Two major City banks have been forced to postpone plans to bring staff back to the office
After yesterday’s abrubt government u-turn on the issue, employees at HSBC and Goldman Sachs have been told to keep working from home where possible.
My colleague Joanna Partridge has the details:
A memo sent to staff at HSBC informed them that the investment bank, based in London’s Canary Wharf financial district, was pausing its planned return of “phase one” teams to the office.
The bank said that its staff working in branches and those supporting customers in call centres would continue to go into work, although the majority of office-based staff will work from home.
Goldman Sachs was one of the first banks to bring some of its 6,000 UK workers back to its London building from mid-June but has postponed plans to expand the operation by bringing back staff on rotating basis.
Richard Gnodde, the chief executive of Goldman Sachs’ international operations, informed staff in a memo that its offices would remain open for the employees “who need to be in the office”.
Tesla’s shares are on track to fall 5%, though, after yesterday’s Battery Day.
During the event, Elon Musk outlined plans to halve the cost of battery manufacturing and suggested he could launch a more affordable Tesla, at $25,000 (£19,600), within three years.
That timescale seems to have disappointed investors, as Neil Wilson of Markets.com explains:
There is some debate about whether Tesla’s Battery Day announcements amount to incremental or revolutionary changes to battery technology, but two things are clear: Tesla has not suddenly acquired warp speed capability, but clearly the company has a roadmap to cheaper, longer life battery technology that it will make itself and will allow it to lead the EV field for a while longer. Panasonic and other suppliers were hit with Tesla planning to make its own battery.
Nevertheless, given all the anticipation around a potential game-changer in battery technology, investors were a little underwhelmed by the news. Tesla’s Frankfurt-listed shares declined 7% at the open, before paring losses a touch.
Ed Miliband MP, Shadow Business Secretary, has said today the government needs to act to avoid mass unemployment.
“We support the introduction of new restrictions to tackle this virus, but we cannot escape the massive economic challenge it creates. It is essential that public health measures go hand in hand with economic support, or we will see disaster for many businesses and workers.
“Businesses are already having to contribute to the costs of furlough, putting jobs at risk, and we are now perilously close to the furlough cliff-edge. Labour has outlined an alternative – the Job Recovery Scheme. This would enable businesses in key sectors to bring back staff on reduced hours with government backing wages for the rest of the working week, saving jobs and giving businesses the certainty they need.
My colleague Richard Partington reported last night that chancellor Rishi Sunak is considering whether to launch a German-style wage subsidy scheme, to replace the furlough scheme which ends next month.
The boss of supermarket chain Tesco has urged customers to resist panic buying, following the move towards tougher Covid-19 restrictions.
CEO Dave Lewis told Sky News this morning that there’s no need to buy abnormal amounts of food, but he did anticipate some ‘stockbuilding’ by households.
“The message would be one of reassurance. I think the UK saw how well the food industry managed last time, so there’s very good supplies of food.
“We just don’t want to see a return to unnecessary panic buying because that creates a tension in the supply chain that’s not necessary. And therefore we would just encourage customers to continue to buy as normal.”
There are signs that UK consumers have been stocking up on essentials, with toilet roll sales up 23% in the last week.
WEPA Group, which produces toilet paper and kitchen towels in Bridgend, south Wales, expects sales to remain high, but insisted yesterday that supplies would not run out.
Jing Teow, senior economist at PwC, reckons Britain’s economy is going to experience a ‘kinked-V’ recovery, as companies adjust to the new Covid-19 restriction:
She writes:
The new restrictions outlined by the Prime Minister affects fewer sectors of the economy than in March and are less severe, meaning that the impact of these restrictions on the economy is likely to be less disruptive.
Although pubs and restaurants face new restrictions, they are allowed to continue operating, along with non-essential shops and businesses, softening the hit to the economy. In addition, while workers are now encouraged to work from home, business investment in adaptations, such as technology, to support remote working will help minimise disruptions to business activity.
Depending on what happens over the coming weeks, we may see some additional fiscal policy response to support businesses and workers, which could see the redeployment of measures seen during the summer. But this is likely to be at a smaller scale and more targeted.
While the shape of economic recovery is still likely to be a kinked V, a longer and broader lockdown would prolong the time required for the UK to recover to pre-crisis levels.
Kallum Pickering of Berenberg bank has helpfully plotted today’s European PMI surveys together, showing that the UK outpaced Germany, France and the wider eurozone this month.
Pickering says the slowdown in eurozone company growth this month shows October-December could be tougher than thought
The rise in infections and the new restrictions which many countries are imposing to contain the spread of COVID-19 are taking a toll on service sectors across Europe. As a result, the balance of risks to our call for a 2.2% q-q gain in Eurozone GDP in Q4 is tilted heavily to the downside.
But he is also optimistic that this second-wave of Covid-19 won’t cause as much economic damage as in March and April:
Six months ago, demand in the US plunged and many supply chains with China were disrupted. Now, the US is recovering robustly and Chinese problems have largely faded. This should underpin sustained gains in the production and international trade in goods.
While Brexit uncertainties are more acute than they were earlier this year, they are more familiar and less pronounced than in late 2019.
European stock markets have actually pushed higher since this morning’s worst-than-expected PMI surveys landed.
Britain’s FTSE 100 is now up 125 points, or over 2%, at 5954 points - meaning it’s recovered much of Monday’s slump. All the major European markets are solidly green too:
One theory is that this bad data could encourage politicians and central bankers to launch even more stimulus measures to help economies through the coming months.
Pugh predicts that the restrictions announced yesterday by Boris Johnson will set back the economic recovery and cause the economy to stagnate, adding:
But the big risk is that the government has to go further. For example, a two-week national lockdown could reduce the level of GDP by 5% and set back the economic recovery by a year.
Rhys Herbert, senior economist at Lloyds Bank, also fears growth could slow:
While these latest figures paint a generally positive picture, the imposition of further restrictions this week and the significant probability that more will be added in the coming weeks, raises the odds that the rebound in growth will now slow. Even if tighter restrictions don’t have as big an impact on the economy as we saw in the spring, they may still have a negative effect on demand dynamics.
“The end of the furlough scheme is another big, imminent hurdle for the UK. A rise in unemployment could be a drag on economic growth. Add the effect of Brexit uncertainty into the mix, and the next few months may be very challenging.”
Economist are also concerned by the sharper slowdown in the eurozone this month.
Simon French of PanmureGordon says it confirms the eurozone recovery has lost momentum:
The services sector saw another fall in overseas demand.
Businesses remained gloomy about future plans and turned instead towards shedding jobs at a distressing rate especially amongst those reliant on consumer footfall. With the announcement of more curbs on movement, it’s impossible to guess how these firms can continue for the rest of the year and the knock-on effects of job losses will be brutal.
With the weakest overall optimism since May when the recovery started, the fragility of the economic recovery has been revealed.”
“The UK economy lost some of its bounce in September, as the initial rebound from Covid-19 lockdowns showed signs of fading.
“It was not surprising to see that the slowdown was especially acute in services, where the restaurant sector in particular saw demand fall sharply as the Eat Out to Help Out scheme was withdrawn. Demand for other consumer-facing services also stalled as companies struggled amid new measures introduced to fight rising infection rates and consumers often remained reluctant to spend.
With the PMI still comfortably over 50 points, the UK economy seems to have returned to growth in July-September. However, Williamson fears that rising unemployment will hurt the recovery:
Jobs continued to be cut at a fierce rate in September as firms sought to bring costs down amid weak demand, meaning unemployment is likely to soon start rising sharply from the current rate of 4.1%.
The indication from the survey that growth momentum is quickly lost when policy support is withdrawn underscores our concern over the path of the labour market once the furlough scheme ends next month, and raises fears that growth could fade further as we head into the winter months, especially as lockdown measures are tightened further.”
Comments (…)
Sign in or create your Guardian account to join the discussion