By Powerscourt on 26/04/2020
Powerscourt Coronavirus Briefing – 26 April 2020
The stark choice between saving economies and saving lives is laid bare today with the grim milestone of 200,000 coronavirus deaths passing just as social distancing restrictions begin to lift in some places.
In the UK Boris Johnson returns to work tomorrow. He will face a split in his cabinet on when to start easing lockdown. The Treasury under Chancellor Rishi Sunak is said to be in favour of lifting restrictions soon while Health Secretary Matt Hancock continues to urge caution. UK deaths are falling but the rate is too slow to allow for a system of testing and contact tracing to function effectively, according to Professor John Edmunds, a member of the government’s Sage group of Covid-19 experts.
Some sectors of the UK economy are already starting to reboot. Housebuilders Bellway, Berkeley and Barratt are reported to be restarting construction while Leon, Pret A Manger, Burger King, McDonalds and KFC plan to reopen some stores this week.
Tata Steel has become the latest major employer to request financial support to the value of £500m in commercial loans from the UK and Welsh governments.
The US is bracing itself for a week of grim economic data. First quarter GDP figures are expected to show the first economic contraction in six years.
WHAT ARE COMPANIES SAYING?
Consumer and Retail
The retail chain run by Mike Ashley has asked some suppliers to take a 20% cut on outstanding bills, as a result of the difficulties caused by the Coronavirus pandemic. Seán Nevitt, head of global commercial, has sent a letter to suppliers explaining that: “We consider this reasonable and prudent treasury management and the discount will be used to support what will be out-of-season stock once the stores reopen.” One supplier has reportedly said it would resist the discount.
The DIY chain has reopened 20 of its stores, which have been closed since March in an effort to slow the spread of Coronavirus. Customers have been allowed back into some stores this weekend, with more set to open if this trial proves a success. Chief executive Damian McGloughlin said: “We have taken this time to carefully review and make a large number of changes to our operations in preparation for a safe, phased reopening, in line with Government guidance on social distancing and that means the doors can now reopen”.
The supermarket chain is risking a backlash as it decides whether to approve a £247m dividend after benefitting from a sales surge brought on by the coronavirus pandemic, alongside millions in taxpayer relief. This follows Tesco sparking anger earlier this month when it announced a £635m dividend despite being in line for £585m of rate relief.
Financial Services & Real Estate
Lloyds Banking Group
Lloyds Banking Group has redeployed hundreds of staff from branches to deal with emergency loan applications and customer support lines, with workers’ new roles including sending “decline emails” to small businesses applying for the government’s Coronavirus Business Interruption Loan Scheme (CBILS) and helping to make lending decisions, according to a bank executive. The bank said that it had approved more than 80% of completed applications.
The housebuilder has announced that it will restart work on 100 of its sites, about one-third of the total, from May 4. It is to start initially with
tradesmen such as carpenters and plasterers, rather than builders using heavy machinery, and staff must drive to sites alone rather than take public transport. Wardens will patrol and issue yellow and red cards to anybody who flouts new guidelines. Jason Honeyman, Chief Executive said: “We have got to get people used to the new way of working. It is not for two weeks, it could be for 12 months.”
The British property developer is to open around 80% of its sites this week, with builders having to undergo temperature checks before entering and working two metres apart. Founder Tony Pidgley, said: “We can’t accept being shut down until Christmas: that would be absolutely awful.”
Industrials & Transport
Britain’s largest steelmaker is seeking a government bailout worth about £500m, with the coronavirus crisis leading to plummeting demand from the construction and car industries. The group’s UK arm, which owns the vast Port Talbot steelworks in south Wales, has told the government that existing programmes announced to help businesses during the pandemic are likely to fall short given the scale of the disruption is has faced as a result of the lockdown.
Richard Branson is seeking a buyer for Virgin Atlantic, with his pursuit of a £500m government package requested to help the airline cope with the effects of the coronavirus outbreak on travel “effectively shelved” according to the Daily Telegraph. The airline is reportedly now focused on securing new private investment, with the expectation that a number of parties will form a consortia over the coming days. A Virgin Atlantic spokesperson has countered that the airline is still in talks with the government over a bailout package.
American aerospace giant Boeing’s £3.4bn deal to buy the passenger planes business of Brazil’s Embraer has collapsed. The grounding of Boeing’s 737 Max fleet after two fatal crashes had already strained the company’s resources, and the global aviation crisis brought on by the coronavirus pandemic has significantly reducing expectations for aircraft demand over the next few years. Embraer said it would sue Boeing, which it claimed had “manufactured false claims” and “wrongfully terminated” the deal
IN THE NEWS
Bosses ready to reopen lockdown Britain – The Times
Two weeks’ quarantine if travelling to UK under plans for ‘second phase’ of coronavirus response – The Daily Telegraph
New jobs fall two-thirds despite higher demand for health workers – The Financial Times