Public confidence about British economy jumps; Thorntons to close all stores – as it happened

Time to recap.

Chocolate retailer Thorntons has become the latest high street chain to announce store closures since the pandemic began. Thorntons, founded back in 1911, plans to close all 61 outlets and focus on online sales, and through supermarkets.

Thorntons said Covid-19 lockdowns, the changing retail dynamics, and the move to online shopping had all forced the move, which puts 603 jobs at risk.

The news came hours after Bank of England governor Andrew Bailey warned that Britain wouldn’t return to its pre-Covid working patterns.

Bailey also revealed that he is more optimistic about the UK’s economic recovery, predicting that it could regain its pre-pandemic size by the end of 2021. But, he also pointed that low-paid staff, women and ethnic minority workers have been disproportionately affected.

Governor Bailey also dampened concerns about rising inflation, and government bond yields.

Optimism about the UK recovery has jumped this month. According to the latest survey from Ipsos MORI, economic confidence is the highest since 2015, and jumped by a record amount in March.

Public confidence rose as the UK’s vaccine rollout continued to run quickly.

In Europe, though, the AstraZeneca vaccine has been suspended in several countries including Germany, France and Italy today. This knocked the mood in the markets, with Germany’s DAX closing 0.3% lower, France’s CAC down 0.2%, and the UK FTSE 100 losing 0.17%.

Fawad Razaqzada, analyst with ThinkMarkets, says:

It is worth pointing out that despite EU’s stance, the UK government, AstraZeneca, the WHO and several other entities have said that the AstraZeneca jab is safe and that there’s no evidence linking vaccines to blood clots.

So, the suspension of its use by European countries could prove to be temporary. But what it does mean is that it will slow the vaccinations, potentially prolonging the lockdowns.

Back in the UK, visits to shopping centres, retail parks and high streets rose last week. But with restrictions still in place, footfall remains around half their levels before the first lockdown a year ago.

The UK’s inflation basket has been shaken up to reflect changing spending patterns. Hand sanitiser, smart watches and hand weights were all added, while white chocolate bars, fruit smoothies and ground coffee got the axe.

Chris Hunt, head of retail at law firm Gowling WLG, says:

“The susceptibility of the economy where rapid and radical changes in consumer behaviour are concerned, are a stark reminder of the balance of power where retailers are concerned – the ability, therefore, to adapt and crucially, support this with the ability to deliver ‘now’ through efficient supply chain and logistical operations, is now vital.”

And in China, industrial production and retail sales jumped strongly at the start of this year. Both rose over 30% compared with January-February 2020, when the coronavirus pandemic was forcing it into lockdown.

Here are some more of today’s stories:

Goodnight. GW

Kevin Mountford, co-founder of savings platform Raisin UK, has some handy advice for Thorntons staff facing the risk of losing their job:

• Read up on your rights, especially when it comes to redundancy pay and settlements. If you’re furloughed, your redundancy pay MUST be calculated on your usual wage, not your 80% furlough payments.
• Check your notice period, being furloughed doesn’t effect the standard notice period you are required to work or be paid for.
• Look at your existing debts. Do you have outstanding balances on credit cards that you could pay off now? It may be wise to settle these whilst you can be sure on your current income.
• Look at your monthly outgoings, is there anything you could negotiate a payment holiday for? This may help whilst you plan your next move in the short-term.
• Prepare your CV and think about your future career options. If it seems like your job role is definitely at risk, start to think about other options and reach out to people who may be able to assist in your job search

The news of Thorntons’ store closures has hit Sheffield, where the company was founded, hard.

Sheffield newspaper The Star reports that the 110-year-old chocolate maker is “like a family friend” to many, so the plan to close all 61 outlets is a blow.

Star reader LizzyBee summed it up well: “Sad news. Feels like losing a childhood friend.”

At its height, the firm employed 4,500 at more than 370 high street shops and 229 franchise counters across the country.

But one of Sheffield’s best known brands is now set to disappear from the High Street and exist online only.

Pat Waistnidge said: “I remember taking my kids to the chocolate factory when it was in Sheffield. I had written to ask if we could meet the Oompa Loompas at the factory.

“It was a great experience. Thornton’s toffee is the best. The cherry nougat was my craving 51 years ago during pregnancy.

Here’s the full piece:

Thorntons adds that it plans to focus on its online sales, and sales of its chocolates through supermarkets, saying:

As customers continue to change the way they shop, we must change with them. We have seen a strong growth in Thorntons.co.uk and this will remain a key focus for us in continuing to provide you with your favourite Thorntons ranges, including our unique personalisation offering. In addition, we continue to invest in building our brand in grocery channels with our partners in order to meet the demand from you, our loyal customers.

We remain committed to our iconic Thorntons brand and will continue to invest further in the future potential to ensure we evolve with the times.

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More pain for the UK retail sector: Chocolate retailer Thorntons has announced plans to permanently shut all its 61 stores, putting around 600 jobs at risk.

The company has blamed the ‘changing dynamics’ in the retail sector, the move to online shopping, and the pandemic lockdowns which forced non-essential shops to close.

Adam Goddard, retail director at Thorntons, said:

“Changing dynamics of the high street, shifting customer behaviour to online, the ongoing impact of Covid-19 and the numerous lockdown restrictions over the last year - especially during our key trading periods at Easter and Christmas - has meant we have been trading in the most challenging circumstances.

“Unfortunately, like many others, the obstacles we have faced and will continue to face on the high street are too severe and despite our best efforts we have taken the difficult decision to permanently close our retail store estate.

“We will now go into full consultation with our colleagues.”

Thorntons was founded back in 1911, and was once a significant high street presence. But amid increased competition and struggling sales, the firm was bought by Italy’s Ferrero in 2015.

European stock markets have now lost their early gains, with the Stoxx 600 index down around 0.2% for the day in late trading.

Investors are absorbing the news that France, Italy and Germany have all temporarily suspended use of the AstraZeneca vaccine this afternoon.

They join a growing number of EU countries pausing their rollout of the Oxford-developed vaccine, while an investigation into cases of blood clots is held.

In Frankfurt, the DAX index of top German company shares is down around 0.5%, with France’s CAC dipping by around 0.4%. So, a fairly modest reaction thus far.

The move comes as the World Health Organisation says it has seen no evidence that the AstraZeneca/Oxford vaccine has caused incidents of blood clots and a low platelet count in some people who have received it.

In London, the FTSE 100 is now down 0.3%, or 22 points, with miners, energy firms and financial companies among the fallers, but travel firms, hospitality groups and retailers rising.

Perhaps the oddest news of the day is that Elon Musk, the billionaire chief executive of Tesla, has changed his job title to “technoking”.

It’s another example of Musk’s unconventional approach to corporate life, and unfailing ability to make headlines, as my colleague Mark Sweney explains:

In addition to Musk, who also retains his position as chief executive, the company’s financial chief, Zach Kirkhorn, has been rebranded as “master of coin”.

Kirkhorn’s job title change is a nod to Tesla’s $1.5bn (£1bn) investment in bitcoin the company made last month, a move which sent shares in the controversial but popular digital cryptocurrency soaring. Musk, who was dethroned as the world’s richest man last month as Tesla’s share price slumped, has previously changed his Twitter biography to “#bitcoin”.

But there is another, more serious, job change at the electric car maker. Jerome Guillen, the head of its automotive unit, is taking control of Tesla’s truck business.

The FT explains why this matters:

While Musk’s new title will attract attention, the change of role for Guillen is significant. He was installed as head of Tesla’s automotive business in 2018 when the carmaker was mired in “production hell” trying to manufacture its Model 3 at high volumes.

His move to run Tesla’s fledging trucks programme comes as the group prepares to begin deliveries of its first battery lorry this year.

The company unveiled the “Semi” fully electric class 8 truck in 2017, complete with unconventional features for such a vehicle including a central seating position, and an angular front to allow for faster acceleration. Over the weekend, Tesla, which has been taking deposits for several years for the trucks but has yet to begin making the vehicle, teased a clip of its truck driving around a racetrack.

The bond markets have cooled a little today, after the selloff that spooked investors at the end of last week.

The yield on US 10-year Treasury bills has dipped back from Friday’s one-year high, to around 1.6%, suggesting that anxiety over inflation has faded (for how long, who knows?...)

UK 10-year gilt yields have also slipped back from this morning’s one-year high, as prices nudge higher.

European equities are also losing some of their early bounce, with the FTSE 100 index now down 10 points today (or -0.15%).

In the technology world, Stripe - the digital payments firm created by Irish brothers Patrick and John Collison - has been valued at $95bn in a new funding round.

That makes Stripe the most valuable private business to come out of Silicon Valley, amid the surge in demand for digital services since the pandemic began. More here:

Speaking of New York... the Dow Jones industrial average has hit a new record high at the start of trading.

The Dow gained 99 points, or 0.3%, to 32,877 in early Wall Street action.

Sportswear firm Nike (+1.9%) and retail chain Home Depot (+1.6%) are among the Dow risers, as traders anticipate a consumer spending boost as the latest stimulus checks arrive.

The wider market is more subdued, though, with the S&P 500 and the tech-focused Nasdaq both flattish.

Over in New York state, factories have reported that business activity grew steadily this month, with new orders increasing modestly, and shipments substantially higher.

This lifted the Empire State Manufacturing index by five points to 17.4, ahead of consensus.

The New York Fed explains:

Business activity grew at a solid clip in New York State, according to firms responding to the March 2021 Empire State Manufacturing Survey. The headline general business conditions index climbed five points to 17.4, its highest level since last summer.

New orders increased modestly, and shipments were up substantially. Delivery times continued to lengthen, and inventories were somewhat higher. Employment levels and the average workweek both increased modestly.

Input price increases continued to pick up, rising at the fastest pace in nearly a decade, and selling prices increased significantly. Looking ahead, firms remained optimistic that conditions would improve over the next six months, anticipating significant increases in employment.

Britain has seen a surge in economic optimism this month, in another sign that the UK’s vaccine rollout is lifting confidence.

Ipsos MORI’s latest Political Monitor found that 43% of Britons think the economy will improve over the next 12 months - an increase of 14 points from February.

In contrast, 41% of people think things will get worse, a drop of 19 points, with 14% thinking things will stay the same.

That lifts Ipsos Mori’s economic optimism index to +2, from -31 in February. That’s the highest reading since 2015, and the biggest upwards swing since the polling began over 40 year ago.

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Clearly BoE governor Andrew Bailey isn’t the only person feeling more positive.

The polling company explains:

This is the most optimistic the British public have been on the economy since 2015 and the largest month on month improvement (a swing of 16.5 points) since our polling began in 1978 – although the fall in optimism at the start of the pandemic was even greater (when our Economic Optimism Index fell from -13 in February 2020 to -54 in March).

The survey polled 1,009 adults aged 18+ across Great Britain between 5th and 12th March 2021. That’s shortly after the Budget, and the news that the furlough scheme will be extended until the end of September.

Gideon Skinner, head of political research at Ipsos MORI, explains:

Although we shouldn’t be complacent that the pandemic is beaten yet, there are clear signs that the public is becoming more optimistic that Britain’s economy can bounce back from the hit it has taken over the last year, fuelled by very positive ratings about the vaccine rollout which have increased even further this month.

Ipsos MORI has been tracking Britain’s economic optimism for over 40 years, and never have we seen a bigger drop than at the start of the pandemic, nor a bigger rise than we see now one year on (admittedly from a low base), highlighting the huge impact the virus has had on the country.

Even so, there are some groups – women, working age adults, social grades DE and in the north of the country – who are not as optimistic as others, and the recovery will need to deliver for them too.

The poll also found that 88% of people think the government has done a good job at ensuring the public are vaccinated as soon as possible, up from 78%.

Labour leader Keir Starmer’s approval rating has turned negative for the first time [with 33% of those polled satisfied, and 42% unsatisfied].

More details here.

Shares in doorstep lender Provident Financial have slumped by over a quarter today after it revealed it faces an FCA probe, and warned it could put its consumer credit division into administration.

Kalyeena Makortoff explains:

The doorstep lender Provident Financial has said it could put its consumer credit division into administration unless borrowers agree to a scheme that will sharply reduce compensation payments for customer complaints.

The high-cost lender also revealed that it is facing a regulatory investigation by the Financial Conduct Authority into a string of issues including whether it carried out proper affordability checks before lending to borrowers.

Provident said profits had been affected by the Covid pandemic and a surge in complaints against its consumer credit division (CCD) by claims management companies that lodge grievances on customers’ behalf. It made £25m worth of payouts in the second half of 2020, compared with £2.5m in the same period in 2019.

The yield, or interest rate, on UK government bonds has nudged its highest level since the market crash a year ago.

UK 10-year gilts are trading at a yield of around 0.85% today, up slightly on Friday night’s 0.82%.

That’s still a low yield by historic standards, indicating the UK can borrow relatively cheaply for the next decade.

As this chart shows, though, gilt yields have moved smartly higher since the start of 2021, amid a wider global shift, as investors have priced in a faster recovery.

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As reported earlier, Bank of England Governor Andrew Bailey sounded relaxed about gilt yield moves, saying the rise in rates in financial markets was consistent with economic recovery prospects.

Visits to UK shopping centres, high streets and retail parks rose 7% last week, even though restrictions on non-essential shops remain in place.

Figures from retail experts Springboard show that shopping centres saw the largest increase in visits, with footfall up 9.8% in the week to Saturday.

But overall, shopper numbers were roughly halved compared with a year ago.

Tuesday saw the biggest footfall increase which Springboard suggests may be due to hard-pressed parents finally getting a break from home-schooling....

Footfall rose on five of the seven days last week, increasing by +10% on each day between Thursday and Saturday with a peak of +14.1% on Tuesday, perhaps prompted by parents of school age children having some additional time to make trips following the return to school on Monday.

Footfall rose in all types of high street apart from in coastal towns where it dropped by 7.9%. Central London saw a notable increase, with footfall up +14.3% --- but that still left it 78.2% below the 2020 level, reflecting the slump in tourism and commuting.

Diane Wehrle, insights director at Springboard points out that footfall was tumbling a year ago, in the early days of the pandemic, adding:

With non-essential stores still closed until 12th April, the steady increase in visits to high streets and shopping centres delivers further evidence of the degree of pent up demand amongst consumers to return to stores.”

Britain’s inflation basket has been given a pandemic shake-up, to reflect the change in spending patterns over the last year.

Hand sanitiser, hand weights for home exercise and loungewear have been added to the basket of goods and services used to calculate the cost of living.

The Office for National Statistics has also added smart watches, smart lightbulbs, and electric and hybrid cars, reflecting the rise in green-tech spending.

Our economics editor Larry Elliott explains:

In a snapshot of a country learning to live with Covid-19, the Office for National Statistics said there had been a surge in spending on products designed to keep people safe and fit.

The ONS said turning bedrooms into work spaces had also had an impact on its choice of items. Reflecting the fact that suits have been left in the wardrobe as people have used their home as the office, the new basket includes men’s tracksuit bottoms and women’s sweatshirts.

The closure of gyms had forced people to exercise at home, leading to the inclusion of dumbbells and smart watches (which track exercise), while hand sanitiser – a niche product at the end of 2019 – had become a household staple within weeks of the virus arriving in the UK early last year.

The ONS has evicted a few dated items from the basket, including gold chains. white chocolate bars, and fruit smoothies.

Ground coffee has also been ditched (rather to my surprise!), in favour of coffee sachets to reflect the trend towards all-in-one drinks.

15 Mar 202107.02 EDT

Kalyeena Makortoff

Deliveroo’s much-anticipated IPO has moved a step closer, with the company saying today it plans to raise £1bn from its stock market flotation.

My colleague Kalyeena Makortoff explains:

The meal delivery company confirmed the fundraising target for the first time, adding that the initial public offering (IPO) would mean selling newly issued and existing shares from some of its current investors on the London market.

While the IPO is expected to value the company at more than £5bn, the formal valuation will not be clear until Deliveroo sets the price at which it intends to sell shares and the number of shares in the offer.

Deliveroo’s IPO plans were revealed earlier this month, only days after the UK government committed to changing rules that would allow founders, such as Deliveroo’s Will Shu, to keep control of their companies despite selling shares to investors on the stock market....

European start-up site Sifted reports that those who helped with Deliveroo’s ‘friends and family’ funding round in 2013 could make a 60,000% return (depending on that IPO valuation....) A reminder of how tech investments can really flourish.

European investors are also in an optimistic mood this morning, pushing the Stoxx 600 index of Europe’s listed companies up 0.5%.

The UK FTSE 100 has gained 23 points, or 0.3%, to 6784.

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Betting group Flutter is the top riser in London, up 7%, after saying it is considering floating a small stake of its FanDuel site on the US stock market.

Airline group IAG (+2.6%), engineering group Melrose (2%) DIY chain Kingfisher (+2.2%) and retail chain Next (+1.8%) are also in the FTSE 100 risers, indicating hopes for an economic recovery after the pandemic.

President Biden’s stimulus package is also cheering investors, as Neil Wilson of Markets.com explains:

The passing of the $1.9tn relief bill and the imminent arrival of stimulus cheques in the US is clearly positive for risk.

As is the growing confidence that things will be back to normal by the summer, at least in the US and UK. Even in Europe with all its vaccine trouble, there is confidence things are looking better and economies are able to withstand the virus much better than last year.