A worker wears a protective mask at the Volkswagen assembly line in Wolfsbrug after Europe’s largest car factory restarted production in April. Photograph: Reuters
A worker wears a protective mask at the Volkswagen assembly line in Wolfsbrug after Europe’s largest car factory restarted production in April. Photograph: Reuters
Almost anyone in any country around the world could tell you that economies are in recession: the question is, how deep?
For Germany the technical marker of recession - two consecutive quarters of declining growth - came earlier than expected, with the news that the fourth quarter of 2019 saw output fall, before the steep decline seen in the first three months of 2020 and the deeper losses expected in the current quarter.
However, while steep, Germany’s downturn has so far been less severe than France and Italy, and only slightly worse than the UK’s (subject to the big revisions that are likely because of the difficulties of collecting data). Overall the eurozone economy shrank by 3.8% in the quarter.
Here are some of the other important business and economics developments from throughout the day:
US retail sales fell in April at the fastest rate ever seen as lockdowns prevented consumers from spending.
Brexit news is here again: the latest round of negotiations ended with no progress and fighting talk from the EU and the UK, with time running out on agreeing a trade deal or transition extension to avert an abrupt move to World Trade Organisation trade terms at the end of the year.
The number of companies or countries at risk of having theircredit ratings cut to junkfrom investment grade has been pushed to a record high of 111 by the coronavirus pandemic, according to research by S&P global ratings research.
Royal Mail shares jumped 8% after the postal service announced the shock departure of boss Rico Back. Royal Mail will pay £50,000 towards unexplained legal fees for his departure.
Transport for London is to raise the congestion charge by 30%, temporarily stop free travel for children and charge over-60s to travel at peak times as part of a deal to secure a £1.6bn bailout from the government.
You can continue to follow our live coverage around the world:
In the UK, NHS England has announced 186 more deaths of people who tested positive for Covid-19, bringing the total number of confirmed reported deaths in hospitals in England to 24,345
A Virgin Atlantic Boeing 747-400 is dismantled to be scrapped at St Athan, Wales. Photograph: Ben Evans/Huw Evans/REX/Shutterstock
And more on airlines: this time, Virgin Atlantic.
The carrier, which is still looking for a bailout after announcing 3,000 job cuts, has had interest from a dozen private investors, according to a source cited by Reuters.
The airline is also reportedly looking to defer orders for six Airbus A350 aircraft and 14 A330 Neo planes.
The winglet of an Ethiopian Airlines Boeing 737 Max 8 is seen as it sits grounded at Bole International Airport in Addis Ababa, Ethiopia. Photograph: Mulugeta Ayene/AP
Some updates on the embattled aviation sector.
First up, Ethiopian Airlines, whose Boeing 737 Max crashed fatally in March 2019, expects compensation talks with the US manufacturer to finish by the end of June.
The crash was the second in the space of a few months, and triggered the worldwide grounding of the 737 Max after a sensor fault was identified.
Reuters reported that Ethiopian Airlines boss Tewolde Gebremariam said the airline is asking Boeing to compensate it for the accident’s “impact on the brand”. He also said:
We have invited Boeing to discuss compensation. It’s compensation for the grounded Max... there is also compensation for delayed delivery of the Max that was supposed to come and loss of revenue.
By the end of June, which is the end of our fiscal year, we should have something... meaning compensation.
The 737 Max grounding was then of course followed by an almost global freeze on passenger flights, putting airlines all over the world at risk of collapse. Germany’s Lufthansa is looking for state aid for its various airlines in their home countries, including Belgium’s Brussels Airlines.
The Belgian government said on Friday it had told Lufthansa it could only invest in its Belgian subsidiary Brussels Airlines if certain conditions were met, according to a joint statement with Lufthansa. That included the prospect of the business returning to profitability.
US stock market futures have taken a tumble ahead of the opening bell on Wall Street today - and they were not helped by the worse than expected US retail sales.
The S&P 500, the Dow Jones industrial average and the Nasdaq are all set for declines of about 1%.
US stock market futures fell on Friday. Photograph: Refinitiv
Economists had expected a 12% decline in US retail sales, so a huge fall was priced in. However, the fact that it was so far off estimates shows the extent of the turmoil in the US economy.
The data also show a big redistribution of spending underlying the overall decline.
Retail trade sales were down 17.8% on last year, with clothing shops down 89.3% - a wipeout. Yet non-store retailers - including online giants such as Amazon - were up 21.6% from last year.
US retail sales plunged by 16.4% in April compared to March as lockdown restrictions bit, according to the US Census Bureau - the fastest rate on record.
WOW! US Retail Sales fell by 16.4% in April, the most on record and far worse than expected. Cumulative decline in retail sales in March-April 22%! pic.twitter.com/u8kMdhNvDY
Barnier is still talking. Via Reuters, he has said that an agreement is still possible but that the EU is ready for “no deal” and will be stepping up preparations.
Before the pandemic a no-deal end to the Brexit transition period was seen as one of the biggest risks to their prospects by many British businesses.
It would mean that trade between the UK and the EU would default to World Trade Organisation terms - which could mean an overnight imposition of tariffs on all manner of goods and complex disruptions to services.
However, in the light of the coronavirus pandemic, some analysts are speculating that it would be difficult to identify precisely the effect of WTO trade, making it more politically palatable.
Barnier: "We will not bargain away our values for the benefit of the British economy"
Sterling has fallen by 0.6% today against the US dollar, hitting its lowest level since 27 March, with traders blaming the Brexit impasse. One pound bought you $1.2155 at its lowest.
The EU’s chief negotiator, Michel Barnier, has added his tuppence, following his counterpart, and it’s fiery stuff:
We will not bargain away our values for the benefit of the British economy.
Here are the key points from him so far:
The trade talks were disappointing, after the UK refused to engage on discussing a level playing field [promises to uphold common standards on the environment, health and workers’ rights so UK businesses don’t get an unfair advantage]. There will be no deal without this agreement.
The UK will have to be more realistic if it wants a deal.
The UK cannot pick and choose the best aspects of the EU without meeting obligations that members must meet.
The next round of negotiations must bring new dynamism to avoid a stalemate.
Remember, the UK officially has until the end of June to either ask for an extension of the Brexit transition or else decide to end the transition period without a trade deal in December (or agree some kind of fudge).
Some of the earlier enthusiasm among European investors has tailed off, with market gains diminishing. Some indices are now in the red:
FTSE 100: +0.6% at 5,775
Germany’s DAX: +0.7% at 10,412
France’s CAC: -0.1% at 4,267
Italy’s FTSE MIB: -0.1% at 16,846
Spain’s IBEX: -0.7% at 6,502
Europe’s STOXX 600: +0.3% at 328
US futures are down, indicating a drop of roughly 1% for the Dow, S&P and Nasdaq when Wall Street opens. A revival of fears over the US-China trade wars adds to concerns about the impact of the coronavirus crisis.
Comments (…)
Sign in or create your Guardian account to join the discussion