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Latest news
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Easing lockdowns creates hope and tensions
Boris Johnson, the UK prime minister, has unveiled a three-phase strategy to encourage a return to work and ease some restrictions in Britain, while France, Spain and other countries across Europe today began easing their lockdowns. But these first cautious moves to begin reviving paralysed economies have been fraught with internal tensions and regional disagreement.
In the UK, the leaders of Wales, Northern Ireland and Scotland have taken a differing view from Mr Johnson, and have rejected his government’s proposed new emphasis on “staying alert” rather than “staying home”, preferring a more cautious approach — a fracture in what had been until now a united front in the fight against the pandemic.
Similar regional tensions are clear in France, where the Brittany region is bristling at public health restrictions when the local disease burden is low, with the largest share of the country’s deaths concentrated in Paris and the eastern part of the country.
France, Germany, Spain, Denmark and Norway are all taking different measures as they ease restrictions, and that has made cross-border discussions even more complex. Mr Johnson has talked about waivers on quarantining travellers arriving in the UK into airports from France. But that has raised questions about those who might be transiting through Paris from third countries, as well as what travel terms should be with the rest of the EU.
Further afield, reports of fresh clusters of infection in Wuhan and South Korea are a reminder that a second wave of coronavirus remains a risk. Governments may need to explore regional networks such as the proposed trans-Tasman travel bubble linking Australia and New Zealand. But as the FT View cautions, they need to balance pressures from other high-risk countries seeking access, and increasing inequalities between ‘“bubbles” of rich countries and poorer regions.
Markets
Moody’s has warned of a sharp pick-up in emerging market corporate debt defaults, with fears that up to 13.7 per cent of all speculative-grade corporate bonds in emerging markets will sour in the year to March 2021. “The collapse in demand has weakened EM corporate profitability and liquidity,” said Joyce Jiang, an analyst at the credit rating agency.
Strategists at French investment bank Société Générale have crunched through the past 150 years of bear markets data to show that recoveries have typically been gradual, with frequent blips along the way as a crisis plays out.
Multi-trillion-dollar fund managers including BlackRock, Vanguard, State Street and Fidelity tightened their stranglehold on the investment industry during the recent market correction, as jittery investors accelerated their migration towards large, low-cost fund groups. The largest 1 per cent of investment groups manage 61 per cent of total industry assets.
Business
Chinese manufacturers are rushing to exploit global medical equipment shortages, as international demand exceeds the productive capacity of most countries — and not just existing medical equipment producers. “We reacted fast,” said Lu Hua, founder of auto parts maker Kanou. “Now 30 per cent of our revenues come from face-mask machines and we cannot keep up with demand.”
Car hire companies are in a global, existential crisis as they fight for survival in the face of tough travel restrictions. Businesses across the sector have furloughed or permanently reduced staff, dumped cars to reduce costs and cut all non-essential spending.
Small businesses in the UK are among the hardest hit by lockdowns, with limited financial resources and often low margins putting them at risk. The government launched a number of schemes to help, but many companies have complained of difficulties accessing the funds. Karl Bond, who owns a family gin business, said: “The promises on all these schemes sound really good but the reality of getting your hands on it is different.”
Global economy
Governments and central banks have been spending to mitigate the economic impact of the pandemic, but as lockdowns are gradually lifted, recovery will be fragile. It is time to restructure taxes as a way to address the problem, writes European economics commentator Martin Sandbu, and to create a more efficient and fairer tax system.
Economic decoupling between the US and China shifted into overdrive in the first quarter of the year as the commercial impact of coronavirus exacerbated a “cold war” chill in their relations.
Argentina is on the brink of its ninth debt default, with the government and creditors deadlocked after an offer to restructure $65bn of foreign debt failed to secure enough support among investors. After missing a payment last month of $503m, default is looming if there is no agreement by the extension granted till May 22.
Get in touch
How is your workplace dealing with the pandemic? And what do you think business and markets — and our daily lives — will look like after lockdown? Please tell us by emailing covid@ft.com. We may publish your contribution in an upcoming newsletter. Thanks
The essentials
If you’ve been wondering what many Americans have been serving up at cocktail hour during confinement, now you know: tequila. The spirit has been one unexpected beneficiary of the crisis in Mexico — as an agricultural product the industry avoided shutdown. US sales leapt 60 per cent in the four weeks to April 25 versus the same period last year, beating all other spirits.
The medical research arm of the US government is preparing the ground for Covid-19 “human challenge trials” that would deliberately infect healthy volunteers with coronavirus, as part of efforts to accelerate the development of a vaccine. Contributing FT science writer Anjana Ahuja says “the pandemic is now prompting scientists to recalculate what counts as reasonable risk”.
“Is it viable to hold a country at least partially accountable for a pandemic?” asked one FT reader in our callout for your biggest coronavirus questions on Instagram. US editor-at-large Gillian Tett, chief foreign affairs columnist Gideon Rachman and science editor Clive Cookson have the answers.
Starting tomorrow, tune into this live, free-to-access event, The Global Boardroom. The FT in partnership with TNW is gathering leaders in policy, business, tech and finance this week for live-streamed conversations with FT journalists across three days to analyse the impact of the pandemic and what is required for recovery.
Speakers include Tony Blair, former UK prime minister; Haruhiko Kuroda, governor of the Bank of Japan; Soumya Swaminathan, chief scientist of the World Health Organization; and Al Gore, former US vice-president and chairman of Generation Investment Management. You can register for free at globalboardroom.ft.com.
Final thought
During lockdown, if you haven’t been streaming, you have probably been reading — so how can we carve out a space for immersing ourselves in our books, asks FT architecture critic Edwin Heathcote. Whether you like yours “stacked or piled, set out in a row on a countertop, on the steps or laid out on a table,” here’s how to create your own reading sanctuary.
Source: Economy - ft.com
