Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The economic cost of Covid-19 is mounting, forcing struggling companies to slash jobs even as governments try to unlock their economies without fuelling the virus’s spread.
In the last few minutes, British travel food group SSP has confirmed it is planning to cut up to 5,000 jobs. That would be over half its workforce, as it implements a reorganisation to address the crisis.
The firm, which runs the Upper Crust and Caffè Ritazza outlets at airports and railway stations, has been hurt badly by the slump in travel since the pandemic started. It has concluded that sales will remain very subdued for months — with demand for long-haul flights likely to remain very low for month.
In a grim statement to the stock market, SSP says:
Our expectation is that by the autumn only around 20% of units in the UK will have opened. We have therefore come to the very difficult conclusion that we will need to simplify and reshape our UK business, and we are now starting a collective consultation on a proposed reorganisation.
If the pace of the recovery continues at the current level, this could lead to up to c. 5,000 roles becoming redundant from within the Head Office and UK Operations.
That slump forced aerospace giant Airbus to announce 15,000 job cuts last night, including 1,700 in the UK.
As chief executive Guillaume Faury put it:
“Airbus is facing the gravest crisis this industry has ever experienced.”
That crisis is also forcing EasyJet to axe thousands of jobs, but it also runs beyond the travel sector. Furniture chain Harveys and shirt maker TM Lewin both fell into administration on Tuesday, costing 800 jobs – with another 1,300 at risk.
The Covid-19 slump has now hit the UK property sector, with some people much more reluctant to risk taking on a new mortgage – or possibly even to risk visiting properties.
Nationwide building society has reported this morning that prices fell by 0.1% in June, the first annual fall since 2012.
On a monthly basis, UK house prices slid by 1.4% compared with May (when they had shrunk by 1.7%).
Robert Gardner, nationwide’s chief economist, said:
“It is unsurprising that annual house price growth has stalled, given the magnitude of the shock to the economy as a result of the pandemic. Economic output fell by an unprecedented 25% over the course of March and April – almost four times more than during the entire financial crisis.
“Housing market activity also slowed sharply as a result of lockdown measures implemented to control the spread of the virus. While latest data from HMRC showed a slight pick-up in residential property transactions from April’s low, in May they were still 50% lower than the same month in 2019.
“Mortgage activity saw an even more dramatic slowdown –there were only 9,300 approvals for house purchase in May, down from 73,700 in February and 86% lower than in May 2019. However, our ability to generate the house price index has not been impacted to date, as sample sizes have remained sufficiently large (and representative) to generate robust results.
More to follow…
- 8.55am BST: German unemployment count for June – expected to rise by 120,000
- 9.30am BST: UK manufacturing PMI for June – expected to rise to 50.1, showing a little growth
- 2pm BST: US manufacturing PMI for June – expected to rise to 49.6, showing a small contraction