Companies strive to keep working under Covid-19 restrictions – business live

Rishi Sunak also rejected the idea that UK workers might be ‘addicted’ to the newly-extended furlough scheme – pointing out that no-one chose the current situation.

The chancellor says the scheme will keep paying 80% of wages (up to £2,500 per month) – there had been rumours it might be cut to 60% or lower.

He’s also planning to adjust the scheme in August, to create “greater flexibility” – including allowing furloughed staff to return part-time. He also talks about employees picking up some of the bill….

Sunak explains:

Employers currently using the scheme will be able to bring furloughed employees back part-time.

And we will ask employers to start sharing with the government the cost of paying people’s salaries.

Full details will follow by the end of May, Sunak adds.

Here’s more details and reaction:

Just in: Chancellor Rishi Sunak has announced that the government is extending its Jobs Retention scheme for another four months.

This means UK firms will be able to furlough workers until the end of October, rather than making them unemployed.

Sunak has also told MPs that 7.3 million people have been furloughed in the UK, with almost one million employers taking up the scheme.

Our main UK Covid-19 liveblog has all the details, as Sunak updates MPs about his plans.

Sales at DIY firm Kingfisher were hit hard by the lockdown, but it now sees signs of improvement.

Kingfisher, which owns B&Q and Screwfix, has reported that sales tumbled by 24% in the February-April quarter.

UK sales fell by 14%, after the company closed all its stores when the lockdown began on 23 March. It’s been slowly reopening since, and selling stock online in the meantime – with e-commerce sales up four-fold since mid-March.

Thierry Garnier, chief executive officer, says:

“Having initially closed our stores in France and the UK, we have rapidly adapted how we operate to meet the essential needs of our customers safely during lockdown.

We started by transforming our operations to meet a material increase in online transactions through our click & collect and home delivery services.

Those new in-store measures include:

• · The provision of gloves, visors and masks to colleagues
• · Limiting the number of customers in store
• · Safe queuing before entering the store
• · Sanitiser stations throughout the store
• · Floor navigational markers to help enforce social distancing
• · Perspex screens at checkouts
• · Contactless or card payments only

Sales are now rebounding as customers venture back to stores, it says:

The fourth week of April reflected a significant improvement in the UK at both B&Q and Screwfix, largely due to increasing demand via contactless click & collect, and the reopening of some B&Q stores towards the end of the week.

Travel firms are among the fallers in the City today, despite Ryanair’s optimism that it can resume flights in July.

Cruise operator Carnival and British Airways owner IAG are both down around 2%, as City traders try to judge when people will be booking holidays again.

Health Secretary Matt Hancock has cautioned that it could be a while.

Asked on ITV’s This Morning show if people should accept that the normal summer holiday season for travelling abroad was cancelled, he replied: “I think that’s likely to be the case.”

Given the need for social distancing, Hancock explained, “it is unlikely that big, lavish international holidays are going to possible for this summer.”

Could the Bank of England be forced to cut UK interest rates below zero, to help the economy handle the Covid-19 slump?

In the past, the BoE has played this idea down — but the prospect of the deepest recession in centuries means everything may be on the table.

Deputy governor Ben Broadbent was asked about the issue of negative rates this morning, on CNBC, and he suggested it was a possibility.

Broadbent said:

“The committee are certainly prepared to do what is necessary to meet our remit with risks still to the downside.

“Yes, it is quite possible that more monetary easing will be needed at the time.

Last week, the Bank left rates at their current record low of 0.1%.

In contrast, the European Central Bank’s headline rate is 0%, with eurozone banks hit with negative rates to encourage them to lend.

Broadbent cautions that cutting borrowing costs below zero would have damaging consequences. Reuters has the details:

“We keep under review all our potential policy tools and this is a question that’s been thought about on and off since the financial crisis and it’s a balanced judgment,” Broadbent told CNBC television.

While cutting rates further could stimulate demand, they could but also have side effects for banks whose lending is vital for the economy, he said.

“These are the balanced questions that the committee has to think about,” Broadbent said.

Instead of cutting rates, the Bank could ease monetary policy by expanding its £645bn QE programme and buying even more government debt.

My colleague Richard Partington has outlined the government’s new guidance to UK companies, here.

Office workers should consider holding meetings outside, shop changing rooms should be cleaned after every user and takeaway customers should wait in their cars, under sweeping new back-to-work guidelines issued by the government on Monday.

Companies across Britain will have to consult with their staff and union officials about how they will keep employees safe as they return to work amid the gradual lifting of lockdown measures.

Under pressure from Labour and trades unions to impose safeguarding measures as the economy gradually reopens after more than a month of lockdown, the guidelines give limited time to some firms as they plan to reopen as soon as this week.

They range from urging office workers to sit back-to-back, rather than face-to-face, to limiting numbers in lifts and closing down canteen…

Ben Hancock, MD of Oscar Acoustics – an acoustics insulation firm — reports that the construction industry is busier this week.

He has employees working onsite at various building sites, who say activity has picked up notably.

This follows Boris Johnson’s speech on Sunday night, in which he said those who can’t work from home (ie, in construction or manufacturing) should be “actively encouraged” to get back to work.

But is it really safe? Hancock is worried that some workers may not properly understand the new ways of working:

With regards to the PM’s speech, I do have real concerns over our ‘safe operating procedures’ being affected by those who have not been properly briefed on them.

It took us the three weeks following the last big Boris speech to formulate and action the changes. If people return this morning having not consulted site management and are not aware of the new rules and systems, there are going to be issues.

Our teams have reported that there are far more people on site this morning. Where it was taking them 50 mins to drive to the sites last week, it took 1h 50m to get there this morning and on arrival, the car parks were full. So far, people seem to be sticking to the rules, e.g following one way systems, and 2 metre distancing.

It is something we are very closely monitoring.

The 6% jump in Vodafone’s shares this morning following its results has helped to lift the FTSE 100 by 25 points, or 0.4%.

France and Germany are becalmed, though, as traders worry about a second wave of Covid-19 infections scuppering plans to reopen economies.

At 5969 points, the FTSE 100 is up roughly 20% from its lows in March, but still down 20% this year.

Neil Wilson of Markets.com says investors are somewhat flummoxed:

Stock markets are in a bit of a muddle right now. On the one hand there are signs of economies emerging from stasis. New York governor Cuomo says three regions of the state will reopen this weekend. Britain has moved from ‘stay home’ to ‘stay alert’, Europe is reopening: there is light at the end of the tunnel, and markets are always first to move. Massive stimulus from central banks and governments helps, too.

But on the other hand, stimulus government stimulus can’t go on forever. Businesses will need to get back to a new normal of reduced earnings in the main. House Democrats are said to be plotting a 4^th massive stimulus bill this week, but it’s not clear whether this will pass. Signs of second-wave outbreaks across South Korea, China and even Germany stoke fears among investors that economies will, if not shut down again at scale, look very different to before as countries take sustainable steps to reopen.

Supermarket group Morrisons has updated the City on its measures to keep running through the lockdown.

Morrisons posted a 5.7% rise in group like-for-like sales for the last quarter – with stockpiling more than making up for a weak Easter.

Britain’s fourth largest supermarket group said the first quarter to 10 May had been “highly volatile”, during an “unprecedented” period of trading.

While sales are up, costs are up too. Morrisons says it hopes the current business rates holiday will cover its extra expenses, but….

At this stage, our best estimate is that the 2020/21 costs relating directly to COVID-19 are likely to be broadly offset by the in-year business rates cost saving, but the actual net effect is highly dependent on the length of the crisis and how customers respond as lockdown eases

It’s also been taking various measures to protect staff and customers, including:

• Protective screens introduced around the till area of almost 6,500 main bank checkouts in ten days, plus further screens introduced in front of checkouts, pharmacy counters and customer service desks
• Social distancing measures at all Morrisons sites, including marshal-controlled entry and reconfigured customer flow at all our stores
• Hand sanitiser, gloves, and masks available for all store colleagues
• Increased cleaning and other health and safety initiatives at all our sites
• Temporarily closed all our in-store cafés, food-to-go and service counters

Shares in property company Land Securities have slumped by 10% this morning, after the coronavirus crisis hit its operations.

With some tenants struggling to pay their rent in the lockdown, Land Securities has been forced to slash the value of its property assets by 8.8% or £1,179m.

One recently completed development, Westgate Oxford, has reduced in value by 28.1%.

This revaluations means Land Securities made a pre-tax loss of £837m for the 12 months to 31 March, up from a £123m loss in the previous year.

The Covid-19 crisis came on top of the problems in the UK retail sector, the company explains:

The majority of the valuation deficit is attributable to our Retail segment, which suffered a 20.5% decline over the 12 months as a result of the challenging environment and ongoing structural changes, exacerbated at the year end by the early effects of Covid-19.

Telecoms giant Vodafone has cautioned shareholders that it isn’t immune from the coronavirus — despite maintaining its dividend today.

Although demand for data services has risen in the lockdown, roaming fees have been predictably reduced.

Vodafone says:

The economic impact of the COVID-19 pandemic in our markets, whilst uncertain, is likely to be significant. Whilst our business model is more resilient than many others, we are not immune to the challenges.

We are experiencing a direct impact on our roaming revenues from lower international travel and we also expect economic pressures to impact our customer revenues over time.

This means Vodafone isn’t actually able to give profit guidance for the coming year.

Shares have jumped almost 5%, though, after it reported an operating profit of over €4bn for last year, up from an operating loss of €951m. It’s sticking with its dividend of €0.09 per share too – some relief for the City.

High street suit maker Moss Bros is also outlining plans to resume operations, following the UK government’s moves to ease the lockdown.

Moss Bros told shareholders it will restart its online operations on May 13, with a “reduced workforce”.

The company, which had closed its stores in March, says it has made some redundancies “where necessary and unavoidable”. It has also used the government’s Job Retention scheme to furlough some workers.

Moss Bros is also getting ready to reopen its high street shops saying:

The Board also notes the Government’s recent update regarding the potential phased reopening of shops from 1 June and is developing plans to reopen its stores in an orderly manner in light of this.

Ryanair’s CEO Eddie Wilson says its “time to get Europe flying again”, as he outlines plans to resume flights from 1st July:

Now that Europe’s States are allowing some gradual return to normal life, we expect this will evolve over the coming weeks and months.

With more than 6 weeks to go to 1^st July, Ryanair believes this is the most practical date to resume normal flight schedules, so that we can allow friends and families to reunite, commuters to go back to work, and allow those tourism based economies such as Spain, Portugal, Italy, Greece, France and others, to recover what is left of this year’s tourism season.

Budget airline Ryanair has announced plans to restart two-fifths of its flights from the start of July — with restrictions to address Covid-19 fears.
Ryanair aims to operate nearly 1,000 flights from 1 July — “subject to Government restrictions on intra-EU flights being lifted, and effective public health measures being put in place at airports.”

It plans to restore 90% of its pre-Covid-19 route network by operating some flights to most of its 80 bases in Europe.

But how will passengers be safe? Ryanair says staff and passengers will wear face masks, and take temperature tests at the airport. There’ll be no queuing for the toilets in the aisle either.
It says:

“On board its aircraft, Ryanair cabin crew will wear face masks/coverings and a limited inflight service will be offered of pre-packaged snacks and drinks, but no cash sales. All onboard transactions will be cashless.

Queuing for toilets will also be prohibited on board although toilet access will be made available to individual passengers upon request. Ryanair encourages passengers to regularly hand wash and use hand sanitizers in airport terminals.”

An interesting example of how companies are striving to maintain operations, with little certainty over when normal service will be restored.

My colleague Julia Kollewe has all the details:

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

There’s an edgy mood in the markets this morning, amid concerns that reopening the global economy after the Covid-19 lockdown will be harder than hoped.

As Associated Press puts it:

Optimism over plans for reopening in many countries after shutdowns aimed at battling the pandemic has taken some hits from reports of new waves of infections in states and countries that are further ahead in lifting lockdown measures.

Investors pointed to small but disconcerting increases of infections in South Korea, China and elsewhere.

In Germany, infections rose late last week, while Wuhan also reported its first case since lifting its lockdown in April. And in South Korea, a growing cluster of cases have been linked to a single patient who visited a series of nightclubs in Seoul.

Such incidents highlight just how hard it will be to return to normality.

This has weighed on Asia-Pacific stocks today, where the Australian S&P/ASX 200 index lost 1% and Hong Kong’s Hang Seng shed 1.45%.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, explains:

The Hang Seng led losses in Asia as a renewed coronavirus panic would mean a longer period of grounded planes and less retail activity in the city, as the housing bubble starts to burst.

European markets (which had such a strong run in April) have dipped back in early trading:

On the corporate front, supermarket chain Morrisons, DIY chain Kingfisher, property firm Land Securities and mobile network giant Vodafone are all reporting results.

The agenda

• 1.30pm BST: US inflation rate: expected to drop to just 0.4% in April, from 1.5%