg, says the bank has slashed growth UK forecasts for Q1 in light of fresh lockdowns in England and Scotland.
Instead of a 3% rise, quarter-on-quarter for Q1, Berenberg is now projecting a 2% decline.
Following the new lockdown, the near-term outlook now looks much worse than before.
On an annual basis, we now project an 11.5% decline in 2020 followed by gains of 6.0% in 2021 and a 6.5% gain in 2022 (previously -11.6%, 7.3% and 4.9%, respectively).
Despite the near-term hit, the UK medium-term outlook remains positive.
12.38pm GMT
Here's our full story on the Chancellor's business lockdown support package:
Related: Rishi Sunak unveils 4.6bn relief package for UK retail and hospitality sectors
12.13pm GMT
The FTSE 250 is one of the last bright spots across European equity markets.
But the UK's domestically-focused index has lost nearly half of its gains and is up just 0.5% compared to 1% just a few hours ago. Here is a snapshot of how European equities are trading:
12.05pm GMT
Office landlords, beware. New lockdown measures in England and Scotland have pushed a return to the office even further into the future for UK workers.
But this will also have an impact on the rental value of London offices, according to new research from Morgan Stanley.
11.43am GMT
Pubs and breweries in England are giving a rather lukewarm reaction to Chancellor's Rishi Sunak's offer of one-off grants to help English pubs get through lockdown 3.0.
Pubs will be eligible for grants of between 4,000- 9,000 depending on their rateable value, which comparable to the rent that premises could charge on the open market.
It is surprising that there does not appear to be some differentiation in grant levels between those businesses in areas which were able to open through to Christmas and those which were not.
Sales through takeaway, click and collect and drive through have enabled many to just about survive up to now.
This reversal in policy directly discriminates against small businesses while allowing supermarkets to continue to sell beer from global breweries.
11.23am GMT
Despite calls for further business support (and quick), the chancellor Rishi Sunak has reportedly said that the budget in March will be an excellent opportunity to take stock and set out the next stage of support, according to Reuters.
The budget is set for 3 March.
11.01am GMT
British Chamber of Commerce boss Adam Marshall has criticised the government for failing to announce Covid restrictions and business support measures at the same time last night.
Speaking to Sky News this morning, he said:
This is a pattern that we have seen repeatedly whereby businesses find that their operations are going to be somehow further curtailed without having knowledge of the support that's going to be there to help them through that period of restriction and difficulty.
It should be possible, I think, to announce both restrictions and support in tandem, because that in turn generates business confidence and means that phones aren't ringing off the hook with worried businesses wondering whether they'll be able to open and be whether they'll be able to pay their people and their suppliers at the end of the month.
10.40am GMT
TUI and Thomas Cook are among the airlines cancelling their UK flights amid fresh Covid lockdowns, according to the BBC Scotland's business editor:
Tui cancels all UK holiday departures until 31 January: Thomas Cook until 15 February. Unsurprisingly.
10.30am GMT
There are still looming deadlines marking the end of government-backed loans, business rates and VAT relief, that may not be offset by the grants programme.
It raises questions over whether further support could be announced before the March budget.
-Cash grants of up to 3000/month for businesses forced to partially/fully closed
-One-off top-up" cash grant of up-to 9000/property for retail/hospitality/leisure firms
- 594m available for councils and devolved administrations to support local businesses
- Christmas support payment for pubs of 1000. Note: government support all timed to end March/April - does anyone think we will be back to normal by end of April?
10.25am GMT
British Chambers of Commerce director general Adam Marshall says the latest batch of support is effectively short-term plaster, and longer-term solutions are needed if businesses are to survive the next year.
While welcome, new #lockdown grant support from @RishiSunak @hmtreasury is incremental.
Ministers need to set out a clear support package for the whole of 2021 - not just until Spring - to help businesses of all shapes and sizes survive this difficult and uncertain year.
Our rationale is that many businesses are going to face a difficult and uncertain time throughout this year, even if we are lucky enough to see vaccine rollouts happening quickly over the coming months.
It's going to take businesses time to reestablish demands to re establish cash flow and so much more besides support needs to be consistent and available for a long enough period of time, to help save many of those good businesses and let them get back on their feet.
I don't see many businesses are able to invest in these circumstances and when you look at the support measures that are available, many of them still have a cliff edge at the end of March, or at the end of April, they are very short term in nature.
And however welcome they might be for those businesses who are struggling to pay their bills over a period of weeks or indeed a month or two, they don't let many companies plan.
10.14am GMT
British Airways owner IAG has said it's reviewing its flight schedule following the UK's national lockdown, according to Reuters.
We'll bring you further updates as we get them.
10.14am GMT
Some business owners have fairly pointed out that supply chains firms could be missing out on direct grants, as many may not have the kinds of physical premises that would make them eligible for large enough grants to cover their costs.
The CEO of the Recruitment & Employment Confederation says:
Welcome further support from @RishiSunak this morning - but support needs to flow into the supply chains of closed businesses, not just to them. Likewise need to address position of small business owners who have had limited support throughout #Covid19UK
10.10am GMT
The FTSE 250 has continued to climb and is now up nearly 1%.
It was previously trading higher by around 0.4% before the news broke
9.40am GMT
The domestically-focused FTSE 250 is making further gains in the wake of the chancellor's grant announcement and is now up 0.7% at 20,688 points.
The FTSE 100 is up around 0.3% at 6,597 points.
9.28am GMT
You can follow the Treasury's announcement in more detail on our politics live blog:
9.23am GMT
Here's Chancellor Rishi Sunak's full (pre-recorded) announcement:
Today I'm announcing 4.5 billion in new lockdown grants to support businesses and protect jobs. https://t.co/dHEpiunX78 pic.twitter.com/SUMrlQKCiE
9.21am GMT
Of course, this means if you don't have physical sites, you are at the mercy of the discretionary fund and we don't yet know how that will be distributed.
Nonetheless, the Institute of Directors business group has broadly welcomed the support:
IoD Director of Policy on BBC News responding to the latest announcement of support from @hmtreasury
Particularly welcome to see the increase in discretionary grants, which have helped to reach those who have fallen through the gaps of other support schemes. pic.twitter.com/VlByIrMygS
9.18am GMT
The chancellor's 594m discretionary fund for businesses will be shared between the devolved nations as follows:
9.16am GMT
BBC Scotland's business editor Douglas Fraser breaks down the eligibility criteria for the new business grants:
Breaking: @hmtreasury 4.6bn more to help retail, leisure, hospitality firms into spring
375m to @scotgov
Scheme for England (likely also in Scotland):
4k for premises with rateable value <15k
6k RV of 15k-51k
9k RV >51k
+ 594m UK/devolved discretionary fund
9.12am GMT
BREAKING: Chancellor Rishi Sunak has announced new support for businesses hit by fresh lockdowns.
Support includes:
9.00am GMT
Going back to Next, chief executive Simon Wolfson has confirmed that the retailer is part of a consortium bidding for some Arcadia brands.
However, he stressed that Next is not looking at taking a majority stake in any Arcadia deal, Reuters reports.
8.46am GMT
Meanwhile, Morrisons is planning to give up parking spaces for the UK's vaccination programme, according to PA Media's business editor:
Morrisons boss David Potts in a call with journalists says three store carparks will host covid-19 vaccine centres from Monday, with a further 47 offered to the Government.
8.40am GMT
ITV's business and economics editor Joel Hills details why Next's performance and projections are so surprising given their high street footprint:
Next's performance during the worst recession for 300 years has been extraordinary. Expects profit of 342 million this year and 600m - 735million in 2021/22. Company assumes its 500 UK stores will be closed for the next eight weeks. Upto 30,000 staff likely to be furloughed. pic.twitter.com/esgaM3fS1H
Next has 500 UK shops and - perhaps surprisingly - no plans to reduce that number. Well over 50% of sales are now online but you can see below how important shops were to Next in the run up to Christmas and March - June last year (when they were forced to close in 1st lockdown). pic.twitter.com/e4kWf6Qisn
8.30am GMT
High street clothing retailer Next is helping lift the FTSE 100, with shares rising 8% despite fresh lockdown measures.
That's because investors are focusing on its strong Christmas trading figures instead. My colleague Zoe Wood explains:
8.22am GMT
UK equities have managed to return to positive territory.
We're nowhere near yesterday's gains but the FTSE 100 is holding comfortably above 6,500 and is up 0.5% so far this morning.
8.15am GMT
But supermarkets are upbeat as they report their Christmas trading figures.
Strong demand for luxury Christmas favourites helped to drive an 8.5% rise in sales at Morrisons over the festive period, as the chain kicked off reporting on what is expected to be a bumper trading period for supermarkets, Sarah Butler reports.
The pandemic has had a severe effect on people and communities around Britain for nine months now but it has been especially hard at Christmas time.
I'm very pleased with the way the Morrisons team has helped our customers across the nation enjoy their Christmas in the best way they could.
Related: Morrisons sparkles with 8.5% rise in sales over festive period
8.11am GMT
British Airways owner IAG is one of the biggest fallers on the FTSE 100, dropping 1.7% at the open.
It comes amid further uncertainty about when international travel and tourism will return to some kind of normal.
Cabinet Office Minister Michael Gove tells LBC an annoucement will be made later on restrictions to international arrivals to the UK to stop the spread of coronavirus.
8.03am GMT
The first rally of 2021 has indeed been cut short. Here are the first prints from major indexes across Europe:
7.55am GMT
CBI director general Tony Danker also told the BBC that he expects that the Treasury, and the business department will come out in the next few days" with support for businesses.
But it looks like today may be the day.
Cabinet minister Michael Gove tells #BBCBreakfast the Chancellor will make announcement about additional financial support later today. https://t.co/5agoteHMjE pic.twitter.com/45sa44AXJ7
7.50am GMT
The head of the CBI business lobby group, Tony Danker, says the government cannot wait until the March budget to roll out extra support for businesses impacted by fresh Covid restrictions:
We've seen lockdowns before, we know the impact they have, and so I'm afraid more comprehensive restrictions do require a more comprehensive economic response.
The second is probably plugging the gaps that are now further exposed again learning lessons from last year. The thing we learnt, most of all, in terms of gaps was probably the role of supply chains. You close hospitality, you also have a big knock on effect on food and drink manufacturers. You close airports and aviation, and tens of thousands of of people in the supply chain [are] affected.
And I think the third thing is underwriting support for the duration, so that firms stay the course rather than acting precipitously.
I don't think we can wait until the budget in March to review support. Business will take a view sooner, and so I think we need to respond very soon, and not wait for the budget.
7.28am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Monday's market rally, which lifted major European indexes and sent the FTSE 100 up nearly 3% in the first trading session of 2021, has been cut short.
European Opening Calls:#FTSE 6563 -0.14%#DAX 13716 -0.08%#CAC 5583 -0.10%#AEX 632 +0.10%#MIB 22236 -0.36%#IBEX 8087 -0.15%#OMX 1892 -0.19%#STOXX 3560 -0.14%#IGOpeningCall
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