British Airways parent IAG cancels dividend
Tanya Powley in London
British Airways’ owner IAG has become the latest company to cancel its proposed final dividend as it looks to bolster its liquidity in the wake of the coronavirus pandemic.
The airline group on Thursday said it would withdraw its proposal to pay a final dividend of 0.17 euros per share — due for shareholder approval in June — and instead allocate all the profit for fiscal year 2019 to its voluntary reserve. It will also delay the date of its annual shareholders’ meeting from June until the end of September.
The announcement comes as BA is finalising talks with the union Unite over plans to furlough about 32,000 employees in a bid to slash costs as it battles with the industry’s worst crisis in decades.
This would affect cabin crew, ground staff, engineers and head office employees. BA already agreed a deal with its 4,000 pilots last month, which will see them required to take two weeks of unpaid leave in each of April and May, with a deduction from basic pay spread over three months.
Last month easyJet, the low-cost airline, came under criticism for going ahead with a £174m dividend payout to shareholders while appealing for financial support from the government.
UK tally of coronavirus deaths rises by 569 in a day
Bethan Staton in London
The number of people in the UK to have died after testing positive for coronavirus has risen by 569 to 2,921, the department for health has announced.
The daily increase – which includes all hospital deaths in the 24 hours to 5pm on Wednesday – is slightly higher than the previous day’s rise of 563.
The daily government figures also show that 33,718 people in total have been confirmed to have coronavirus.
The 24-hour rise in cases as of Thursday morning was 4,244, and figures showed the number of people tested increased by 10,215 to more than 163,000.
Muslim pilgrimage sites in Saudi Arabia placed under curfew
Ahmed Al Omran in Riyadh
Saudi Arabia has announced a curfew in the Muslim holy cities of Mecca and Medina as the kingdom enforces stricter measures to contain Covid-19.
The interior ministry said essential workers are exempt from the restrictions, and residents would be allowed to buy food and access medical services within their neighbourhoods. Cars in those cities are not allowed to carry more than two people at any time.
The country has already halted international and domestic flights and ordered most public places to close. Earlier this week, the government asked Muslims to delay making travel plans for the annual hajj pilgrimage until there is more clarity about the pandemic.
The health ministry also announced five deaths and 165 new confirmed cases of Covid-19. This brings the total number of cases in the kingdom to 1,885, while the death toll currently stands at 21.
UK government admits ‘more needs to be done’ on testing
Laura Hughes in London
Downing Street has accepted “more needs to be done” in relation to coronavirus testing, as the UK government scrambles to increase capacity.
“We acknowledge that more needs to be done in relation to testing, we need to be testing more people and we need to be making progress very quickly”, the prime minister’s spokesman said.
Matt Hancock, the health secretary, will this afternoon set out steps the government will take to ensure there is a significant increase in testing.
The announcement comes after the prime minister, Boris Johnson, clarified on Wednesday evening that both mass antigen and antibody testing would form part of the government’s strategy to “unlock the coronavirus puzzle”.
Downing Street said 2,800 frontline NHS staff have now been tested for coronavirus at drive-in testing facilities and an unspecified “significant number” had been tested in laboratories — adding that 10,412 coronavirus tests were carried out Tuesday and that scientists were still working on developing an antibody test.
“We are working as quickly as we can on that and as soon as a test is approved then we will announce it publicly,” the spokesman said.
Downing Street also suggested immunity certificates could be introduced to help identify those who have had the virus:
This is something which has been discussed in other countries…We have always said that we are watching closely what other countries are doing and we will always look to learn from ideas which could be helpful.
Hong Kong orders fortnight-long closure of bars and pubs
Nicole Liu in Hong Kong
Hong Kong is to shut bars and pubs from Friday for 14 days as authorities step up measures to contain the spread of coronavirus.
The Secretary for Food and Health Sophia Chan said 69 confirmed Covid-19 cases are related to bars, leading to other secondary, tertiary and quaternary infections, including a forty-days old infant.
People who violate the order, which comes into effect at 6pm local time on Friday, are subject to a maximum fine of HK$50,000 ($6,400) and imprisonment for six months.
The Hong Kong government had ordered gyms, game centres, karaoke, night clubs and other entertaining spots to close. Catering businesses are also required to limit the number of in-store customers with no more than four people each table.
Hong Kong recorded 802 confirmed cases up to Thursday and four deaths related to the disease.
France says pandemic should push EU to cut dependence on Asia
Victor Mallet in Paris
Europe should use the coronavirus crisis as an opportunity to rethink its industrial supply chains, cut dependence on Asia and promote “European industrial sovereignty”, according to French finance minister Bruno Le Maire.
“For some time we have been asking for a new European industrial policy, an update of the EU’s competition policy and to work on limiting the industrial dependence of some strategic sectors, for instance electric batteries and artificial intelligence,” he told an online news conference on Thursday. “Protection is not the same as protectionism.”
Mr Le Maire said: “With this crisis, the European Union has a historical opportunity to become an economic and political superpower between the US and China.”
President Emmanuel Macron and Mr Le Maire have long pushed for EU investment in key high-tech sectors, and the Covid-19 pandemic has exposed how much Europe depends on China for supplies of medical equipment such as masks and the active ingredients in many drugs.
In an interview with the FT, Mr Le Maire said he wanted globalisation to “drastically change” and was pressing for a “new economic world order”.
France is also proposing a new, joint EU fund to finance economic recovery after the crisis — in addition to other rescue packages announced or under way from various eurozone and EU institutions — but the prospect of mutual debt obligations has met resistance from northern EU members such as the Netherlands and Germany.
Moody’s warns of ‘intense’ liquidity pressure in US mortgage sector
Laura Noonan in New York
Ratings agency Moody’s cut its outlook for nonbank mortgage lenders in the US, warning of the “intense” liquidity pressures that coronavirus has heaped on a sector that writes over half of America’s home loans.
Describing the “turmoil” in the mortgage industry following the coronavirus crisis, Moody’s said its outlook for nonbank lenders had moved to “negative” from “stable”.
“Our baseline scenario is that over the next several quarters non-bank mortgage firms will face ongoing liquidity stress, weaker profitability, as well as declines in capitalization and asset quality,” analysts wrote.
They added that nonbank lenders are “highly dependent” on short-term funding markets which will likely become more challenging.
The firms are also facing a cash crunch since they are required to make payments to bondholders even if mortgage holders don’t have to service their home loans, because of forbearance measures promoted by the government.
US jobless claims soar to 6.6m as lockdowns hit jobs market
Mamta Badkar in New York and Brendan Greeley in Washington
The number of Americans filing for first time unemployment benefits hit a record high for the second consecutive week as layoffs stemming from the coronavirus shutdown accelerated and spread into new industries.
Initial jobless claims jumped to 6.6m in the week ending March 28, the labour department said on Thursday. That eclipsed economists’ forecasts for a rise to 3.7m.
The report also revised the previous week’s data, expanding claims to 3.31m from 3.28m as states overwhelmed by the volume worked through a backlog of applications.
As states and cities shut down non-essential businesses, retailers and restaurants facing a collapse in revenue have laid off employees across the country. California and Pennsylvania were particularly hard-hit, according to state level estimates that have not been seasonally adjusted. The states alongside New York, and most recently Florida, have asked residents to stay at home to try to curb the spread of coronavirus.
States reported that shutdowns continued to affect the service sector, but that the pain had spread to healthcare and social assistance, manufacturing, wholesale trade and construction industries as well.
Greece quarantines migrant camp after coronavirus detected
Kerin Hope in Athens
Greece has put an asylum-seekers’ camp into quarantine after 20 residents tested positive for coronavirus, marking the first confirmed cases at one of the country’s 30 official facilities for migrants.
Sixty-three tests were carried out at Ritsona camp in central Greece on Wednesday, after a resident who gave birth at an Athens clinic was found to be infected, an official from the public health organisation EODY said.
About 2,600 refugees and migrants are living in container homes at the facility while they wait for asylum applications to be processed.
International medical and human rights organisations have called for overcrowded reception centres on the Greek islands to be evacuated to prevent the spread of Covid-19 among residents and aid workers.
“Our plan is to gradually alleviate the pressure on Lesvos and other islands,” Kyriakos Mitsotakis, the prime minister, said in a television interview on Wednesday with CNN. He gave no details.
More than 40,000 migrants are crammed into facilities designed for 15,000 on five islands close to Turkey.
Ukraine plans to ‘restart the economy’ in May
Roman Olearchyk in Kyiv
Ukraine’s prime minister said the country plans to “restart the economy” in May after imposing stricter quarantine measures this month to slow the spread of coronavirus.
“Our strategy lies in the fact that Ukraine can’t afford a long quarantine of two, three, four months,” said Denys Shmyhal during a video conference with the American Chamber of Commerce in Ukraine.
Families and businesses, he added, do not have a sufficient “stock of reserves” to sustain a longer lockdown economically. Upon easing restrictions on businesses in May, Mr Shmyhal said the elderly and children still have to stay home.
Ukraine’s economy could shrink 4 per cent after growing in past years at 2.4-3.4 per cent, he said, adding that state finances will be stabilised by an $8bn loan from the IMF and billions of dollars of additional funding from foreign backers.
Mr Shmyhal said the IMF and World Bank had given “positive” signals after the country’s parliament voted on two reforms required to unlock the international funds.
Germany faces first recession since 2009
Guy Chazan in Berlin
Germany will this year experience its first recession since 2009 as it battles to stem the damage of the coronavirus pandemic, said the minister for the economy.
Germany’s economy shrank 5 per cent during the 2008-9 financial crisis and the government assumes “that this figure cannot only be reached this time but exceeded”, Peter Altmaier said.
“After 10 years of growth we will have a recession,” he told reporters.
EU considers delaying €1.1bn in air traffic control fees to help airlines
Tanya Powley in London
Europe’s air traffic controllers have proposed that airlines can temporarily defer upcoming payments by seven months as the industry battles a deepening cash crisis from a virtual shutdown of international travel during the coronavirus pandemic.
The proposal comes after carriers collectively pushed back on paying February’s charges, worth about €500m, that are due next month to Eurocontrol. The organisation co-ordinates national air traffic management agencies and is responsible for collecting route charges from carriers to fund air navigation facilities and services in the EU.
Eurocontrol’s 41 member countries are due to vote on the proposal by April 6. If agreed, this will mean airlines can defer their February fees until November. Payments for March, April and May, which will vary because of the lower level of air traffic, will be deferred into 2021. The total deferral is estimated to be about €1.1bn.
Thomas Reynaert, managing director of the European carriers association Airlines for Europe, said:
Airlines are fighting for their survival. While a temporary deferral of [air traffic control] charges is helpful in the short term, it is clear that more measures – including a full-year waiver or further deferment of charges – may also be needed to secure the survival of the sector and aid in its recovery.
ECB pushes deadline for monetary policy review to next year
Martin Arnold in Frankfurt
The European Central Bank has extended the timeframe for its strategic review of monetary policy by six months to the middle of next year after it was disrupted by the coronavirus pandemic.
The central bank, which has launched a radical easing of monetary policy in response to the economic and financial turmoil caused by the pandemic in recent weeks, had initially hoped to conclude its strategic review by the end of this year.
As well as pushing back a series of “ECB listens” events to debate monetary policy with representatives of civil societies, it also said its annual forum on central banking in Sintra, Portugal, would be delayed from June until November.
The ECB’s strategic review aims to reconsider the inflation target that defines its core price-stability mandate, along with the effectiveness and potential side-effects of the tools used to achieve it.
In addition, it aims to examine how it can tackle climate change, the way it communicates and its broader impact on employment, inequality and financial stability.
The central bank said it had extended the deadline for public submissions to its ECB Listens online portal to the end of August.
France’s temporary jobless total rises to 4m
Victor Mallet in Paris
A fifth of all French private sector employees in 400,000 companies are seeking temporary unemployment benefit, with 4m people set to take up a multibillion-euro government scheme to save jobs and struggling businesses during the coronavirus pandemic.
“That is a massive uptake,” said Muriel Pénicaud, French labour minister, as she announced the latest figures on Thursday.
France’s “partial unemployment” measures, similar to Germany’s “Kurzarbeit” scheme, mean the state pays the wages of temporarily laid off workers, who retain their jobs and are spared from redundancy.
The French measures were originally expected to cost €8.5bn over two months, part of a €45bn national economic rescue package, but ministers said the cost is now certain to be higher.
Oil and gas suppliers in ‘stranded middle’ face collapse, warns OGUK
Nathalie Thomas in Edinburgh
The North Sea oil and gas industry has warned there is a “stranded middle” of companies in its supply chain that will face financial difficulties from the coronavirus pandemic and oil price collapse but cannot access government support schemes.
OGUK, a trade body for the UK North Sea, said on Thursday that many companies such as equipment suppliers and oilfield services groups would be disqualified from two of the main government support schemes on the basis of their turnover or credit rating.
The group has raised a red flag that some companies in its supply chain, which were still recovering from the last oil price crisis in 2014, could go under as a result of the collapse in demand for hydrocarbons because of the pandemic, which has coincided with a price war.
Matt Abraham, supply chain director at OGUK, said many companies would be disqualified from the government’s business interruption loan scheme as their turnovers exceed its £45m a year threshold and would also not qualify for another package, the Covid Corporate Finance Facility, because they are not deemed investment grade.
The industry is talking to the government about further support for this “stranded middle”, Mr Abraham said.
Coronavirus: ask the FT about how to access UK government help
Dan Thomas, the FT’s chief business correspondent, has been writing about how UK companies can access the government’s Covid-19 bailout funds. Dan has also been covering how banks are helping struggling businesses and how non-bank lenders are responding to the crisis.
Dan wants to hear your stories and answer your questions. You can join a live discussion throughout today by following this link and leaving a comment.
Emirates to restart passenger flights
Simeon Kerr in Dubai
Dubai’s Emirates Airline has received approval to resume some passenger flights from Monday, the carrier’s chairman said.
The first flights will be outbound services to carry visitors and residents back to their home countries. Over time, the airline aims to resume operations gradually in line with the lifting of travel and operational restrictions, Sheikh Ahmed bin Saeed Al Maktoum said in a tweet. Global booking sites show that Emirates intends to resume some scheduled passenger services from May 1.
The UAE suspended passenger flights on March 25 as the country tightened measures against the spread of coronavirus, leaving many tourists and residents trapped. The government has pledged a rescue package to assist the long-haul carrier through this period.
Iran extends medical treatment to refugees and foreign nationals
Monavar Khalaj in Tehran
Iran will provide medical treatment for refugees and foreign nationals at a nominal rate if they test positive for coronavirus, which has beleaguered the nation.
“The national headquarters to fight against coronavirus approved that nationals from Afghanistan, Pakistan and other countries will be treated like Iranians, [almost] for free,” said Dr Mohammad Asaei-Ardakani, an advisor to the health minister, in a video conference call on Thursday.
The Islamic republic has said that all Iranians are entitled to free tests, and must pay only 10 per cent for treatment and medicine if hospitalised, even if they are not covered by medical insurance. The same rules now apply to foreign nationals in Iran.
The Afghanistan embassy in Tehran, in a statement on Thursday, thanked Iranian officials for admitting Afghan nationals to Iran’s state-run hospitals for treatment of Covid-19.
About 2.5 to 3m Afghan nationals, many of whom are refugees, are believed to live in Iran, often without official residence permits.
Dr Asaei added that the health ministry had set up medical checkpoints on Iran’s borders with Afghanistan and Pakistan, such as Mirjaveh and Al-Ghadir, to monitor the health of foreign nationals who leave and enter the country.
Coming up today: A live Q&A on how to access UK government help
In response to the economic threat posed by the coronavirus pandemic, the UK government last week unveiled a £330bn package of bailout loans alongside an extraordinary offer of wage subsidies. But the speed of the response has left banks, regulators and Treasury officials scrambling to find ways to get the money to the companies that need it most.
Dan Thomas, the FT’s chief business correspondent, will be answering your questions about the bailout package in a live Q&A throughout the day. Click here to join the conversation.
Testing ‘not a cure’, says UK health minister
Laura Hughes in London
Nadine Dorries, a UK health minister, has claimed coronavirus testing is “not a cure” and “won’t cut the number of deaths”.
Her comments came after Boris Johnson insisted on Wednesday that both mass antigen and antibody testing would form part of the government’s strategy to “unlock the coronavirus puzzle”.
Antigen tests determine whether someone is infected, while antibody tests check whether a person has had the disease.
But in a series of Tweets posted on Thursday morning, Ms Dorries said: “Testing is not a cure, it won’t cut the number of deaths, it won’t make people feel better or stop them catching coronavirus.
In a video shared on Wednesday evening on Twitter, the prime minister, who is self-isolating in Downing Street after testing positive for the virus, said:
I want to say a special word about testing because it is so important and, as I have said for weeks and weeks, this is the way through.
He added: “This is how we will unlock the coronavirus puzzle. This is how we will defeat it in the end.”
Germany expects to issue €100bn in emergency business loans
Olaf Storbeck in Frankfurt
German companies are likely to claim between €50bn-€100bn in state-backed emergency liquidity loans within the next few weeks, as the coronavirus pandemic has brought large parts of the country’s economy to standstill, KfW chief executive Günther Bräunig said on Thursday morning.
“Practically every German company is affected and needs liquidity,” said the boss of the state-owned lender, which is administering the unlimited subsidised lending scheme the German government launched last month.
The government is guaranteeing up to 90 per cent of the credit risk of loans of up to €1bn per company.
Over the first 10 days of the scheme, KfW has already received applications from 2,500 companies requesting close to €11bn in loans. “We are expecting that applications will surge next week,” said Mr Bräunig.
He acknowledged that some companies and banks were complaining that access to the emergency loans was too complicated and that the terms and conditions were too harsh.
“There are still detailed discussions over further improvements,” said Mr Bräunig.
BMA publishes guidelines for doctors on ‘agonising’ ethical decisions
Bethan Staton in London
The UK doctor’s union issued ethics guidance advising that doctors should withdraw treatment like ventilators from seriously ill patients in order to give them to those more likely to survive.
The British Medical Association said on Wednesday that overstretched resources would present doctors with “agonising choices” over which patients get lifesaving treatment.
It issued an ethics document stating that hospitals should adopt a new “threshold” for intensive care admissions, with elderly people who have severe existing conditions potentially not qualifying for intensive care treatment.
Decisions about how to allocate care would normally be based on individual medical need, but should now be based on “how to maximise overall benefit” – a “more strictly utilitarian approach”, the document says.
“It is preferable to save the lives of three patients with high need and a high likelihood of benefiting than one patient with high need and a low – but nonetheless real – chance of benefiting,” Julian Sheather, a rights and ethics adviser for the BMA, said. “This is the heart of the moral challenge.”
More than half think UK government was too slow to impose lockdown
Most British people feel the government did not act quick enough in shutting down the country, an Ipsos Mori survey shows, marking the latest instance of criticism of UK policy in tackling the coronavirus.
Boris Johnson made the call 10 days ago to impose sweeping restrictions on public life in the UK, limiting Britons from leaving their homes except for essential shopping and one period of exercise a day.
The decision followed similar moves by governments across Europe and came in the wake of mounting pressure to take tougher action to stem the spread of the virus in the country.
But for most of those surveyed (56 per cent) it came too late. About a third (35 per cent) of people felt it was taken at the right time, while barely anyone (4 per cent) said it was taken too early.
Labour voters were more critical of the timing of Mr Johnson’s decision than their Conservative counterparts.
Norway’s $900bn oil fund reports worst ever quarterly drop
Richard Milne in Oslo
Norway’s $930bn oil fund reported its worst ever quarterly performance as the coronavirus crisis hit the world’s largest sovereign wealth fund harder than the global financial crisis.
The fund said its return in the first quarter was minus 14.6 per cent, lower than the previous record of minus 10.3 per cent recorded in the fourth quarter of 2008.
Its performance was dragged down by a minus 21.1 per cent return from equities with bonds recording a 1.3 per cent positive return, according to preliminary figures released on Thursday. Yngve Slyngstad, the fund’s chief executive, called the market situation “very challenging”.
The record fall in value comes as economists expect Norway’s government to use more money from the fund to plug a growing gap in its budget. Unemployment in the rich Nordic country has more than quadrupled in the past three weeks.
Yngve Slyngstad, the fund’s outgoing chief executive, said last week that it would soon start buying equities and selling bonds in an attempt to rebalance its portfolio and provide the government with money for its budget.
The oil fund has said its general worst-case scenario is for a 40 per cent drop in its value over one year in Norwegian krone as both equities and bonds decline. So far, the fund has fallen about 11 per cent from its February peak in krone terms as the Norwegian currency has fallen to record lows against the US dollar and euro in recent weeks.
EU cautions Hungary’s leader to uphold rule of law
Mehreen Khan in Brussels
Ursula von der Leyen, president of the European Commission, has explicitly warned Hungary that Brussels is concerned by an emergency law that allows premier Viktor Orban to rule by decree indefinitely due to coronavirus.
The commission has come under fire this week for failing to mention Hungary by name as it has told member states to uphold the rule of law during the pandemic emergency.
Yesterday a group of 13 member states including France, Spain, The Netherlands, Italy and Belgium, issued a statement urging all countries to avoid violating democratic principles — but it also stopped short of mentioning Hungary.
Speaking at a press conference on Thursday, Ms von der Leyen said she was concerned Hungary’s measures “go too far”.
“Emergency measures have to be limited and strictly proportional. They should not last indefinitely. They should be subject to regular scrutiny,” she said.
Earlier this week, Hungary’s parliament passed a bill to allow Mr Orban to rule by decree indefinitely. The government had argued the measure is required to fight the pandemic.
Iberdrola steps up €4bn of orders to help suppliers
Nathalie Thomas in Edinburgh
Spain’s Iberdrola has accelerated €3.8bn worth of orders with its suppliers in the renewable energy and electricity supply chains to offer them “greater security and visibility” as Europe grapples with the coronavirus pandemic.
The utility has placed orders with “thousands” of suppliers in recent days so they could have access to liquidity and maintain adequate employment, the chairman and chief executive of the Spanish utility said on Thursday.
Ignacio Galán said the company intends to press ahead with a record €10bn of investment that had been planned this year for projects such as solar and wind farms, as well as grid infrastructure, “once these exceptional circumstances come to an end”.
The company has renewable energy projects planned in countries such as France, Germany and Portugal as well as energy grid infrastructure schemes in Brazil and the US.
Speeding up this investment “is the best – I would venture to say the only – way to get through this situation of crisis and uncertainty”, added Mr Galán, who was hosting Iberdrola’s annual meeting online.
Hong Kong attacks broadcaster over WHO handling of Taiwan question
Nicolle Liu in Hong Kong
The Hong Kong government has criticised a public broadcaster after one of its journalists asked a World Health Organization senior adviser about Taiwan’s membership to the UN agency.
WHO has been accused of being too quick to praise Beijing’s handling of the coronavirus outbreak and not separating out Taiwan as an individual member because China demands that countries and international bodies do not treat the island as an independent state. China claims Taiwan as part of its territory.
Bruce Aylward, leader of the WHO-China joint mission on Covid-19, appeared to hang up on a reporter from Radio Television Hong Kong during a video call, after they asked whether the WHO would reconsider Taiwan’s membership.
“I’m sorry, I couldn’t hear your question…It’s ok. Let’s move to another one then,” he replied before the call ended abruptly.
Yvonne Tong, the broadcaster’s producer, called him back and asked for his comments on Taiwan’s virus containing efforts. “We’ve already talked about China,” he responded.
A spokesman for the Commerce and Economic Development Bureau said its secretary “holds the view that the presentation in that episode of the aforesaid programme has breached the ‘one-China principle’”.
“As the editor-in-chief of RTHK, the director of broadcasting should be responsible for this,” it said in a statement on Thursday
A pro-democracy lawmaker Lam Cheuk-ting said he was “shocked” by the statement and that it was a “naked interference in the editorial and editorial autonomy of Hong Kong and the freedom of the press”.
Prepare for Covid-19 impact to last as long as a year, Iran’s Rouhani says
Najmeh Bozorgmehr in Tehran
Iranians should be prepared for the effects of the coronavirus pandemic to last up to one year, President Hassan Rouhani said, assuring citizens that plans were under way to avoid any shocks to the supply of medicine and basic commodities.
“In foreign currency allocation, the first priority is the health sector and medical and pharmaceutical needs,” Mr Rouhani said on Thursday, “and the second is the procurement of essential goods.
“We do not seem to have any problems in terms of foreign currencies to the end of this [Iranian] year [March 20 2021] and our plans are to procure goods on time while strategic reserves will remain stable,” he said to the committee set up to battle the fallout from Covid-19.
Struggling with the US’s toughest ever sanctions, the Islamic republic is concerned about its shrinking revenues and inability to support businesses hit by the impact of the illness, which could lead to layoffs in an economy suffering from two-digit unemployment rate.
The latest death toll on Thursday stood at 3,160, up from 3,036 on Wednesday, out of 50,468 confirmed cases.
Bank of America forecasts deepest US recession on record
Philip Georgiadis and Anna Gross:
Bank of America has sharply downgraded its expectations for global growth this year, as it warned that the US faces its deepest recession on record.
The Wall Street bank now expects world growth to contract by 2.7 per cent this year, having earlier forecast a more moderate decline of 0.3 per cent.
In the US, it sees three consecutive quarters of GDP contraction, with the economy shrinking 7 per cent on an annualised basis in the first three months of the year, 30 per cent in the second quarter and 1 per cent in the third.
The bank said its forecast for output to decline 10.4 per cent during the downturn would be the deepest recession on record, nearly five times more severe than the post-war average.
“The lack of an effective policy response to control the spread of the virus in developed markets and some emerging markets has led us to take down 2020 global growth,” Ethan Harris, Bank of America’s global economist, said.
“Deep recessions” are also looming in emerging markets across Europe, the Middle East and Africa, said Bank of America, due to a combination of lower external demand and the impending spread of the virus in those regions.
Russia to hold Victory Day parade despite pandemic
Henry Foy in Moscow
Russia has vowed to push ahead with its annual May 9 military parade in Moscow despite the coronavirus outbreak, its defence ministry has said.
The parade of soldiers, tanks and ballistic missiles through Moscow’s Red Square and the centre of the capital dates back to the second world war, and this year’s event will celebrate 75 years since the conflict ended.
Chinese president Xi Jinping and France’s Emmanuel Macron had previously said they would attend the parade, which is one of Russia’s most prominent and high-profile events.
“Everything is being done consistent with the plan,” Russian defense ministry spokesman Igor Konashenkov said in an interview with newspaper Komsomolskaya Pravda, adding there were no plans to change the date, despite the global pandemic that has quarantined entire cities and shut down almost all cross-border travel.
People are eager to take part in this historic event and are working themselves into a sweat
Mr Konashenkov added that “unprecedented preventive measures” have been taken to protect against infection and parade participants were having their temperatures checked three times a day.
Senegal requests $221m in IMF funding
Neil Munshi in Lagos
Senegal has completed discussions to secure $221m in funding from the IMF to help cushion the economic blow from the coronavirus pandemic.
In a statement the fund said the pandemic had caused remittances from Senegalese living abroad to drop and crippled the country’s tourism industry. The west African country has reported 175 confirmed cases so far.
The funds “will allow the authorities to meet the urgent budgetary and balance of payment needs,” the fund said.
The funding will need to be approved by the IMF’s executive board, which is set to consider it by mid-April.
Spanish death toll exceeds 10,000
Daniel Dombey in Madrid
More than 10,000 people have now died in Spain after contracting coronavirus, a record 950 of them in the last 24 hours, although the spread of the virus has decelerated since its peak.
Government figures released on Thursday showed a cumulative total of 10,003 coronavirus deaths, compared with 9,053 a day before.
There are now 110,238 confirmed cases of coronavirus — an 8 per cent increase on the previous day’s figure.
The relatively low rise in the number of cases — at earlier stages there were daily increases of 25 per cent or more — comes two and a half weeks into a nationwide lockdown that was intensified this week. But Spanish authorities acknowledge that the real figure is significantly higher, since the tests are mainly of people who have been hospitalised rather than the nation as a whole.
So far, 6,092 people have been treated for the effects of the virus in intensive care, while 26,743 have recovered.
Coronavirus to cause hundreds of billions of euros in losses, says ifo
Coronavirus will lead to production losses worth hundreds of billions of euros across Europe due to paralysis in the economy caused by lockdown measures.
Two months of partial closure in the UK – in which products and services deemed essential are still provided – will generate €193bn-328bn in losses, said the Munich-based ifo Institute, representing an 8 to 13 per cent fall in annual production. If the shutdown extends into a third month, the costs could rise to between €271bn-480bn.
“We urgently need companies to take precautions that would allow them to resume production while still containing the spread of the epidemic,” said ifo president Clemens Fuest. “If the shutdown lasts for more than a month, the production losses quickly reach dimensions that are well beyond the growth slump of previous recessions or natural disasters, at least in the history of the European Union.”
The ifo made forecasts for the UK, Italy, Spain, France, Austria and Switzerland.
In Italy, which has been particularly hard hit, ifo estimates that the costs of a two‑month partial shutdown will amount to €143bn-234bn; in Spain, a lockdown period of the same length would incur €101bn-171bn in losses.
Senior UK health official voices frustration over lack of testing
Laura Hughes and Bethan Staton in London
A top British health official has said “everybody involved is frustrated” over a lack of coronavirus testing as the UK government scrambles to increase capacity.
Ministers are facing mounting criticism over the speed at which testing has been rolled out and a lack of clarity over what role it will play in the government’s exit strategy from the lockdown.
The government admitted on Wednesday that just 2,000 out of 500,000 frontline National Health Service staff have had tests for coronavirus. Thousands are self-isolating out of fear they have been infected.
“Everybody involved is frustrated that we haven’t got to the position yet that we need to get to,” Paul Cosford, emeritus medical director of Public Health England, told BBC Radio 4’s Today programme on Thursday. “We’ve not got as far as we’ve wanted to.
Sir Paul said his institute was working with other laboratory organisations such as Cancer Research UK to prepare similar testing capacity.
Read the full story here
Opinion: It is time to make amends to the low-paid essential worker
Sarah O’Connor in London
Economies around the world are going into hibernation. Governments that have imposed lockdowns to slow the spread of coronavirus are focused on how to help the millions who have been put out of work. But not everyone is hunkered down at home. Essential workers must go out to keep the lights on and their fellow citizens fed. This has exposed an uncomfortable truth: the people we need the most are often the ones we value the least.
The situation is particularly stark in the UK. Doctors and nurses have rightly received an outpouring of national gratitude, but they are not the only ones on the front line. The list of “key workers” also includes those who work in nurseries, care homes, food factories, warehouses and delivery drivers. These are some of the worst paid and most insecure jobs in the British economy.
Read more here
StanChart launches $50m fund coronavirus relief fund
Stephen Morris in London
Standard Chartered has started a $50m fund to provide assistance to people affected by the coronavirus pandemic.
The money will be split evenly between an immediate donation to emergency relief efforts in the bank’s most important markets across Africa, the Middle East and Asia, with the remainder distributed “over the medium term to recover from the economic impact of the virus”, the London-based lender said in a statement.
“The group’s board and management team members will be making personal contributions to the fund,” it added, without providing specifics on the amount of executive pay being donated.
StanChart has previously pledged to provide as much as $1bn of loans, import-export financing and working capital at preferential rates for companies helping stem the spread of the virus and treat victims.
British Airways set to suspend 32,000 staff temporarily
Tanya Powley in London
British Airways is expected to announce plans to suspend about 32,000 employees as the airline seeks to cut costs in the wake of the coronavirus pandemic.
The airline is in talks with union Unite about temporarily suspending staff, with an announcement expected later today. BA said talks were continuing with Unite.
The move could affect about 32,000 staff, a person familiar with the matter has said. This would range from cabin crew, ground staff, engineers to head office. Staff affected by the job suspensions are expected to receive some of their wages through the government’s job retention scheme.
BA agreed a deal with its 4,000 pilots last month, which will see them required to take two weeks of unpaid leave in each month April and May, with a deduction from basic pay spread over three months.
The expected move comes as airlines are looking at ways to cut costs as they battle the industry’s worst crisis in years.
Investors lose out on £13bn in dividend payments, says Peel Hunt
Investors have to look elsewhere to find income over the coming months as more UK companies scrap or delay dividend payments.
About 120 companies from the FTSE 350 and AIM 100 indices have cancelled or suspended their dividends, equating to a total loss to investors of £13.6bn, said trading house Peel Hunt.
More businesses in the building industry have cancelled dividends than any other sector. The 29 companies that have done so account for 78 per cent of the industry, while the next highest numbers are among industrial and travel and leisure companies.
Only about 40 companies from the same pool have committed to paying their dividends, which total £8.5bn, while roughly 100 companies have announced dividends but are yet to confirm if they are going ahead with payments that come to £13.6bn.
Global Covid-19 case count approaches 1m
Steve Bernard, FT data visualisation journalist
The worldwide coronavirus case count has risen towards 1m as the outbreak intensifies in Europe and the US, while Asia contends with a second wave.
Confirmed infections rose by 76,836 on Wednesday, bringing the current tally to 938,063. At the current rate of increase, the number of infections will reach the 1m mark by the end of Thursday.
The death toll also increased by 4,883 on Wednesday, another daily high, with the number of fatalities hitting 47,269.
America’s situation continues to worsen as the daily figure increased by 26,473 on Wednesday. New York State was once again hardest hit adding 7,918 cases to stand at 83,901 and 2,219 fatalities. Spain was the only country to record more cases than New York with 8,195 pushing its total over 100,000 to 104,118.
The UK also had its darkest day registering 4,324 new confirmed cases, a 44 per cent increase on Tuesday’s daily numbers. The country’s death toll increased by 563, a 31 per cent increase on Tuesday’s figure to stand at 2,352.
The global number of recovered cases rose by 15,872 yesterday, leaving a total of 193,989 free from the virus.
UK science institute develops rapid testing for frontline workers
Camilla Hodgson in London
London’s Francis Crick Institute has developed a rapid diagnostic coronavirus test and says it hopes to test 500 frontline workers a day from next week.
The research centre, which is a partnership between Cancer Research UK and several of the capital’s universities, said it aimed to increase testing to 2,000 people per day, and would be giving National Health Service staff priority.
“Institutes like ours are coming together with a Dunkirk spirit – small boats that collectively can have a huge impact on the national endeavour,” said Paul Nurse, director of the Crick Institute.
The test, which uses polymerase chain reaction testing and has been verified against the national standard, was developed in partnership with University College London Hospitals, NHS Foundation Trust and its diagnostic partner Health Services Laboratories.
Starting with UCLH, the Crick will offer its testing to other hospitals. In addition to performing tests at the Crick, more than 100 of the Institute’s scientists have volunteered to do shifts in Public Health England’s testing labs.
Ask the FT about how to access UK government help
Join a live discussion on Thursday with the FT’s chief business correspondent Daniel Thomas.
In response to the economic threat posed by the coronavirus pandemic, the UK government last week unveiled a £330bn package of bailout loans alongside an extraordinary offer of wage subsidies. But the speed of the response has left banks, regulators and Treasury officials scrambling to find ways to get the money to the companies that need it most.
Have you seen a significant decrease in revenue? Have you had to close operations temporarily or permanently? Will you furlough employees? And if so, how much of your workforce?
LandSec property group launches £80m fund for struggling UK tenants
George Hammond in London
LandSec, the UK’s largest listed property group by assets, has launched an £80m relief fund for its tenants struggling as a result of coronavirus.
The funds will be targeted at retailers, bars and restaurants on the company’s estate, which includes a number of properties in the City of London.
With the government mandating the closure of non-essential shops, many retailers and food and beverage businesses have struggled to pay their rent. On March 25, the rent day for the quarter, LandSec received just 37 per cent of the rent it was due from retailers.
The £80m fund is aimed at “customers who need our help most to survive,” said the company. £15m will be allocated to food and beverage businesses and the remainder will be distributed on a case by case basis.
Landsec also announced it was suspending its dividend on Thursday. “It just isn’t clear how long these circumstances will persist,” said interim chief executive Martin Greenslade.
Germany reports 140 more deaths as rate of new cases slows
Tobias Buck in Berlin
The rate of new cases slowed for a fifth day in Germany, as containment measures slowed the growth rate of the virus in more countries.
The biggest economic power in Europe reported 6,156 new coronavirus cases on Thursday, taking total infections to 73,522 since the start of the crisis. The number of Covid-19 deaths rose by 140 to 872, an increase of 19 per cent.
It was the fifth day in a row that new cases rose by less than 10 per cent from one day to the next – a notable slowdown in the growth rate compared with the previous week.
Germany’s case fatality rate rose to 1.2 per cent, higher than in recent weeks but still significantly below the death rate in countries such as Italy and Spain. In Italy, for example, more than one in 10 patients with Covid-19 have died so far.
Spain posts biggest increase in jobless figures
Daniel Dombey in Madrid
Spain has recorded the biggest jump in unemployment in its history, with more than 800,000 people losing their jobs as the coronavirus crisis hits the economy.
Figures for March released on Thursday morning showed the number of people making social security contributions had fallen by 833,979 – the biggest monthly slide on record.
Those officially registering as unemployed rose by 302,265, again by far the biggest such shift in Spain’s history. The disparity between the two figures is due to the fact that some who lose their jobs may not be eligible for unemployment benefit or may not yet have signed on.
Spain had a 14 per cent unemployment rate before the crisis struck and the importance of tourism and manufacturing in its mix has left it particularly vulnerable to the economic impact of efforts to fight coronavirus, notably a two-and-a-half week old lockdown and more recent measures to ban “non-essential” work temporarily.
The government is trying to limit job losses by making it easier for employers to lay off staff temporarily, rather than permanently.
Spain has the third-highest number of coronavirus cases in the world, after the US and Italy, and the second-highest death count.
Russia’s Covid-19 case count rises by 28% to 3,547
Henry Foy in Moscow
Russia reported a record 771 new coronavirus cases on Thursday, a 28 per cent jump that takes its total to 3,547.
The country has fewer cases than other major European states but its numbers have risen sharply over the past week.
After a fall in new cases on Wednesday, the recent surge sees Russia return to a trend of doubling infections every three days.
Pets at Home upgrades forecast as cat and dog owners stockpile
Patricia Nilsson in London
Pets at Home has upgraded its profit expectations for the full year, amid “exceptional levels” of demand as the pandemic outbreak has spurred people to stockpile pet food and grooming products.
The Manchester-based group, which was designated an “essential retailer” by the government, on Thursday said pre-tax profit for the year ending March 26 would be “slightly” ahead of £97.1m, the end range of previous guidance.
“In difficult times consumers turn to trusted brands and advice,” said Peter Pritchard, chief executive. “Never has our role as a pet care provider been more important, and never have we been more determined to serve the nation’s pet owners”.
Pets at Home said it would not be “appropriate” to give guidance for the year ahead. Its share price was down about 2 per cent in morning trading.
“The fact that they have benefited from stockpiling is not unexpected,” said Adam Tomlinson at Liberum.
He said management had shown confidence in the business by not suspending dividend payments, but added that the pets supply group was not immune from the economic impact of the pandemic.
Social distancing measures at shops would hit the business, Mr Tomlinson said, and some shops in close proximity to one another could have to close.
Quick corporate round-up from Cat Rutter Pooley’s opening quote
Hays, the global recruitment group, is doing an equity placing to raise £200m, equivalent to 12.4 per cent of its current share capital.
The global recruitment group joins a host of others as a trickle of company cash calls turns into a steady stream. Carnival, the Florida-headquartered but FTSE-listed cruise ship operator, is the biggest while more UK groups follow suit. Last week travel concession operator SSP tapped investors for £216m in new equity capital, yesterday Autotrader announced it was raising cash.
A relaxation of rules, which were announced on Wednesday, allows companies to dilute existing investors by issuing new shares up to 19.9 per cent of their capital on a non-preemptive basis to get cash in the door more quickly.
Normally only 10 per cent is allowed without a shareholder vote. That change recognises the desperate situation many businesses find themselves in. About half of UK companies plan to furlough staff because of the coronavirus pandemic, according to surveys, a higher proportion than the Treasury had expected.
In non-corona news on job moves: William Hill has found a new chief financial officer, after the previous candidate changed his mind about joining the bookmaker last week. It has recruited Matt Ashley from National Express. The company has itself a new chief operating officer. Stephen Parry will join from rival Flutter later in the year.
Feel free to sign up to Cat’s opening quote here.
India’s economic activity falls to four-month low amid lockdown
Benjamin Parkin in New Delhi
India’s manufacturing activity fell to a four-month low in March in an early indication of the disruption the country’s lockdown is having on the economy
The IHS Markit Indian manufacturing purchasing managers’ index fell to 51.8 in March, down from 54.5 a month earlier, with readings for output and new component orders declining.
While India was initially shielded from the immediate shock of Covid-19 as it spread across Asia, infections in the country accelerated in March and prompted the government to order a series of tough measures. Prime Minister Narendra Modi on March 24 announced a three-week lockdown that would see all but essential economic activity grind to a halt and citizens stay at home.
The move is expected to have a dramatic impact across India’s already slowing economy, including its manufacturers. But the current survey, which was taken between March 11 and 25, does not account for the extent of that dislocation.
“The reading has yet to capture the impact of the nationwide lockdown which began at the end of the month,” said Capital Economics in a note. “April’s reading, and possibly beyond, will be far worse.”
Capital Economics expects India’s GDP to reach a four-decade low of 1 per cent this year.
UK energy supplier Centrica to slash spending
Nathalie Thomas in Edinburgh
Centrica has become the latest UK company to cancel its dividend, withdraw its financial guidance and outline plans to reduce spending in response to the pandemic.
Britain’s biggest energy supplier said it had already witnessed a “significant” reduction in energy demand from businesses that were forced to close after the UK government imposed a lockdown last week, as it also suspended asset sales.
Centrica had been seeking to sell off its share of its upstream oil and gas production joint business – Spirit Energy – and its 20 per cent stake in the UK’s operational nuclear power plants.
The actions also include a further £400m reduction in spending this year. Electricity demand in Britain has declined by around 10 per cent since the restrictions came into force last Tuesday.
Brent crude rises sharply on hopes producers reach deal
Anjli Raval reports from London
Brent crude surged more than 12 per cent on hopes that major oil producers, led by Saudi Arabia and Russia, would reach a supply deal to alleviate the commodity’s price collapse triggered by the coronavirus outbreak.
US president Donald Trump said he had spoken in recent days with the leaders of Russia and Saudi Arabia and believed a deal to end a price war – that has taken Brent to its lowest level since 2002 – would be made in “a few days”.
Saudi Arabia had pushed for a deal to deepen and prolong production curbs ahead of a March meeting of oil ministers, but it was met with reluctance by Russia. This prompted Saudi Arabia to pursue a pump at will strategy, cutting prices for its crude and raising production to record levels.
“I think that they will work it out over the next few days… Both know what they have to do,” Trump told a White House press conference, without giving any further details.
Brent crude, the international oil benchmark, rose to $27.95 a barrel.
Saudi Arabia and Russia have both backed co-operation, yet there have been few signs of a strategy shift so far. The kingdom raised production to above 12m barrels a day, its maximum level, on Wednesday.
People close to the kingdom say the world’s biggest oil exporter still wants a deal, but any production curbs would need to be shared between all producers, including Russia.
UK papers attack government’s response to crisis
This morning’s newspapers make difficult reading for Boris Johnson’s government, which has come under criticism for its handling of the crisis.
Thursday’s front pages focus on two issues: the slow rollout of coronavirus testing, and the difficulties some health staff are having in accessing protective equipment.
Significantly, even typically supportive newspapers such as the Daily Telegraph are portraying this as government incompetence.
Here is a flavour:
FCA proposes credit card payments deferrals
The UK’s Financial Regulator has proposed a temporary payment freeze on loans and credit card bills for customers whose finances have been hit by the coronavirus crisis.
The Financial Conduct Authority said repayment should be frozen for three months, and that consumers should also be offered a £500 overdraft facility at zero interest, again for three months.
The measures will be put out for a brief consultation, and if confirmed would come into force by April 9.
Britain’s banks had asked regulators to relax the rules on credit card repayments as part of a series of measures to help customers cope during the coronavirus crisis.
Christopher Woolard, interim chief executive of the FCA, said:
If confirmed, this package of measures we are proposing today will help provide affected consumers with the temporary financial support they need to help them weather the storm during this challenging time.
News you might have missed
Mexico slashed its 2020 gross domestic product forecast and acknowledged it would have to spend its primary surplus because of the coronavirus crisis, as it predicted the economy could now contract by as much as 3.9 per cent.
Human rights groups and critics of Rodrigo Duterte on Thursday castigated the Philippine President for saying coronavirus quarantine violators should be shot if found causing “trouble” during community lockdowns.
Carnival Corporation has raised $500m in new equity, finalising the terms of a wider rescue deal that aims to stave off the risk of collapse for one of the world’s largest travel and leisure companies.
New Zealand’s central bank ordered the nation’s banks — most of which are owned by Australian lenders — to stop paying dividends and redeeming capital notes on Thursday
Australia refuses to allow international cruise ships to dock
Jamie Smyth in Sydney
Australian authorities are refusing to allow more than a dozen international cruise ships to dock due to fears of coronavirus infection, preventing the repatriation of 11,000 crew members in a dispute that trade unions warn risks creating a ‘humanitarian disaster’.
Peter Dutton, Australia’s home affairs minister, alleged on Thursday that some companies had been “lying” about the situation of the health of passengers and crew on board the ships that are lining up off the east and west coasts of Australia.
His comments followed new data showing almost a tenth of Australia’s total number of coronavirus cases can be linked to passengers and crew disembarking from cruise ships.
Tracking by New South Wales health officials show at least 464 cases in the state are linked to four cruise ships owned by multinational giants Carnival Corporation and Royal Caribbean.
One ship, the Ruby Princess, which is owned by Carnival, has been linked to 340 cases in New South Wales – an infection rate that has sparked a bruising political row between state and federal authorities over which arm of government was responsible for not adequately screening passengers.
“It’s clear that some of the companies have been lying about the situation of the health of passengers and crew on board,” said Mr Dutton, who revealed authorities were planning to send doctors onto the ships to undertake preliminary testing to determine the level of risk on each ship of coronavirus infections.
Coronavirus-hit cruise appeals for permission to dock in Florida
Jude Webber in Mexico City
A coronavirus-hit cruise liner on which four people have died and up to 10 passengers need immediate critical care will arrive in US waters early on Thursday, as its operator appealed for “compassion” to dock in Florida after a fraught Latin American journey in which it was repeatedly turned away from ports.
After transferring healthy passengers from the stricken Zaandam to a sister ship, the Rotterdam, at the weekend, the vessels were allowed through the Panama Canal as a humanitarian gesture after what Holland America Line president Orlando Ashford called a display of “not my problem syndrome”.
“Holland America Line is awaiting confirmation to disembark guests from Zaandam and Rotterdam in Fort Lauderdale, Florida,” it said in a statement, adding it was working with authorities to get the nearly 1,200 guests who are fit to travel onto flights home.
The mayor of Fort Lauderdale, Dean Trantalis, has opposed allowing the ship to dock, saying local hospitals are already under enough strain, but Holland America said it had lined up a facility for the “estimated less than 10 people” who needed emergency care.
The company wants to keep 45 passengers who are still exhibiting “mild illness” isolated on board; they would not disembark until they are recovered.
Nearly 100 passengers and 136 crew on the ships have presented influenza-like symptoms since March 22. There are now 808 passengers and 583 crew on the Rotterdam and 442 guests and 603 crew on Zaandam.
“Holland America Line calls for compassion and reason in the review and approval of our disembarkation plan by Florida officials,” the company said. Four elderly patients have already died on board the Zaandam.
Duterte says police can ‘shoot’ if lives at risk during lockdowns
John Reed in Bangkok
Human rights groups and critics of Rodrigo Duterte on Thursday castigated the Philippine President for saying coronavirus quarantine violators should be shot if found causing “trouble” during community lockdowns.
Mr Duterte, who has faced international condemnation for the shootings by police and armed vigilantes of drug suspects and others during his anti-narcotics crackdown, made the comments in a late-night speech on Wednesday.
“I will not hesitate,” the Philippine president said in remarks quoted by the website Rappler. “My orders are to the police and military, also the barangay [district government], that if there is trouble or the situation arises that people fight and your lives are on the line, shoot them dead. Do you understand?”
Senators from Mr Duterte’s small opposition condemned the remarks, as did Butch Olano, director of Amnesty International’s Philippine section, who described the shoot to kill remarks as “deeply alarming”.
Luzon island and greater Manila, where more than 12m people live, are under one of Asia’s strictest lockdowns. Earlier on Wednesday 21 residents of Quezon City, near Manila, were arrested after holding a protest to ask for government help.
Campaigners have accused Philippine authorities of mistreating some of those accused of breaking the government’s Covid-19 regulations, using punishments that according to Human Rights Watch included putting detainees in dog cages. The Philippine Congress last week passed a law giving Mr Duterte 30 new powers to fight the Covid-19 outbreak.
Social media companies open new front in fight with EU
Social media companies have launched a concerted effort to block misinformation during the coronavirus crisis, opening a new front in their battle to stop a clampdown on their activity by EU regulators.
The global health crisis has the potential to change the dynamic of the long-running contest between European regulators and the US tech sector. This comes less than two months after Facebook chief Mark Zuckerberg went to Brussels, only to see the EU reject his vision of how online content should be regulated.
It is still unclear whether their actions will translate into more favourable policy.
And while the removal of misinformation from global leaders has garnered attention, experts say the platforms continue to host harmful information in private forums, as well as in adverts, for example for unsubstantiated cures.
Read more here
Coronavirus pandemic reveals gaps in China’s surveillance state
To the outside world, China can often seem like a surveillance monolith, with the government accused of having access to all data held by companies in the country. But the coronavirus pandemic has demonstrated a messier reality.
Although Beijing has tools that many other governments would not be able to usually deploy to track potentially infected people, such as location data from individual phones and facial recognition technology, the country’s ability to access personal data is at times limited.
Read the full FT story here
Mexico cuts GDP forecast for 2020 over coronavirus impact
Jude Webber in Mexico City
Mexico slashed its 2020 gross domestic product forecast and acknowledged it would have to spend its primary surplus because of the coronavirus crisis, as it predicted the economy could now contract by as much as 3.9 per cent.
The finance ministry, bowed to the inevitable and forecast a primary deficit of 0.4 per cent of GDP, compared with a target of a surplus of 0.7 per cent in a statement late on Wednesday. It also expected the public sector borrowing requirement to be 4.4 per cent of GDP, compared with 2.6 per cent previously.
Pemex, the loss-making national oil company that is struggling to fend off a second ratings downgrade to junk, could require more state aid but will seek new financing sources, the statement said, apparently opening the door to private sector participation in the state icon — something ruled out by president Andrés Manuel López Obrador until now.
“The government of Mexico … is evaluating additional support measures to those already implemented for this year. Nevertheless, Pemex will seek to make economies as well as alternative sources of income to face the effect on its finances of the reduction in the price of oil,” the statement said.
The GDP goal for 2020 is a range of minus 3.9 per cent to 0.1 per cent, compared with a previous target of 2 per cent growth this year that most economists thought was well out of reach even before the Covid-19 emergency. Market estimates are for a contraction of as much as 7 per cent.
The ministry, whose 2020 budget was widely considered overly optimistic, nonetheless believes the economy will bounce back in 2021 with growth of 1.5 per cent to 3.5 per cent.
The new assumption is for an average exchange rate of 22 pesos to the dollar and a price of $24 for the Mexican oil export mix, half the level on which the 2020 budget was drawn up, and oil production of 1.85m barrels of oil per day. Given that at current oil prices much of Pemex’s production is unprofitable, that goal also appeared ambitious.
Hong Kong’s economy provides early glimpse of global virus impact
Before the coronavirus claimed its first victims in Europe or the US, it was taking its toll on Hong Kong’s economy.
The finance- and tourism-dependent city, already weakened by US-China trade tension and anti-government protests last year, is an early indicator of the impact of the virus on hospitality and retail around the world.
Visitor numbers to the territory collapsed by 96 per cent in February, while the latest data shows unemployment figures creeping higher.
Attractions such as Disneyland have been shut for more than two months, and local hotels have slashed their prices as a “race to the bottom” beckons.
Read more here.
Carnival finalises terms of debt and equity rescue deal
Eric Platt in New York and Thomas Hale in Hong Kong
Carnival Corporation has raised $500m in new equity, finalising the terms of a wider rescue deal that aims to stave off the risk of collapse for one of the world’s largest travel and leisure companies.
The equity injection, which is lower than both the initial $1.25bn the company planned to raise and a subsequent target of $750m reported this week, is part of a wider deal worth more than $6bn.
Panama-based Carnival is one of the most prominent corporate examples of the devastating financial impact of the coronavirus, which killed passengers aboard several of its cruise ships and hit future bookings.
The finalisation of the fundraising comes after Carnival increased the size of the debt part of its rescue deal from $3bn to $4bn.
The bonds, which are secured against the company’s cruise ships and other assets which it says are worth $28bn, were priced at a yield of almost 12 per cent – a rate usually associated with the riskier portion of the corporate debt market.
Carnival is also raising $1.75bn in convertible debt that matures in 2023.
Read more about the deal here.
Coronavirus wreaks havoc among Asia-Pacific pension funds
Fears of retirees making panicked runs on investments, a new generation of workers facing higher premiums and a $1.4tn state fund defying tradition to move away from domestic bonds are all part of the turmoil that the coronavirus pandemic has wrought on Asia-Pacific’s pensions industry.
Investment funds and policymakers across the region, the first to be hit by the viral outbreak, have been forced to reassess their until now ironclad promises of money in retirement for ageing populations.
Read the full FT story by Jamie Smyth in Sydney, Edward White in Wellington and Leo Lewis in Tokyo here
US braces for severe spike in unemployment
A wave of coronavirus lay-offs is looming in the US as companies that had hoped for a short interruption to their operations prepare for a longer, more severe downturn.
Large companies have put hundreds of thousands of staff on unpaid leave this week, bowing to the reality of a prolonged shutdown and setting the scene for another historic high in jobless claims when official weekly figures come out on Thursday.
Read the full FT story by Andrew Edgecliffe-Johnson and Alistair Gray here
Mexico warns coronavirus emergency could last until September
Jude Webber in Mexico City
Mexico has launched a mobile app to help manage the country’s coronavirus emergency that Hugo López-Gatell, health undersecretary, said could last until September.
The number of confirmed cases in Mexico hit 1,378 on Wednesday, a 13 per cent rise on Tuesday as deaths rose to 37 from 29 a day earlier.
As cities hunkered down, the governor of the northern state of Nuevo León, Jaime Rodríguez, caused a furore by announcing a nationwide ban on alcohol sales from Friday, saying it was a non-essential industry.
Mexico City mayor Claudia Sheinbaum dismissed rumours of a so-called “dry law” as fake news.
Mr Rodríguez’s comments apparently sparked panic buying with images of long queues of cars outside beer stores lining up in the northern city of Monterrey.
Israel’s health minister tests positive for coronavirus
Mehul Srivastava in Tel Aviv
Israel’s health minister, Yaakov Litzman, and his wife Chava tested positive for Covid-19, the state broadcaster said, hours after prime minister Benjamin Netanyahu made the wearing of masks in public compulsory.
Mr Litzman is an ultra-orthodox rabbi, and has been under intense criticism for the surge of cases in the ultra-orthodox community, which until recently resisted the government’s instructions on closing synagogues and ending large prayer groups. He will enter quarantine at his home, his office said.
It is not clear when Mr Litzman was last in contact with Mr Netanyahu, who has been self-isolating since another ultra-orthodox aide also tested positive for the virus. Mr Netanyahu tested negative, but has remained in isolation out of caution.
Residents of the primarily ultra-orthodox town of Bnei Barak will face strict restrictions on their travel, the prime minister said, and sick inhabitants will be taken away for quarantine in converted hotels to try and stem the rate of new infections in the community.
Outside international travel and transmission within family members, at least a third of new infections in Israel have been traced back to synagogues — and the local press estimate that the ultra-orthodox, 10 per cent of the population, make up a majority of those requiring urgent hospitalisation.
“The ultra-orthodox public has well internalised the danger of the spread of the coronavirus,” Mr Netanyahu said while announcing the closure. “It is listening to the instructions and is behaving responsibly, with full backing from the rabbis.”
At least 26 people have died of coronavirus-related complications and 6,000 are confirmed ill in Israel.
New Zealand orders banks to halt dividend payments
Jamie Smyth in Sydney
New Zealand’s central bank ordered the nation’s banks — most of which are owned by Australian lenders — to stop paying dividends and redeeming capital notes on Thursday in a move to bolster their balance sheets during the coronavirus crisis.
The restrictions enter into force on Thursday and follow similar moves by European monetary authorities, which asked banks last week to refrain from paying dividends or share buy backs to enable banks to better support the economy during what is expected to be a deep recession.
Geoff Bascand, the Reserve Bank of New Zealand’s deputy governor and general manager for financial stability, said the measures would act as a buffer during a period of economic uncertainty and would prevent banks from paying dividends on ordinary shares or redeeming non-CET1 capital instruments.
“This initiative further supports the stability of the financial system by maintaining higher levels of capital during the period of falling economic activity resulting from the Covid-19 pandemic,” said Mr Bascand.
The block on bank dividends comes as the RBNZ steps up its support for the economy by unveiling a long-term lending facility that provides cheap funding to local banks to advance to small and medium businesses.
Analysts said the move by the RBNZ would put pressure on Australian banks’ dividends policies, as their New Zealand subsidiaries account for about a tenth of the dividends they pay out to shareholders.
“This will be an added pressure for the banks on higher dividend payout ratios to bring them back down under 70 per cent sooner,” said Nathan Zaia, analyst at Morningstar.
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Greece has banned swimming and watersports around its coastline for as long as the country remains in lockdown to prevent the spread of coronavirus. Sailing, windsurfing, kitesurfing, canoeing, kayaking and paddleboarding as well as snorkelling and spearfishing are included in the ban, a shipping ministry official said.
Panama, not content with a strict quarantine, has implemented a new social distancing strategy: men and women are now only allowed out on separate days. Women can go out on Mondays, Wednesdays and Fridays and men are permitted to leave their homes on Tuesdays, Thursdays and Saturdays. Sunday is “everyone at home” day, according to the health ministry. Panama has one of the highest number of coronavirus cases in Latin America.
Pakistan’s prime minister Imran Khan has launched a new youth movement known as ‘Corona relief Tigers’ to deliver relief supplies to the poorest segments of society, as the country counts its losses from a de facto lockdown.
American Airlines has drawn down revolving loans totalling $2.7bn, borrowing the funds from credit agreements it set up with banks in 2013, 2014 and 2016. The 2013 and 2016 revolvers were tapped in full, while an additional $110m remains on the 2014 agreement.
The number of confirmed coronavirus cases in Brazil more than tripled in the past week to 6,836 on Wednesday afternoon, with 240 fatalities, as president Jair Bolsonaro tried to soothe political tensions over his response to the outbreak.
Three of the world’s biggest pharmaceutical companies, Merck, Pfizer and Eli Lilly, have announced plans that will allow global employees with medical and laboratory expertise to volunteer their services to local healthcare systems and those most affected by coronavirus.
The UN climate talks set to take place in Glasgow in November will be postponed to 2021 due to coronavirus, delaying a round of new global climate commitments. The talks, which would have been one of the biggest diplomatic summits ever hosted by the UK, will still take place in Glasgow at a date to be determined in 2021.
Mexico could this year suffer a 17 per cent fall in remittances – which last year hit a record of $36bn – because of the coronavirus crisis, dealing a severe blow to millions of Mexicans and to the states of Michoacán, Oaxaca and Zacatecas, for whom remittances make up more than 10 per cent of GDP, according to a study by BBVA.
Amundi, Europe’s largest asset manager has proposed suspending its dividend payment, becoming the first big global investment company to take such a move.
Two-thirds of elderly care homes in eastern France have been affected by the coronavirus pandemic, and 570 residents have died from the disease in the Grand Est region alone, according to regional health authorities cited by French media. Those 570 people are not recorded in France’s official coronavirus death toll, which has reached 4,032 but so far counts only those who have died in hospital.
Coming up today: A live Q&A on the UK’s rescue package
In response to the economic threat posed by the coronavirus pandemic, the UK government last week unveiled a £330bn package of bailout loans alongside an extraordinary offer of wage subsidies. But the speed of the response has left banks, regulators and Treasury officials scrambling to find ways to get the money to the companies that need it most.
Dan Thomas, the FT’s chief business correspondent, will be answering your questions about the rescue package in a live Q&A tomorrow. Click here to join the conversation.
American Hospital Association urges insurers to speed up payments
Hannah Kuchler in New York
The American Hospital Association is calling on health insurers to help keep hospitals open during the crisis, by speeding up payments and cutting administration.
US hospitals are suffering from reduced revenue after cancelling elective procedures to treat — or prepare to treat — patients suffering from Covid-19.
The AHA said they need help from private insurance, even after government measures to ease the burden, such as accelerating payments for the public-funded Medicare health insurance for seniors.
In a letter to the leaders of seven insurers including Anthem, United, and Aetna, Richard Pollack, chief executive of the AHA, asked that private insurers make payments more quickly and waive rules that require physicians to ask for authorisation before some treatments.
“You could make a significant difference in whether a hospital or health system keeps their doors open during this critical time,” he said.
Asia-Pacific stocks mixed after Wall Street drop
Asia-Pacific stocks diverged on Thursday, following a sharp drop on Wall Street after countries extended lockdowns to control the spread of the virus and predictions for the pandemic’s likely death toll rattled investors.
The Topix index in Japan was down 0.5 per cent and the S&P/ASX 200 in Australia shed 2.1 per cent. South Korea’s Kospi gained 1 per cent.
Overnight on Wall Street, US benchmark S&P 500 closed 4.4 per cent lower with banks and airlines among those hardest hit by renewed concerns over the pandemic. Surveys of manufacturers in the eurozone and Asia also highlighted the economic pain caused by the outbreak.
S&P 500 futures pointed to a 0.9 per cent gain when markets reopen in the US.
Trump looking at domestic flight ban to curb Covid-19 spread
Demetri Sevastopulo in Washington
Donald Trump said he was looking “very strongly” at banning domestic air travel, in a dramatic step to curb the spread of coronavirus that would have a severe impact on the reeling aviation industry.
Mr Trump said he may announce some recommendations soon, but added that he was conscious it would be a significant step because of the potential damage to the US airline industry.
“You really are clamping down on an industry that is desperately needed,” Mr Trump said. “That is a calculation that we’re looking at right now.”
Later in the White House briefing, Mr Trump suggested that any ban on domestic travel could be more limited, saying: “We are thinking about hotspots.”
Mr Trump spoke as the number of US coronavirus cases topped 206,000 and the death toll rose to 4,633, an almost 50 per cent rise from Tuesday. New York remains the worst hotspot with almost 2,000 deaths, while 355 people have died in New Jersey. Louisiana, a state with a much smaller population, has recorded 273 deaths.
Earlier on Wednesday, Mike Pence, the US vice-president and head of the White House coronavirus task force, said the virus could return in the fall or winter, but stressed that the US would be better prepared at that point.
“We will be in a much, much better place … if the coronavirus stays with us,” Mr Pence told CNN.
With the White House forecasting that as many as 240,000 people could die, Mr Pence was asked why the federal government was not following the example of many states and ordering a national “stay-at-home” policy. But he sidestepped the question, saying he had been “very inspired” at how people were heeding the social distancing guidelines that were recommended for 15 days and then extended by a month until the end of April.
Earlier on Wednesday, Ron DeSantis, the Republican governor of Florida, issued a stay-at-home order for the 21m residents of the state, which as a retirement destination has a much larger proportion of vulnerable elderly people.
