Line chart of Price difference between Brent crude and the finished products ($ per barrel) showing Refining oil in Europe has become less profitable

UK unveils £30bn recovery package

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Latest news

As governments around the world roll out plans to rebuild their economies, the UK has unveiled its latest £30bn package of stimulus measures designed to stave off an employment disaster, including targeted tax cuts and new job support schemes.

The measures, which include a job retention bonus for employers, meal discounts to encourage eating out, and VAT and stamp duty reductions, take the total cost of the Treasury’s Covid-19 support measures to about £189bn since March.

Rishi Sunak, the UK’s chancellor, told the House of Commons: “Although hardship lies ahead, no one will be left without hope. Where challenges arise we will overcome them.” He warned that the economy still faced “profound economic challenges” with significant job losses. 

Carolyn Fairbairn, director-general of the CBI business lobby, welcomed the package but cautioned: “With nearly 70 per cent of firms running low on cash, and three in four reporting lack of demand, more immediate direct support for firms, from grants to further business rates relief, is still urgently needed.”

Markets

European stocks retreated on Wednesday while the gold price tested a nine-year high as investors tracked a surge in coronavirus cases that threatens to undermine economic recoveries across the world. US shares opened higher, despite Texas, California and Florida reporting an increase in outbreaks.

Christine Lagarde, president of the European Central Bank, has opened the door to using its €2.8tn asset purchase scheme to switch from “brown” to “green” bonds. In an exclusive interview, she told the FT the bank “has to look at all the business lines and the operations in which we are engaged in order to tackle climate change, because at the end of the day, money talks”.

Investors are betting on big swings in US stock prices, with volatility indices indicating potential shake-ups in the benchmark S&P 500 reflecting unease over the scale of the market recovery since March. “We are all basically trying to fit historical models and patterns (on to) today’s scenario,” said Randy Frederick at Charles Schwab. “The reality is the scenario today is unique.”

Business

The online fashion retailer Boohoo has commissioned an independent review of its UK supply chain after growing concerns from investors and customers. The probe follows reports into the resurgence of coronavirus in Leicester, with workers in the supplier companies allegedly paid below the minimum wage and suffering poor working conditions.

EU banks with lower capital ratios — and smaller cushions against losses — appear to have booked smaller provisions in the first quarter of this year than banks with larger ratios, warns Simon Samuels from Veritum Partners. Without higher provisions, Europe risks “entering the post-coronavirus world with weaker banks saddled with higher levels of bad loans and still failing to regain the trust of global investors”.

Oil refineries are struggling as the worst demand-crash in decades cascades through the industry, leaving plants around the world at risk of closure with demand for fuel depressed, stockpiles bulging and processing costs high. “There will be a shakeout in the refining sector,” said John Auers, executive vice-president of Turner, Mason & Company, a consultancy.

Global economy

Covid-19 has not so far transformed the world but it has accelerated its development, technologically, socially and politically, writes the FT’s chief economics commentator Martin Wolf. He describes the tension between “a rising despotic superpower . . . with real frailties” in China and “an incumbent superpower that has lost its way” in the US. “The western crisis is a crisis of values. We can overcome it. But it will be hard.”

Government borrowing costs in the eurozone have fallen back to levels last seen before the start of the coronavirus crisis. The ECB’s massive programme of asset purchases — announced in mid-March at €750bn and expanded last month to €1.35tn — has since improved sentiment, pulling borrowing costs back down and making investors more confident.

Line chart of Lean meat white strip pork (Rmb per kg) showing China's pork prices rebound

Chinese consumers face a fresh increase in meat prices and an uptick in food price inflation after Beijing suspended imports from a swath of overseas processing plants following infections in slaughterhouses around the world. EU, US and Brazilian authorities have rejected concerns over food safety and complained about shouldering extra charges.

Get in touch

How is your workplace dealing with the pandemic? And what do you think business and markets — and our daily lives — will look like after lockdown? Please tell us by emailing [email protected] We may publish your contribution in an upcoming newsletter. Thanks

The essentials

Covid-19 has disproportionately affected black, Asian and other ethnic minorities. Yet black scientists in the UK and the US are not leading research into the reasons why, says Marja Makarow, chair of Technology Academy Finland, who calls for more ethnic minority researchers on selection panels and greater efforts to recruit people from under-represented groups into science.

Beware the backlash: employers putting profits before the welfare of workers during the Covid-19 crisis have provoked criticism and increased a focus towards fairness on staff and supply chains. There is mounting evidence that responsible behaviour delivers stronger long-term investment returns. 

Travelling from New York to London is surprisingly easy at the moment, but FT editor-at-large Gillian Tett was shocked at the difference between the two cities. Face masks, social distancing and testing are much more widespread in the US, with important lessons for governments: “they must pay close attention to these subtle, embodied behavioural patterns and devise public health policies that chime with them.”

Final thought


© AFP via Getty Images

The FT’s arts editor Jan Dalley delighted in a return to the National Gallery, one of a number of museums now reopening with extra Covid-19 precautions including advanced booking and one-way systems. While enjoying art displayed in new settings with philanthropic funding, she stresses the importance of continued government support for “the sheer grinding business of keeping our institutions alive and running”.