This article is an on-site version of our Coronavirus Business Update newsletter. Please share this with friends and colleagues who might find it valuable and let them know that, even if they are not subscribers to the Financial Times, they can read the newsletter — and all of the FT — free for 30 days. Welcome and please sign up here.
Get the latest worldwide picture with our vaccine tracker
Latest news
Cuba will seek World Health Organization approval of three homegrown Covid-19 vaccines as it begins administering shots to toddlers (Reuters)
Inflation in Canada hit 4.1% in August — its highest level since March 2003 (Bloomberg)
Californian governor Gavin Newsom defeats efforts to kick him out of office over his handling of the pandemic
For up-to-the-minute coronavirus updates, visit our live blog
This morning’s official figures showing an unexpected surge in UK inflation to 3.2 per cent in August — the highest level since 2012 — are the latest piece of evidence for those who believe we are on the verge of a new inflationary era.
The Bank of England, in common with its counterparts in the EU and US, has always insisted that rises in inflation in coming months would be transitory, but must now explain to the government why prices have risen so quickly and what it intends to do about it. Poorer households in particular face a tough winter as large rises in energy prices coincide with the ending of a temporary boost to universal credit, the UK’s main welfare benefit.
The unexpected jump in UK inflation contrasts with yesterday’s data from the US, which show inflationary pressures easing thanks to falls in key indicators such as used car prices. This diminished the prospects of an early rate rise from the US Federal Reserve.
One of the key indicators for policymakers grappling with rising inflation is the state of the labour market. The Bank of England will be watching for signs of companies increasing prices to pay for higher wages as the jobs market heats up. Data released yesterday showed UK vacancies shooting past 1m for the first time.
Global investors remain wary. A Bank of America survey released yesterday on prospects for world economic growth showed fears of inflation were an even greater source of pessimism than the spread of the Delta variant of coronavirus.
Read economics editor Chris Giles’s explainer on the five big questions facing the Bank of England
Global economy
The UN has warned that developing economies risk being left behind, as their richer peers focus on the “post-Covid” world while they are still struggling to get the vaccines they need. Today’s report from the United Nations Conference on Trade and Development estimates that developing countries will be $12tn poorer by 2025 than they would have been if the pandemic had not occurred, based on their growth trajectories in 2017-19. A separate report from the OECD said GDP in the world’s richest countries slowed to 0.4 per cent in the second quarter of 2021, down from 0.9 per cent in the first quarter.
However, there was some encouraging news for poorer countries from European Commission chief Ursula von der Leyen, who used her State of the Union speech to announce that the EU would double its vaccine sharing with low and middle-income nations. The commission is also investing €50bn in a new vaccine body to prepare for future pandemics, called the Health Emergency Preparedness and Response Authority (HERA).
Fresh data have fuelled fears that China’s economic recovery is slowing. Retail sales in August rose by 2.5 per cent — far below forecasts — while industrial production also missed targets, rising 5.3 per cent. A wide range of factors have been blamed for the slowdown in growth, including recent flooding, regulatory interventions, new coronavirus infections and a property slowdown.
Business
Inditex, the world’s biggest clothing retailer and best known for its Zara brand, reported a strong bounceback from the pandemic. Although the company was hit hard by the forced closure of stores, a strong online performance meant quarterly figures for sales, profits and cash generation were now higher than pre-crisis levels. Rival H&M also reported sales back at pre-pandemic levels in the US and Europe.
One of the losers from the rise in homeworking and the consequent drop in commuters — highlighted in our interview with London’s transport chief — is the $40bn global “out of home” advertising market. Spending on billboards and at travel hubs is set to remain below pre-pandemic levels until at least 2023.
Our Work and Careers team has run the rule over the return-to-work plans at some of the world’s biggest companies. The key findings? Technology companies: remote and flexible. Financial services companies: office-centric and more rigid. Everyone else: hybrid.
Markets
London broker Peel Hunt’s announcement that it will go public later this month and expand into Europe is the latest sign of the boom in share trading and dealmaking during the pandemic. Supporting industries such as lawyers, accountants and investment banks have all reported strong results during the crisis.
Shares in casino operators slumped after the government in Macau, a Chinese territory and the world’s largest gambling hub, announced plans to step up scrutiny of an industry already suffering squeezed margins because of the pandemic. Casino groups’ 20-year concessions to operate in Macau are set to expire next year.
The essentials
The UK has decided to following other wealthy countries in offering booster vaccine shots. Read our explainer on why they are needed. The FT Editorial Board has welcomed government moves to head off another winter lockdown, including offering vaccines to 12-to-15-year olds.
Have your say
Lalachi comments on We are creeping towards a continuous working week:
Working from home due to Covid is the worst thing that’s ever happened to my work-life balance. The time that I used to spend listening to music or reading during my commute is now spent answering emails, instead of something for myself. No more 30 minute break to grab lunch or coffee with a colleague. People these days apologise if they take two hours to answer an email, or 30 minutes to reply to an IM. More colleagues and clients are working through vacations. Pressure to suck it up and work late, again, because of supposed business impacts from the pandemic.
Also, the day used to wind down when the most senior folk had to run to catch their trains to the suburbs. Now they can dole out commands from 5am until late in the evening without pausing to take a breath, all without stepping foot outside their palatial homes.
Final thought
If you’re looking for a good read, dip into our guide to this year’s Booker Prize. Read deputy books editor Laura Battle’s thoughts on yesterday’s shortlist and browse our list of collected reviews. A key focus for judges this year is on novelists chronicling “forces larger than themselves”.
Source: Economy - ft.com
