Money

Open for business: England loosens lockdown rules


Please forward this newsletter to friends and colleagues who might find it valuable. Even if they are not subscribers to the Financial Times, they can read the newsletter — and all of the FT — free for 30 days. And if this has been forwarded to you, hello. Welcome and please sign up here

Coronavirus cases and vaccinations

Total global cases: 135.4m

Total doses given: 774.3m

Get the latest worldwide picture with our vaccine tracker

Latest news

  • Budesonide, a widely available asthma drug, can help speed recovery from Covid-19 at home, according to a new study

  • FT analysis shows £19bn of pandemic-related business was awarded by the UK government without seeking rival bids

  • A medical committee in India has recommended the use of Russia’s Sputnik V vaccine, potentially making it the country’s third available jab if approved by the drugs controller

For up-to-the-minute coronavirus updates, visit our live blog

A pint, a haircut, a spot of shopping and a trip to the gym. Some sense of normality — or as the prime minister prefers it, a “major step forward in our road map to freedom”, was restored to British life today as the next phase in the great unlocking got under way across much of the country.

All shops in England are now allowed to open, as are local amenities such as libraries, while pubs and restaurants can serve customers outdoors and wider social contact is permitted. The next stage of reopening, set for May 17, will see restrictions further relaxed before the final phase on June 21 — coronavirus data permitting — when all restrictions on business and social life will be removed.

Struggling high street retailers will take heart from new data showing Britons have saved an additional £180bn during the pandemic — almost 10 per cent of the UK’s annual gross domestic product — and pray that pent-up demand will encourage consumers to splash the cash.

Line chart of UK household savings ratio (% of disposable income) showing that compared with normal levels, twice the proportion of income has been saved over the past year

The Office for Budget Responsibility, the UK fiscal watchdog, said spending these savings could add about 6 per cent to consumption in 2021 and 2022. Economists are divided, however, over whether the urge to splurge will take priority over newly acquired habits of thrift. And poorer households, which are more likely to respond to changes in their financial conditions, will not have enjoyed the same accumulation of savings.

READ  Royal London sells pensions subsidiary for £4.8 million

For many bricks-and-mortar outlets, the grand reopening after three months of forced closure has come too late. Others are clinging on in the hope that the boom in ecommerce that has been turbocharged by the pandemic — as evidenced in research showing that online grocery shopping has become profitable for the big UK supermarkets for the first time — does not herald permanent closing time for the high street.

Global economy

Our Economists Exchange series features former US Treasury secretary Larry Summers on the “substantially excessive” recovery plans of President Joe Biden. “I look at the response and I look at the scale of the problem and I can’t see how it adds up,” he tells the FT’s Martin Wolf. Federal Reserve chair Jay Powell warned that the pandemic still had the capacity to derail the country’s economic comeback.

As in much of Latin America, inflation in Brazil is surging and having a serious impact on affordability of food for the country’s poorest, already suffering from rising joblessness and the withdrawal of social programmes. Critics have given President Jair Bolsonaro, also under fire for his handling of the pandemic, the nickname of “Bolsocaro” — a combination of his name and the Portuguese word for expensive.

Line chart of percentage increase over past 12 months showing that the price of rice in Brazil is soaring

India is at present recording more new coronavirus infections than anywhere in the world with 170,000 registered on Sunday and 900 deaths. This second wave could damage IMF forecasts for a 12.5 per cent rise in growth in India this year as vaccination stutters and new business restrictions are introduced, including in Maharashtra, home to the country’s financial capital Mumbai. Indian shares are tumbling as cases increase.

READ  A truly bold chancellor would scrap national insurance

Business

Black cab drivers in London are the latest victims of the pandemic-induced downturn in international travel. Heathrow is trebling pick-up fees to £10 as the airport tries to claw back some of the £1.4m it lost running the taxi rank last year, a move that drivers say will devastate their business.

Spending on private jets by US companies increased during the pandemic with top executives at the likes of Morgan Stanley and PepsiCo using the planes for personal travel — including for holidays. One academic said: “It is not the plane, it is the vacation trip itself that I find interesting. Why are they going on vacation at all?”

The surge in online grocery deliveries during the pandemic has given ecommerce groups masses of consumer data to improve their products and fuelled the rise of new companies such as Getir, which deliver baskets of essentials in just 10 minutes. Our Big Read examines the opportunities and the hype surrounding the new rapid delivery apps. Other ecommerce companies such as Ozon — “Russia’s Amazon” — and Swedish group Trustly are expanding after pandemic success.

Line chart of deal value ($bn) showing that the global pandemic has spurred investments in rapid delivery apps worldwide

Markets

The Bank of England’s quantitative easing programme has made it the biggest holder of UK government debt (gilts), overtaking overseas investors and pension and insurance companies. By the end of this year, the BoE will have accumulated £895bn in assets since it first began buying bonds during the global financial crisis in 2009.

Line chart of percentage of UK gilts held by the three largest investor categories showing that Bank of England gilt holdings have surged during Covid-19

Goldman Sachs forecast a 10 per cent return on European stocks over the next 12 months and a strong economic recovery for the region starting this summer, ahead of consensus opinion that expects lost ground to be retained only in the second quarter next year.

READ  California wildfire risk prompts planned mass cutoff of PG&E power

As traders get ready for US earnings season, investors in equities are fretting that President Joe Biden’s plans to raise corporate taxes from 21 per cent to 28 per cent and usher in a global minimum tax could dent company profits.

Column chart of effective US corporate tax rate (%) showing US corporate taxes fell sharply under the Trump administration

Have your say

JWHey comments on Britons prepare to spend their savings as lockdown eases:

If the pandemic has shown me anything, it’s that I’ve spent my entire adult life feeding a habit of consumption; spending a lot of money on stuff that I think I want but that actually doesn’t improve my overall happiness and wellbeing. Being forced into saving a large chunk of my disposable income every month was an awkward adjustment at first, but over time, seeing my wealth grow has made me feel considerably more secure and happier. I also haven’t missed routine consumption at all. I miss experiences like holidays, going to the pub, and having the odd meal out, but I certainly don’t miss going to a restaurant four-five times a week and dropping money on the high street for stuff that I don’t need. In short, the pandemic has turned me from an unhappy consumer into a happy saver. I suspect I’m not alone.

Final thought

Pubs and restaurants in England — at least until May 17 — are obliged to serve customers outdoors. So if you’re in the London area and in the mood for an aperitivo, here are the best outdoor spots for a refreshing spritz, courtesy of FT Globetrotter. Cin cin!

Seabird at The Hoxton hotel in Southwark, south London
Seabird at The Hoxton hotel in Southwark, south London © Seabird at The Hoxton hotel

We would really like to hear from you. Please send your reactions or suggestions to covid@ft.com. Thanks



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.