Russia denies its atomic plants are responsible for radiation leak


Russia has denied that its nuclear power stations in the north-west of the country were responsible for a mild leak of radiation detected in Scandinavia last week.

Rosenergoatom, the power-plant subsidiary of state-owned nuclear group Rosatom, said its installations near St Petersburg and Murmansk were operating normally.

“Aggregated emissions of all specified isotopes in the above-mentioned period did not exceed the reference numbers. No incidents related to release of radionuclide outside containment structures have been reported,” Rosenergoatom said, according to Tass news agency.

The International Atomic Energy Agency, the UN nuclear watchdog, said late on Saturday it had contacted member states seeking more information “and if any event may have been associated with this atmospheric release”.

The IAEA said it had received evidence from international monitoring systems of “elevated” levels of three radioactive isotopes in the Nordic region.

The IAEA’s technical directorate was notified by the Comprehensive Nuclear-Test-Ban Treaty Organization, which maintains independent monitoring systems around the world, that radioisotopes of caesium and ruthenium had been measured well above normal levels by a facility it runs in Sweden. The isotopes do not occur naturally.

Lassina Zerbo, executive secretary of the CTBTO, wrote on Twitter on Friday that its Swedish monitoring unit had detected three isotopes normally associated with nuclear fission that were “higher than usual levels (but not harmful for human health)”. The message included a map of the possible source of the radiation, stretching from north-western Russia across the Baltic to the North Sea.

Mr Zerbo later added in a second message: “These isotopes are most likely from a civil source. We are able to indicate the likely region of the source, but it’s outside the CTBTO’s mandate to identify the exact origin.”

Russia has a history of concealing radiation leaks. Most notoriously, Soviet authorities for weeks denied the true extent of the accident at Chernobyl in 1986, the world’s worst nuclear disaster.

More recently, it took Russian authorities several weeks in 2017 to acknowledge publicly a radioactive cloud containing ruthenium that was detected by France. The highest levels of ruthenium from the leak were found in Argayash, a village close to the Mayak nuclear fuel reprocessing plant in the southern Urals. Rosatom denied the facility was responsible.

The latest incident was first reported last week by agencies in Sweden, Finland and Norway. The Swedish Radiation Safety Authority said it detected “very low levels of the radioactive substances caesium-134, caesium-137, cobalt-60 and ruthenium-103” in early June. Its Finnish counterpart identified the same substances while the Norwegian agency picked up iodine-131.

The National Institute for Public Health and the Environment (RIVM) in the Netherlands on Friday said: “The combination of radionuclides may be explained by an anomaly in the fuel elements of a nuclear power plant.”

“RIVM has performed calculations to find out the source of the radionuclides. The calculations indicate that the nuclides come from the direction of western Russia. Determining a more specific source location is not possible with the limited data available.”

Western Russia has several nuclear facilities, including the vast Leningrad nuclear facility outside St Petersburg on the southern shore of the Gulf of Finland, which features four reactors of the same Soviet-era type as those at Chernobyl. Work is under way to upgrade the facility.

Russia also has operational civilian nuclear plants near Smolensk and Tver. 
Finland and Sweden also operate active reactors in the potential zone of origin for the isotopes indicated by the CTBTO. The region is also home to Lithuania’s Ignalina facility, decommissioned in 2009 — as a condition for the country joining the EU — and reactors under construction in Belarus and Russia’s Kaliningrad enclave.

Coronavirus latest: Macy’s to cut 3,900 jobs in restructuring


UK retailers expect falling sales in July

Valentina Romei in London

UK retailers doubt that reopening non-essential shops will be sufficient to revive demand and prevent sale volumes from falling in July.

More than two in three retailers expect sales to be lower than the same month in 2019, the CBI monthly retail sector survey showed on Thursday. The share is largely unchanged since last month and is up from one in four retailers in March.

The labour market and businesses’ turnover remained depressed, separate figures from the Office for National Statistics showed, while online job adverts in catering and hospitality rose from 20 per cent from its 2019 level on June 12 to 27 per cent on June 19.

“Despite retailers working flat out to make sure they are safe and ready to open their doors, outside the grocery sector most retailers expect sales to be far below where they were this time last year,” said Rain Newton-Smith, chief economist at the employers’ organisation.

The survey, conducted between May 27 and June 12 which comes at a time when the government relaxed some of its coronavirus restrictions, revealed that the overall level of sales in July is expected to be poor.

Retailers have struggled from a lack of demand, with 62 per cent of respondents saying that’s a key challenge, plus growing piles of stocks. Expectations for low demand and sales led to fewer orders for suppliers: two in three said they were lower compared with last year, a proportion largely unchanged when looking at expectations for July.

Online sales however have performed above the long-term average and retailers expect them to increase at a faster clip in July. About two in five retailers reported level of stocks above the adequate levels, a proportion that increases marginally when asked about expectations for July.

Online sales made up less than a fifth of total retail sales before the pandemic, according to the ONS, but the proportion has since risen to 33 per cent.

This chart, from the ONS, shows how online shopping has soared in Britain during the pandemic.

Coronavirus latest: Covid-19 spread accelerates as situation deteriorates in Latin America


Mexico’s death toll on Sunday exceeds 1,000

Jude Webber in Mexico City

Mexico reported 1,044 more deaths from coronavirus on Sunday, as fears grow about the severity of the crisis affecting the country.

Sunday’s data brought Mexico’s total to 21,825 deaths and 180,545 confirmed cases, but because Mexico has one of the world’s lowest levels of testing, the true figures are widely assumed to be far higher.

The low testing rate might have contributed to another alarming statistic, highlighted by Harvard epidemiologist and health economist Eric Feigl-Ding, who tweeted: “Holy moly- I’m crying for MEXICO. The over 50% is the POSITIVITY percentage!!!”

José Luis Alomía, director general of epidemiology at the health ministry, told a news conference that “the majority of this group of 1,044 [deaths] are new notifications and … the vast majority of them … are deaths that happened in the month of May, then there is a group with happened in the first weeks of June and really, in the last few days, we have fewer deaths”.

However, he noted that the northern states of Sonora, Sinaloa and Coahuila and the Pacific states of Guerrero and Michoacán were emerging as Covid-19 hotspots.

Despite the increasing numbers, Mexico’s President Andrés Manuel López Obrador insists the country has “tamed” coronavirus. The health ministry says cases rose until late May but have stabilised at high levels and have yet to fall.

The country began reopening its economy at the beginning of June, despite the continued increase in cases and deaths, applying a traffic light system to differentiate between different risk areas.

Mexico City remains on red, meaning only essential businesses are supposed to be operating, but increasing number of street markets, boutiques and even shops selling toys and gifts are in operation.

Coronavirus latest: UK scientific task force recommends downgrading threat level


Australia is suffering state-sponsored cyber attack, says prime minister

Jamie Smyth in Sydney

A sophisticated, state-sponsored cyber attack is actively targeting Australian government, business, education and political organisations, Australian prime minister Scott Morrison, said on Friday.

He did not reveal the identity of the state actor that is responsible for the attacks, which he said had been happening for many months. But the scale and sophisticated nature of the malicious activity has led Australia’s security services to determine that a state actor is responsible, he said.

“Based on advice provided to me by our cyber experts, Australian organisations are currently being targeted by a sophisticated state-based cyber actor,” Mr Morrison told reporters.

“This act is targeting Australian organisations across a range of sectors including all levels of government, industry, political organisations, education, health, essential service providers and operators of other critical infrastructure.”

Mr Morrison said no large scale personal data breaches had been revealed so far and he had talked to Australia’s Five Eyes intelligence network partners, including Boris Johnson, about the malicious activity. When pressed on the possible identity of the state actor, he said there were not very many state-based actors which had the capabilities to undertake the type of operation under way.

Despite the lack of detail provided by the government on the timing and nature of the cyber attacks, analysts said China was the most likely suspect owing to the broad scope of the institutions targeted.

Sino-Australian relations have slumped to their lowest level in a generation following Canberra’s recent call for an inquiry into the origins of the Covid-19 outbreak in Wuhan, China.

“Of course it is China. There are a few countries that have the capability: Russia, China, US, UK, and perhaps Iran and North Korea, although they may not have the scale. Only China in this list will have the appetite for such a broad approach,” said Tom Uren, a cyber security analyst at the Australian Strategic Policy Institute, a Canberra-based think tank, in a social media post.

Coronavirus latest: McDonald’s sales improve as diners flock to drive-thrus


News you might have missed

Wall Street kicked off the new week with gains, as the Federal Reserve’s plans to begin buying corporate debt buoyed market sentiment. The S&P 500 closed 0.8 per cent higher on Monday, led higher by shares across the financial sector. The tech-heavy Nasdaq Composite fared best among the three main indices, rising 1.4 per cent. The Dow Jones Industrial Average added 0.6 per cent.

The US drug regulator has revoked its emergency approval for hydroxychloroquine, an anti-malarial that has been touted by the president, Donald Trump, and used to treat Covid-19 patients. The Food and Drug Administration said new data from trials showed the drug did not improve the condition of patients or have an antiviral effect — and so the benefits did not outweigh the risks.

The World Health Organization has cautioned that people should not “lose sight” of the public health threat posed by influenza, as it warned that surveillance had been sidelined in many countries in favour of efforts to tackle Covid-19. “Circulation of both [diseases] can worsen the impact on health systems which are already overwhelmed,” said WHO director-general Tedros Adhanom Ghebreyesus.

United Airlines will tap $4.5bn in loans from US taxpayers, while also signing for a $5bn term loan from Goldman Sachs, backed by the airline’s mileage programme. Airline executives expect the financing will bring the Chicago company to $17bn in liquidity by the end of the third quarter. United plans to offer unspecified slots, gates and routes as collateral for the loan, according to a Securities and Exchange Commission filing.

India’s imports halved last month, with exports dropping by more than a third, as nearly three months of lockdown measures and pandemic disruptions hit the economy. Imports in May fell 51 per cent to $22bn from the same month a year earlier while exports dropped 36 per cent to $19.9bn. The trade deficit narrowed to $3.2bn, down from $30bn in May 2019.

India’s southern state of Tamil Nadu is re-imposing a strict and total lockdown in the southern city of Chennai and four neighbouring districts from June 19 to 30 as it tries to clamp down on the spread of coronavirus. Chennai and the surrounding area – a hub of India’s car manufacturing industry – is one of the three Indian cities worst hit by Covid-19.

Pakistan will impose a two-week lockdown from Tuesday night in parts of Lahore, its second-largest city, after healthcare officials reported a surge in the number of coronavirus cases. Businesses, excluding pharmacies and stores selling essential food items, are to be shut under the new restrictions. Street vendors, pictured, have continued to ply their wares amid restrictions.

Singapore will ease distancing measures further on Friday in a move that authorities have said will essentially resume activity throughout the economy. Gan Kim Yong, health minister, said the number of infections has remained “under control” since Singapore started lifting lockdown measures two weeks ago. Dining in, retail outlets, parks, beaches, gyms and all healthcare services are among the activities that may resume operations.

Greece reopened officially for tourism on Monday, reducing testing for coronavirus for people arriving at Athens airport and allowing direct flights to Thessaloniki, a hub for visitors to northern Greek resorts. All visitors arriving from Italy, Spain and the Netherlands will be tested at the airport, health authorities said. If the result is positive, they will spend two weeks in quarantine, paid for by Greece.

Jaguar Land Rover has expanded its multibillion pound cost-cutting programme by a quarter and plans to shed more than 1,000 UK jobs, after the business fell to an annual loss on the back of a £500m coronavirus hit between January and March. Britain’s largest carmaker booked a £422m pre-tax loss in the year to March as showrooms and factories across the world closed because of the pandemic.

Ikea in talks with governments over returning furlough money


Ikea is in talks over returning money to all nine countries that gave the world’s largest furniture retailer government support through furlough schemes as it has suffered less than expected from the Covid-19 crisis.

Tolga Oncu, retail operations manager at Ingka Group, the main Ikea retailer, said the company had decided to start a dialogue with Belgium, Croatia, the Czech Republic, Ireland, Portugal, Romania, Serbia, Spain and the US.

Mr Oncu added that Ikea had thought business could fall by 70-80 per cent at the start of the crisis. But, now all but 23 of its stores had reopened, it was experiencing a large amount of “pent-up demand” for home improvements.

“Now we know more than what we did in February and March, it’s just the right thing to go back and say, ‘hey guys thanks very much you helped us through this difficult period and so now can we see about paying this back or forward’,” he told the Financial Times.

Ikea is in early discussions with the relevant national authorities. Because of differences in how the furlough or short-time working schemes are set up, the company does not yet know how it will pay the governments back.

Mr Oncu said the flat-pack retailer also did not know how much money it would cost or exactly how many workers were involved across the nine countries.

Ikea’s decision to return the money lays bare a dilemma for many companies as economies start to recover after the immediate shock following lockdowns from coronavirus across much of the world.

Some other companies have returned furlough money in individual countries, often under pressure from external scrutiny, but few large multinational companies have committed to returning all support.

Mr Oncu said Ikea’s priority at the beginning of the crisis in February and March had been to protect employees and their livelihoods as it closed down most of its 374 stores worldwide.

“When the thick fog started to fade away we saw that our ability to adapt to the new circumstances . . . made us realise that the depth of the crisis was not as deep as we had feared and would not last as long as we first thought.”

Mr Oncu said the move to repay the money had nothing to do with how Ikea is perceived but was simply “the right thing to do”.

He added: “It’s important to keep good relations with societies and communities we are close to. Connected with the fact that we work in the long term and we talk in terms of generations, it gives us the responsibility and opportunity to work with these questions.”

Ikea has also set up a €26m fund for Ikea store leaders to distribute in their local communities. This is on top of looking at improving both remote solutions for its workers and customers as it boosts its digital offering.

Ikea, which was founded in Sweden but now has a family of companies, many of which are headquartered in the Netherlands, is facing scrutiny from European regulators about its tax affairs.

Deutsche Bank warns bad loan provisions set to reach 11-year high


Deutsche Bank has warned its provisions for bad loans will surge to the highest level in more than a decade this quarter as the coronavirus crisis leaves the global economy mired in recession.

Germany’s biggest lender had earmarked a provision of just €506m for bad loans in the first three months of the year, but cautioned on Wednesday that the figure would increase this quarter.

“Our expectation would be that credit loss provisions will be in a range around €800m for this quarter,” James von Moltke, chief financial officer, told analysts on Wednesday at Goldman Sachs’ European Financials Conference.

Analysts were expecting just €630m in provisions for the second quarter, and €800m will be up fivefold from a year ago.

Mr von Moltke added that “we would expect that the second quarter will be the peak of the loan loss provisioning for this year”, and that the picture would improve in the second half of the year.

Shares in Deutsche Bank rose 2.6 per cent in early afternoon trading in Frankfurt to the highest level since late February.

The optimism reflected in Deutsche’s first-quarter provision caused some surprise among analysts given the economic damage wrought by efforts to contain Covid-19. Relative to the size of their loan book, only 10 of the 40 largest European lenders provisioned less than Deutsche, according to data by DBRS Morningstar.

Deutsche has argued that it is less exposed to credit card debt than many of its rivals and that an early lockdown in Germany, where state aid for stricken companies is more generous than in many other countries, will limit the damage to its loan book.

“There is nothing we have seen since [late April] that would change our outlook for the full year,” Mr von Moltke said on Wednesday, confirming Deutsche’s guidance that 2020 credit losses will range between 35 and 45 basis points of its loan book. That is up from 17 basis points last year.

In calculating their expected credit losses, banks have some leeway over the inputs they feed into their internal models. European regulators urged lenders at the onset of the pandemic to take a long-term view and not be too “mechanistic”.

As a result, Deutsche in the first quarter reverted to three-year average economic forecasts to model likely loan losses, compared with its previous policy of using quarterly assumptions. That meant that the implied hit to gross domestic product in Deutsche’s risk models was smaller, inflicting less damage on borrowers.

Doubts remain over true scale of US jobless crisis


The US government agency responsible for publishing labour market statistics is struggling to pin down the actual unemployment rate in the world’s largest economy.

The problem is due to “misclassification” of workers in a key survey, struggles with data collection during the pandemic, and massive flows in and out of jobs.

On Friday, the Bureau of Labor Statistics, a unit of the US labour department, released its latest report on the American jobs market, showing unemployment dropping from 14.7 per cent in April to 13.3 per cent in May, an unexpected improvement.

But the data came with a caveat: the agency acknowledged that some furloughed employees had been labelled as working but absent, when they should have been classified as temporarily laid off. If not for that mistake, the unemployment rate would have been 3 percentage points higher.

The revelation was not new and in fact the problem has been getting smaller: in April, closer to the start of the pandemic, the BLS had said the “misclassification error” was in the order of 5 percentage points, which meant the US unemployment rate might have neared 20 per cent. 

But the agency’s own admission that a higher, alternative jobless rate might be more accurate than the official one has placed it in the spotlight at a time when economic data is crucial in assessing the depth of the recession, and more politically sensitive given the presidential election year.

It also revealed the difficulty of producing economic statistics at a time of massive, sudden economic transformation.

“It’s not that the questions have changed or the interviewers have changed, the circumstances have changed dramatically from anything that has been encountered before,” said Erica Groshen, a former BLS commissioner under president Barack Obama, now at Cornell University. “You have employers who have never laid anybody off before, you have workers who have never been laid off before, this happened essentially overnight, and both sides are intending to pick up where they left off as soon as they can,” she said.

The BLS’s main quandary is that in its judgment — and its instructions to field staff — people furloughed during the pandemic should be classified as unemployed on a temporary basis, because it is an involuntary absence unlike other forms of leave. But when asked about their status, many respondents have been answering that they remained employed, but absent for “other reasons”. That category is usually reserved for limited departures from the workplace due to medical leave or jury duty, rather than homebound people waiting for pandemic restrictions to be lifted.

“At a moment like this, the line is blurry over how furloughed / hiatus / temporarily closed workers should be classified. They gave guidance to the field personnel but clearly there was ambiguity and some reported it one way and some the other,” said Austan Goolsbee, an economics professor at the University of Chicago’s business school and former economic adviser to Mr Obama.

BLS declined a request for an interview but on Friday said it and the US Census Bureau were investigating why discrepancies continued to occur and was taking additional steps to address it, suggesting a ramped-up training effort for field staff to prompt respondents differently so they do not place themselves in the wrong category.

In the data release, BLS revealed other difficulties it was having with producing the unemployment statistics at this time, including the fact that the survey of 60,000 households they are based on are partly conducted through in-person interviews that had to be cancelled due to social distancing guidelines. That led the response rate to be 15 percentage points lower than pre-pandemic levels, at 67 per cent, the BLS said.

The trouble has been compounded by the epic nature of the shifts happening in the labour market at the moment. The separate establishment survey released by BLS at the same time as the unemployment data showed that employers created 2.5m jobs in May, which was also a surprise, marking a small rebound from the 20.5m positions shed in April. But that was a net figure: according to a JPMorgan analysis of the data, 7.7m workers moved from unemployment to employment last month, and another 5.5m moved from outside the labour force into employment. But at the same time, 4.9m people moved in the opposite direction, from employment to unemployment.

Inevitably, given the heated political atmosphere in Washington, the confusion over the unemployment rate triggered some accusations of political bias at the BLS, suggesting Donald Trump was trying to suppress the true state of the jobless crisis. Paul Krugman, the New York Times columnist, apologised after saying on Twitter one could not “completely discount” the possibility that the US president had interfered with it.

However, former US economic officials have dismissed the idea of any political influence, saying statistics are assembled by civil servants in a very quick timeframe. The commissioner, currently William Beach, a former Republican staffer on Capitol Hill is the sole political appointee at the agency, and reviews the reports only once they are completed.

“I think there would have been red flags [if it had been tampered with]. Either the release would not have come out in time, or it would have been missing some of the back-up information that normally accompanies it,” said Ms Groshen. “And I would have been really surprised if somebody hadn’t gotten an inkling of it at BLS, because they are so dedicated to the integrity of the product and the agency that word would have gotten out”, she said.

Coronavirus latest: Opec and Russia in talks about extending oil production cuts


Australian house prices fall, but transaction activity rebounds

Jamie Smyth in Sydney

Australian house prices fell for the first time in a year in May as the coronavirus crisis dented the economy and pushed an estimated 3m people onto government wage-support schemes.

Property values across state and territory capitals fell by 0.5 per cent in May, the first monthly decline since June 2019, according to CoreLogic, a research company. House prices in the two biggest cities, Melbourne and Sydney, recorded falls of 0.9 and 0.4 per cent respectively, while the national index fell by 0.4 per cent.

However, the price declines were lower than some analysts had anticipated and transaction activity rebounded towards the end of May, as social-distancing restrictions were eased in some states due to Australia’s success in suppressing the spread of Covid-19.

CoreLogic said sales activity bounced back strongly last month with weekly auction clearance rates rising from 30.2 per cent in late April to 62.7 per cent in the week ending May 24.

“Considering the weak economic conditions associated with the pandemic, a fall of less than half a per cent in housing values over the month shows the market has remained resilient to a material correction,” said Tim Lawless, Corelogic head of research. “With restrictive policies being progressively lifted or relaxed, the downwards trajectory of housing values could be milder than first expected.”

Australia’s capital city house prices have surged 10 per cent over the past year due to record-low interest rates and looser lending criteria applied by banks. But analysts have predicted house prices could fall by 10 per cent over the next 12 months with unemployment tipped to hit 10 per cent by the end of June.

Australian banks have already deferred payments on 429,000 mortgages under a scheme that provides people with up to six months’ leeway on home loans.

The government is mulling stimulus measures aimed at supporting the construction industry and housing market, according to the Australian Financial Review. The newspaper said buyers of newly constructed homes could be offered cash grants of at least A$20,000 ($13,450) by the government.