Pressure to reopen faster – business news 14 April 2021.
James Salmon, Operations Director.
Pressure to reopen faster, February export figures, news from Tescos, Easyjey, Babcock, Peacocks, SEISS payments and more.
Positive Covid data pressures Johnson to reopen faster
New official figures show 23% of recorded coronavirus deaths are now people whose primary cause of death was not COVID-19. Additionally, daily death figures by “date of death” reveal that Britain has had no more than 28 deaths a day since the beginning of April while Oxford University has calculated that the number of people in hospital with an active Covid infection is likely to be around half the current published daily figure. Covid deaths now make up just 4.9% of deaths registered in England and Wales, compared with 45% in mid-January, according to the ONS. MPs are now calling on Boris Johnson to take a less cautious approach to lifting restrictions to reduce the other harms caused by lockdown. Prof Carl Heneghan, the director of the Centre for Evidence Based Medicine at Oxford University, commented: “The issue is as we go about our daily lives there will be a slight increase in cases, but the key is not to panic. I think this over-cautiousness can be overcome by using a data-driven approach.”
February export figures released
The Office for National Statistics has released figures showing that UK trade with the EU recovered in February, with exports increasing by £3.7bn, or 46.6%, after a £5.7bn decline a month earlier. AJ Bell financial analyst Danni Hewson commented: “There is small comfort to be had in February’s trade figures. Exports to the EU, which dropped so dramatically off a cliff in January, have bungeed back up, though they are still £2bn down on pre-Brexit levels. Notably imports from the EU were less resilient and remain more than £5bn down.”
Tesco
Tesco said pre-tax profit fell by 20% to £825m in 2020 despite a pandemic-driven jump in group sales. The UK’s biggest grocer said it incurred £892m of covid 19 related costs during the year and repaid £535m of business rates relief. The retailer reported a 6.3 per cent rise in group like-for-like sales, including a 7.7 per cent lift in its core British market.
EasyJet
EasyJet forecast a ‘slightly’ better-than-expected results as it looked to cut costs by reducing its flying capacity, which was expected to increase from late May onwards. ‘Based on current travel restrictions in the markets in which we operate, easyJet expects to fly up to 20% of 2019 capacity levels in Q3 with an expectation that capacity levels will start to increase from late May onwards,’ the company said.
HMRC gives update on SEISS payments
HMRC has issued an update on SEISS grants, stating that the service to claim the fourth grant will be available from late April 2021. HMRC said: “If you are eligible based on your tax returns, HMRC will contact you in mid-April to give you a date that you can make your claim from. It will be given to you either by email, letter or within the online service.” HMRC added that self-employed claimants will need to confirm they meet all the eligibility criteria when making their claim – which has to be made on or before June 1, 2021.
Babcock in write-downs warning
Defence contractor Babcock has warned of write-downs totaling some £1.7bn, more than double analysts’ estimates, following a review of historic contracts and future income. In a trading update, the firm noted that the “vast majority” of impairments are one-off in nature and non-cash affecting, with group underlying operating profit expected to be reduced by around £30m annually. Babcock International said it will not pay a dividend for the 2021 or 2022 financial years – but nor will it come to the market for more money – as it embarks on a thorough restructuring of the business. The defence contractor said it conducted the review as it moves to simplify the business and reduce layers in a restructuring. It looked at around 100 contracts worth £2.6 billion per year, with each contract and balance sheet caption receiving a different level of view depending on its perceived risk
Peacocks bidders had no chance, critics say
The Times reviews the move by Philip Day’s right-hand man to rescue Peacocks, with the backing of Day himself. The “phoenixing” of Day’s various retail interests in new vehicles fronted by Steve Simpson, his long-term lieutenant, has led to criticism. The Peacocks move infuriated rivals who have accused FRP Advisory, the administrators to Day’s assets, of “merely going through the motions, wishing to create the appearance of a fair and equal bidding process, when in fact they have a settled intention to compete with one particular party — an insider”. FRP insists it ran a full and fair process and rejects allegations that it had frustrated other bidders, such as Frasers Group’s attempts.
Katie Price owes £3.2m to creditors
Former glamour model Katie Price reportedly owes more than £3.2m to her creditors after accountants submitted a report raising concerns about her financial conduct. Price allegedly owes the cash from her company Jordan Trading Ltd, despite being declared bankrupt in 2019 and vowing to pay back £12,000 a month through an individual voluntary arrangement. The reality star was once worth more than £45m
Bank of England’s chief economist to run Royal Society of Arts
Andy Haldane is leaving the Bank of England after a 30-year career to join the Royal Society for Arts, Manufactures and Commerce (RSA) as chief executive in September. The Bank of England’s chief economist has been among the most optimistic forecasters throughout the pandemic. “Haldane’s departure means the Bank of England is losing its major – and maybe only – current hawk,” said James Smith, economist at ING. “In theory, at the margin this tilts the committee towards a more favourable view on negative interest rates if more stimulus were needed, though we still think this is unlikely.”
US Inflation
US Inflation rose 2.6% year-on-year in March, ahead of analyst expectations of a 2.5% rise, as more of Washington’s fiscal stimulus filtered down into the real economy. The month-on-month rate in March was a 0.6% jump increase in average prices, up from a 0.4% increase in February.
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