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Latest news
US manufacturing sector grows at quickest pace in 2 years
T-cell response delivers coronavirus immunity after infection, study shows
Italian and Spanish factories shrug off impact of pandemic
Speed of Covid comeback prompts urgent effort to understand why
Italy became the latest European country on Monday to announce new restrictions on citizens as Covid-19 cases surge across the continent.
The tougher rules will be introduced regionally, Prime Minister Giuseppe Conte told parliament. Italy’s restrictions follow a weekend announcement from UK prime minister Boris Johnson trailing a new national lockdown in England.
The new measures to be introduced in Italy from Wednesday are designed to halt the rapid spread of coronavirus in the country and include night-time curfews, distance learning for middle schools, cutting back on public transport as well as restrictions on travel between high-infection areas.
Business leaders in England reacted with dismay to the new restrictions, which come into force on Thursday and will last for at least four weeks. The new national lockdown will see all non-essential retail shut, strict curbs on travel and the closure of pubs and restaurants in response to a rapid rise in the number of confirmed coronavirus cases across the country.
Mr Johnson told parliament on Monday that there was “no alternative” to a national lockdown, claiming that without action, the NHS would have to turn away sick people for the first time because there was “no longer room in our hospitals”. But the prime minister is facing a backlash from his own MPs over his decision to introduce the new lockdown.
Earlier in the day, Chancellor Angela Merkel told Germans there would be no big New Year’s parties this year as a month-long lockdown took effect. The lockdown, which includes the closure of restaurants, gyms and theatres, was necessary to protect Germany’s health system, said Ms Merkel. More than 2,000 people are at present being treated for Covid-19 in Germany’s intensive care wards, double the level 10 days ago.
The speed and scale of Covid-19’s comeback in Europe has prompted an urgent effort to understand why it has happened and what can be done about it.
Denmark is one of a clutch of countries that are at the low end of infection rates in Europe, but Copenhagen is still acting now in an attempt to avoid an exponential rise in caseloads.
“The most important [factor] is the opening of [educational] institutions at the same time that you relaxed some of those protective measures,” said Flemming Konradsen, of the University of Copenhagen’s global health department. “The unifying feature is that we relaxed a lot; we had had enough Covid-19 . . . I think people had moved on.”
The fresh wave of lockdowns in Europe triggered a flurry of downgrades to eurozone growth forecasts. According to 18 economists surveyed by the Financial Times, the eurozone economy is now expected to shrink 2.3 per cent in the fourth quarter of this year — a worse performance than had been forecast before the new restrictions were announced.
Markets
Oil prices fell to their lowest level for almost six months on Monday as renewed lockdowns in Europe soured the economic outlook for the global economy. Brent crude, the international benchmark, at one point was down almost 5 per cent to $35.74 a barrel. West Texas Intermediate, the US marker, was down as much as 6 per cent to $33.64 a barrel before paring some of those losses. Analysts slashed their price forecasts on Friday after oil suffered its worst week since May.
America’s third-quarter earnings season is proving less downbeat than Wall Street analysts had forecast. Better than expected sales reported by mega-cap stocks such as Facebook and Apple have helped drive the rise, but consumer groups such as Procter & Gamble also fared better than expected over the summer as demand surged for staples such as Bounty paper towels, Ariel detergent and Fairy washing-up liquid.
The leisure-dominated UK junk bond market has suffered a fresh knock following the announcement of a second lockdown in England, reflecting the strain on debt-laden pubs, gyms and restaurants as revenues dry up. The yields on bonds from several UK high street names such as the pub group that runs the Slug and Lettuce chain of bars and the Wagamama restaurant owner have now reached double digits, underscoring the pain expected from a collapse in earnings in what is typically a busy pre-Christmas period.
Business
A large US mall owner has collapsed into bankruptcy after shoppers deserted its properties during the pandemic. CBL & Associates, which has more than 100 properties across 26 states, is trying to persuade creditors to wipe out $1.5bn of liabilities through a Chapter 11 restructuring. Several of CBL’s biggest tenants include retailers that have themselves filed for bankruptcy in recent months, including JCPenney and Ann Taylor-owner Ascena Retail.
Companies have warned of hundreds of millions of pounds in lost business over the coming weeks as they scramble to assess the cost of the new lockdown in England. Associated British Foods, which owns high street chain Primark, said it would lose £375m in sales after the UK government said that all non-essential shops in England needed to close for at least four weeks from November 5. Bookmaker GVC said earnings would be hit by between £37m and £43m and insurer Hiscox said it could face an extra $30m to $40m of claims for cancelled events if Covid-19 restrictions lasted into next year.
At the start of the year, big consumer brands were trying to emerge from a bleak period. A slowdown in demand from emerging markets had cut into one source of expansion and start-ups had seized the opportunity to connect with younger consumers. But since the pandemic struck, “trusted brands” have regained ground as shoppers turn to hygiene products and processed food. A key question now for multinationals, which normally plan strategically three years ahead, is how durable pandemic-related behaviour changes will prove.
Global economy
The world is in a global liquidity trap, writes the IMF’s chief economist in the FT, and we must agree on appropriate policies to climb out. Central banks have responded to the pandemic with measures that have been essential to meet the liquidity needs of businesses and households and to preserve jobs, writes Gita Gopinath. Yet these policies are limited in their ability to stimulate demand. “Vulnerable but viable firms require support, a problem that is much better addressed by fiscal policy,” she says.
The world’s best-equipped military believes it can defeat any enemy, but is struggling against a new foe: the number of Covid-19 infections surpassed 50,000 in the US armed forces last month. The disease has disrupted military routines, writes Katrina Manson, the FT’s US foreign policy and defence correspondent. “You could already hear the coughing and sneezing at night. Some people were complaining to the drill sergeants about it,” said a trainee at a military barracks.
In the midst of the coronavirus pandemic, China is emerging as the engine of global growth, writes John Plender. The Chinese government bond market, the second-largest in the world, offers positive real interest income after allowing for inflation, which is no longer the case with US Treasuries or big European bond markets. At the same time, the Chinese equity market is the only one outside the US to offer serious exposure to Big Tech. Western policymakers must foster stable financial interdependence with China to secure pension incomes for their elderly populations.
Get in touch
How is your workplace dealing with the pandemic? How are you dealing with it as a professional or a manager? And what do you think business and markets — and our daily lives — will look like after we eventually emerge? Also — tell us what you think about this newsletter and how we can make it more useful to you. Email us at covid@ft.com. We may publish your contribution in an upcoming newsletter. Thanks.
In response to I expect to be made redundant. How do I prepare? FT reader Another engineer wrote:
At times redundancy can be a bit like putting your mind through a washing machine on spin cycle . . . Focus on gathering up the advice from the people with front line experience. The reality is that it is tough but can also be transformative.
The essentials
Travel has relied on paper documents for decades. But when we return to mass aviation how comfortable will we feel handing over our passports at check-in, boarding and immigration? asks Michael Skapinker. And how comfortable will the people we hand them to feel? The travel industry should use the current lull for reinvention. “Our largely paper-based travel systems are not up to the task, not only because they require excessive handling but because they hold limited information,” he writes.
Final thought
The courtyard at Castello di Reschio © Philip Vile
Reschio is one of central Italy’s most ambitious rehabilitation projects. Situated at the border between Umbria and Tuscany, the 1,500-hectare estate of wooded hills, dotted with atmospheric ruins, is almost entirely untouched by the post-industrial world. Antonio Bolza and his son Benedikt have been renovating the site since 1994 and next April they are due to open their long-awaited hotel, Castello di Reschio, housed in an 11th-century castle.
Source: Economy - ft.com
