UK borrowing hits record £55bn in May; retail sales rebound -business live

• We also learned that retail sales rebounded in May with sales rising 12% month-on-month. That is a significant improvement from the -18% contraction in April

• The Office for Budget Responsibility updated its analysis on the economic impact of the Covid-19 crisis. It said “GDP and overall tax receipts have performed a little less badly than assumed, while average earnings have fallen less sharply”

• The Bank of England announced it was scaling back its 7-day US dollar repo operations, which was one of the measures meant prevent the financial system grinding to a halt at the start of the Covid-19 crisis

• The competition watchdog launched an investigation into four pharmacies and convenience stores suspected of charging “excessive and unfair prices” for hand sanitiser

• The pound fell below $1.24 for the first time since 1 June, and hit its lowest level against the euro since late March, as investors digested yesterday’s BoE stimulus measures and the data this morning

• The CEO of crisis-hit payment group Wirecard resigned just a day after the company said that €1.9bn worth of cash seemed to be missing

That’s all from us today. We’ll be back on Monday. Have a good weekend and stay safe –KM

Wall Street is open for trading and it’s a strong positive start for US stocks:

• S&P 500 is up1.1% at 3,150 points
• Dow is up 1.2% at 26,395 points
• Nasdaq is up 0.98% at 10,040

The pound is now at its lowest level against the euro since late March.

Comments out of a meeting of EU leaders are not raising hopes of a smooth end to the Brexit transition period.

European Council president Charles Michel said that they need to intensify negotiations with Britain and are committed to a deal, but not at any cost.

US futures are pointing to a positive open on Wall Street in less than an hour’s time:

• Dow futures are up 1.3%
• S&P 500 futures are up 1.1%.
• Nasdaq futures are up 0.99%

Meanwhile, European stocks have extended their gains since this morning:

• FTSE 100 is up 1%
• Germany’s XETRA DAX is up nearly 1.%
• France’s CAC 40 is up 1.4%
• Italy’s FTSE MIB is up 1.1%

Following the borrowing data release this morning, the Office for Budget Responsibility has updated its analysis of Covid-19’s impact on the UK economy:

Relative to our reference scenario, initial estimates show that GDP and overall tax receipts have performed a little less badly than assumed, while average earnings have fallen less sharply.

The headline unemployment measure has yet to show much effect from the crisis, but the claimant count measure that relates directly to benefit claims has climbed very sharply.

However, it added that:

Today’s data highlight the gathering fiscal impact of the coronavirus crisis, but the numbers will be prone to revision. It will be many months before the true scale of the shock becomes clear

But mark your calendars, because on 14 July the OBR will publish three scenarios showing different degrees of scarring from the coronavirus pandemic on public finances:

Newsflash: Spain is expecting a decision in the coming hours as it negotiates with the UK over a travel corridor that would avoid quarantine.

That’s according to Reuters citing a foreign ministry source.

We’ll bring you more details as we get them.

UK Finance says lenders have granted 1.9m mortgage payment holidays over the past three months.

It means one in six mortgages in the UK are now part of a temporary deferred payment plan, which on average is worth £755 per month.

But for those that might still be facing trouble, the FCA earlier this month extended the payments freeze period that banks were allowed to grant to customers impacted by Covid-19 to the end of October. (And you’ll remember this morning that a similar extension was granted on the payments freeze for personal loans and credit cards).

UK Finance said that homeowners who have requested a payment holiday will be contacted by their banks as the payments freeze comes to an end so they can consider their next steps.

The banking lobby group said:

Borrowers who can afford to resume payments should do so, as it will always be in their best interests in the long run. However, for those who can’t, then help is at hand. Where possible, borrowers will be able to explore their options online.

The CEO of crisis-hit payment group Wirecard has resigned just a day after the company said that €1.9bn worth of cash seemed to be missing. (That’s roughly a quarter of its total balance sheet.)

In an incredibly short market statement, Wirecard said:

In mutual consent with the Supervisory Board of Wirecard AG, Dr. Markus Braun resigned today with immediate effect as member of the management board.

The Supervisory Board of Wirecard AG appointed Dr. James H. Freis, Jr., who was appointed yesterday as member of the management board, as interim CEO with sole power of representation.

Wirecard’s share price has plunged nearly 40% today, with shares down nearly 80% over the past two days.

As the FT explains (£): “Wirecard was plunged into crisis on Thursday when it revealed that €1.9bn held in escrow accounts at two Asian banks was missing. It was told by EY, its longstanding auditor, that there were indications a trustee of Wirecard bank accounts had attempted “to deceive the auditor” and may have provided “spurious cash balances”.

Wirecard said yesterday that the board was “working intensively together with the auditor towards a clarification of the situation.”

The pound is losing ground this morning and has fallen below $1.24 for the first time since 1 June.

Sterling was already hit hard by the Bank of England’s decision to ramp up its quantitative easing programme by £100bn yesterday.

But it looks like even the surprise rebound in retail sales wasn’t enough to perk up the GBP/USD currency pair this morning:

Some warm words for businesses trying to weather the pandemic from the Queen herself.

(But the real question on everyone’s mind, surely, is whether the Queen expecting a V-shaped recovery?)

While health secretary Matt Hancock hails the reduction of the coronavirus threat level from 4 to 3, there are still lingering concerns about how opportunists are taking advantage of consumers during the pandemic.

The Competition and Markets Authority has launched an investigation into four pharmacies and convenience stores suspected of charging “excessive and unfair prices” for hand sanitiser products during the Covid-19 pandemic.

(It doesn’t look like they’re releasing the names of the suspected businesses but we’ll let you know if there are any updates)

The competition watchdog stressed that the investigation was in its early stages and it was not yet clear whether competition rules had been breached.

It will continue gathering information and will issue formal requests to the parties involved over the coming weeks.