By Powerscourt on 22/06/2020
Powerscourt Coronavirus Briefing – 22 June 2020
UK Prime Minister Boris Johnson will on Tuesday unveil his plan for the next stage of coronavirus lockdown relaxation in the UK, just as his Government announces the outcome of a review to the 2m social distancing rule.
The announcement comes against a background of continued lobbying by some of the business sectors hardest hit by the coronavirus lockdown, in particular the UK’s leisure industry, with widespread expectation that pubs will reopen on July 4.
Reports over the weekend suggested that drinkers attending pubs will be required to provide their details to bar staff, supporting contact tracing in the event of outbreaks.
The Chancellor of the Exchequer, Rishi Sunak, is expected to issue further stimulus to support some of the industries worst-hit by coronavirus over the summer, with broad expectation of a cut to VAT. However, the Financial Times today speculates on a potential clawback in the autumn with the implementation of tax rises.
As restrictions lift in the UK, reports suggest a worrying spike in the coronavirus reproduction or R rate in Germany. Health authorities say that the rate jumped to 2.88 from a previous 1.79, a development largely attributed to an outbreak traced to a slaughterhouse in North Rhine-Westphalia. The region has quarantined around 7,000 people.
In the US, coronavirus cases have risen by 15% over the past fortnight, with cases rising in 18 states across the South, West and Midwest. Scott Gottlieb, the former Commissioner of the US Food & Drug Administration, warned in an interview that there was a possibility of an “exponential” rise in COVID-19 cases in Texas, Arizona and Florida, apparently contradicting President Trump’s repeated assertion that the virus was “going away”.
European markets are expected to open lower Monday after growing anxiety around signs of a resurgence of the virus, on both sides of the Atlantic.
WHAT ARE COMPANIES SAYING?
Industrials & Transport
In a trading update today, the global aviation services business said that trading in Q2 has been ahead of management expectations, with a recovery in flight activity anticipated from early July. The company said that it had been cash generative during April and May, despite the pandemic, due to unwinding its working capital and achieving good cash collection from customers, as well as benefiting extensively from government schemes mitigating payroll costs. As a result the business said that its liquidity headroom leaves it able to “emerge strongly from this challenging period.”
Financials & Real Estate
The UK insurance and travel business said in an AGM trading update today that while its travel business has been out of action since mid-March as a result of the pandemic, its insurance business has been “resilient” and “continues to make progress”. The company said it would remain focused on costs and efficiency while continuing to seek good results in the insurance business. It also said that its travel business is ready to resume trading as soon as restrictions are lifted. The company also noted that the Board believes the business has “significant potential” that “has not been fulfilled in recent years”, and that an update on strategy will be provided at the interim results.
The loan provider said in a statement that it has seen a “substantial increase” in the rate of complaints. It said that it is in discussions with the Financial Conduct Authority about a voluntary requirement as it seeks to clear a backlog of about 9,000 complaints. It expects to agree to extend the completion date beyond 26 June. It added in the statement that it expects the additional cost of complaints received is expected to be material.
The British videogame developer and publisher sad that it saw digital sales amplified at the end of its 2019 financial year as a result of the pandemic. It said digital sales represented 67% of revenue compared to 59% last year. It also said that it does not expect any material loss resulting from Covid-19, with all employees transitioning to remote working with minimal disruption to systems and processes. It also highlighted that it launched its F1 Esports Virtual Grand Prix during the sporting calendar blackout, which drew a combined online and TV audience of 30 million.
The cinema business said in a statement this morning that it had secured a new $250m debt facility with a maturity of 2023. It said that this facility, together with a revolving credit facility increase of $110m announced previously, strengthens the group’s balance sheet in preparation fro cinema’s re-opening around the world.
IN THE NEWS
Sunak set to follow VAT stimulus with autumn tax rises – Financial Times
How the world’s largest maker of rubber gloves is coping with Covid – Financial Times
Coronavirus: Tina is back and investors are dancing to her tune – The Times