Time for a recap

The economic impact of the coronavirus has driven two UK firms into administration today, with more likely to follow.

The Italian restaurant chain Carluccio’s and rent-to-own retailer BrightHouse both collapsed, putting about 4,400 jobs at risk, as the government’s coronavirus lockdown biting the high street.

Retail experts warned that more firms will also collapse, as customers continue to obey the government lockdown.

Economists warned that the UK economy could shrink by 15% in the next three months, an extremely sharp contraction.

A survey showed that half the UK population expect a recession this year, with 19% bracing for a depression.

Fears of a deep slowdown drove the oil price to its lowest levels since 2002, as analysts predicted that many wells may have to be shut down due to weak demand.

Travel companies are suffering too. Airline easyJet was forced to ground all its planes, due to a slump in demand for flights, while cruise operator Cunard suspended sailings for another month.

Shopping centre operator Hammerson reported that two-thirds of its customers haven’t paid next quarter’s rent:

But stock markets have picked up, with Britain’s FTSE 100 ending 1% higher after a wobbly start.

Good evening. GW

The collapse of restaurant chain Carluccio’s and rent-to-own retailer BrightHouse are a clear sign the government’s coronavirus lockdown is biting the high street, writes my colleague Sarah Butler:

Analysts believe a substantial number of restaurant, retail and leisure businesses will struggle to survive in the coming weeks. Mark Brumby, a hospitality and leisure analyst at Langton Capital, predicted that five or six firms could collapse this week alone. The coronavirus outbreak, he said, had “hit the industry like a brick”.

BrightHouse’s stores were also already closed under the government’s coronavirus control measures but administrators said the business would continue delivering smaller items to homes and, where possible, would continue servicing items already in people’s homes.

More here (including confirmation that BrightHouse aren’t released from their financial agreements):

Two UK companies have just fallen into administration, as the Covid-19 crisis continues to damage the British economy.

Brighthouse, the rent-to-own electricals giant, and restaurant chain Carluccio’s have both entered administration, putting more than 4,000 jobs at risk.

Both suffered a slump in customer numbers since the government instructed people to stay at home, and non-essential shops to shut.

Carluccio’s, which has 73 branches and about 2,000 employees, has been on the brink of administration for days -- a restaurant group can’t operate for long with no customers. It had already been forced to shut 30 loss-making sites in 2018.

Brighthouse was also already in serious straits before Covid-19 hit, having been ordered to repay millions of pounds to consumers for misselling goods on high-cost credit deals.

Adam French, Which? Consumer Rights Expert, explained last week:

“Few former customers will mourn the loss ofBrightHouse which has been embroiled in a mis-selling scandal since 2017, however its imminent collapse will be concerning for employees and those still waiting to resolve claims against the firm.

“If the retailer goes bust, an administrator is likely to oversee the scores of mis-selling claims lodged against the firm. However, claimants may have to wait longer for their compensation and receive a smaller sum.

“Current customers with outstanding debt will be expected to keep making repayments to the administrator in the event of a collapse. While those with a warranty policy may still be able to make a claim if their product is faulty.”

Workers from businesses across the UK have told MPs that they are being put at risk by employers who insist they keep working, despite the coronavirus lockdown.

The Business, Energy and Industrial Strategy (BEIS) Committee received the warnings, after asking employees to get in touch with their experiences of working during the Covid-19 crisis.

Several workers reported concerns over the last week, and the committee have just published them.

One EE call centre worker said:

There are hundreds of people working in our centres, there has been no deep cleaning done and some people are off self-isolating because they have symptoms of the virus, no tests can be done on these advisors so we don’t know if any of them have the virus or not but they still were coming to work before going off to self-isolate. We are asked now to stay 2 metres apart when at desks but when all the teams are in this is going to prove very difficult as there will not be enough workspace to do this.

We are still using the one lift we have altogether and still passing each other on the stairs, in the toilets and in the canteen and also queuing for food together.

Another, from insurer AXA, said some staff were being made to commute to work -- including a tutorial about remote working(!) that didn’t go well.

Yesterday, high risk members of staff were forced to commute into the office for training on ‘how to work from home.’ The training should’ve taken 45 minutes but staff were made to wait around for 3 hours until AXA realised the training couldn’t be delivered and the staff were sent home without laptops. Shocking behaviour from a company who advertises how important health is.

A Barclays Bank worker said the company wasn’t showing enough concern for front-line staff:

An area leader is condoning staff bringing their children into work if they don’t have childcare which again goes directly against the government ruling on maintaining social distancing.

To encourage our customers to social distance staff have had to go on their own volition and out of their own pocket pay for tape to mark out spaces on the floor, the 2-metre rule isn’t being followed between customers or colleagues.

Our branch hasn’t been cleaned this week as our current cleaner is on holiday and there are not provisions to replace her this week. Meaning staff are having to do this.

Staff at IWG Group (who own Regus business Centres) are also being treated badly, according to the partner of one.

There is no flexible working or working from home, no hand sanitiser and they are being asked to continue to conduct tours of the centres, host meetings and key-holders continue to come into centres. It seems madness these remain open when libraries, schools, retail outlets are forced to close. Staff are being told if they do not come in, they will not be paid. This means my partner is having to go into work, breaking government guidelines and potentially infecting our household. It is beyond irresponsible and communicating that Regus is very much ‘open for business’ sends the wrong message.

There is a backlash on Twitter, a petition and staff are in tears as they are put in an invidious position, deciding between health or an income.

Regus, though, insists all staff working are ‘dedicated volunteers’....

The partner of a DPD depot worker also had a worrying story:

Last week they were handed information for the coronavirus outbreak which told them, amongst other things, that if they take time off to self-isolate or because they have contracted the coronavirus, this would be added to their Bradford factor index score - therefore risking disciplinary action and/or termination of employment.

Committee chair Rachel Reeves says bosses will be held to account:

“When this pandemic passes, businesses will have to answer for how they treated their workers and suppliers. The Government will be judged on the effectiveness of their response.

Many businesses will be able to tell of how they did everything they could while others will be found wanting. The BEIS Committee will continue to press for action on these issues and hold the Government and businesses to account for their response to this pandemic.”

Just in: Cruise operator Cunard has suspended all voyages until May 15th, a month later than first planned.

Cunard had originally paused sailings until April 11, due to the coronavirus outbreak. But it has now extended this as a “preventative measure”, due to the global clampdown on travel.

Cunard preident Simon Palethorpe says:

“The impact of COVID-19 is affecting personal routines and businesses as well as placing significant travel restrictions around the world,”

“Everyone in the Cunard team is aware of the need to support the management and containment of COVID-19 globally. This includes protecting the health and safety of our guests and crew. It is therefore right we extend the pause in operations.

Putting thousands of people on a boat and sailing between various cities across the world is clearly incompatible with government advice to stay at home and avoid other people.

Goldman Sachs have predicted that oil companies will be forced to cut down wells in their, because demand is slumping due to the coronavirus.

In a new note, they say Covid-19 is causing “the largest economic shock of our lifetimes”.

In the short term, production sites - particularly on-shore, will be turned off, they write, as the oil transportation network is already being overwhelmed by surplus stock.

Indeed, given the cost of shutting down a well, a producer would be willing to pay someone to dispose of a barrel, implying negative prices in landlocked areas.

An astonishing thought.

But in the long-term, this disruption could actually lead to an (eventual) spike in prices, as the industry won’t be able to boost production fast enough when demand comes back.

Goldman argue:

The ultimate magnitude of these shut-ins, which is still unknown, will likely permanently alter the energy industry and its geopolitics.

Polling firm YouGov has found that more than half of Britons (52%) expect a recession within the next year.

That’s not too surprising -- most City economists expect the economy to contract sharply too.

More worryingly ,nearly one in five people (19%) are expecting a full-blown depression (typically meaning slumping output, extremely high unemployment and widespread company closures).

YouGov found that people are much less optimistic about their own financial situation, business activity and house prices - due to the impact of Covid-19 on the economy.

Kay Neufeld, head of macroeconomics at the Centre for Economics and Business Research (who also carry out the survey), says the UK’s lockdown is having a very severe impact on the economy.

Government mandated closures of non-essential shops, pubs, restaurants and other establishments will have a devastating effect on several industries and in particular on the leisure and hospitality sectors.

It is now highly likely that the economic crisis will lead to an increase in unemployment and a reduction in household incomes in the coming months, although the Government and the Bank of England are working hard to soften the blow. To limit the economic damage from the crisis, it will be crucial to get the pandemic under control as quickly as possible.”

Digger maker JCB is to reopen one of its factories in order to make metal casings for a new ventilator designed by vacuum cleaner maker Dyson.

The newly designed ventilator is expected to be produced within weeks by Dyson in response to the coronavirus crisis, with the aim of producing 10,000 in preparation for a surge of critical cases of Covid-19. The production will start once the device gains regulatory approval.

JCB had furloughed most of its 6,500 employees across nine factories as the pandemic dented demand and stopped crucial supplies, but the company said on Monday that 50 employees will return to restart production.

Dyson’s move came after the prime minister appealed to major manufacturing companies to boost production of ventilators.

A separate effort including carmakers and aerospace companies such as Ford, the McLaren F1 team, Airbus, and Rolls-Royce is expected to start production of an existing ventilator design this week.

JCB chairman Lord Bamford, a major donor to Boris Johnson and the Leave campaign in the EU referendum, said:

“This project has gone from design to production in just a matter of days and I am delighted that we have been to deploy the skills of our talented engineering, design and fabrication teams so quickly at a time of national crisis.

This is also a global crisis, of course, and we will naturally help with the production of more housings if these ventilators are eventually required by other countries.”

Jack Allardyce, oil and gas analyst at Cantor Fitzgerald Europe predicts that the oil price will keep falling.

He points out that Saudi Arabia is resisting pressure from Washington to curb production, having dramatically boosted production this month.

That could push US crude prices sharply below today’s $20 per barrel, he predicts:

“Crude prices plunged further over the weekend, with WTI slipping below $20 and Brent around the $23 level, as Saudi Arabia said it was not in talks with Russia despite Washington pressuring both sides to help stabilise markets.

“The potential for a renewed supply pact had been one of the few factors helping to prop up benchmarks, as coronavirus-driven demand destruction has continued to outweigh global stimulus efforts.

“With major producers pumping barrels freely and the IEA suggesting that short-term demand could fall by a fifth due to travel restrictions, global storage is likely to hit capacity over the next two-to-three months. This is likely to be particularly damaging for US crude, with prices in the Permian region potentially hitting single digits. While we believe that current levels are unsustainable in the medium term given achievable breakeven prices, the ongoing uncertainty around COVID-19 and apparent stalemate between Riyadh and Moscow is likely to cause continued downward pressure over the coming weeks.

“While prices have not yet reached the relative falls seen during the Global Financial Crisis of 2008, the rate of the crash is unprecedented, and the pain looks far from over. “

The selloff in the oil price is now accelerating, driving Brent crude below $23 per barrel for the first time since November 2002.

Neil Wilson of Markets.com says oil is facing a ‘perfect storm’. One one hand: a complete collapse in demand due to the coronavirus. On the other: a price war launched by Saudi Arabia after Russia refused to cut production.

He adds:

The thing to stress is that we simply do not have any idea when demand will recover – it could take months to get back to some semblance of normality. And just as this is happening the Saudis are opening the spigots. It’s getting to the point where we run out of places to store the oil.

The London stock market has opened in the red, dashing hopes of small gains.

The FTSE 100 has shed 94 points in early trading, a drop of 1.7%, taking it down to 5417.

Jet-engine maker Rolls-Royce are the top faller, down 11% (demand for engines, and services, will slump if more airlines follow easyJet’s example and ground their flights).

Aerospace group Meggitt and engineering firm Melrose are both down 9%.

Retailer Next, which was forced to shut its online shopping service last week, has lost 7%.

In happier days, budget airline easyJet would be celebrating a drop in the oil price.

But it won’t benefit this time. Instead, easyJet has just grounded its entire fleet, due to the collapse in demand for holidays during the coronavirus lockdown.

The company says it has repatriated more than 45,000 passengers, who were stranded abroad when the pandemic struck. With that task now complete, jets are being parked up and staff are being put on ‘furlough’.

This means cabin crew will qualify for the government’s job retention scheme (which pays 80% of wages, up to £2,500 per month).

Johan Lundgren, easyJet CEO said:

“I am extremely proud of the way in which people across easyJet have given their absolute best at such a challenging time, including so many crew who have volunteered to operate rescue flights to bring our customers home.

We are working tirelessly to ensure that easyJet continues to be well positioned to overcome the challenges of coronavirus.”

Fears of a global recession also forced China’s central bank to ease monetary policy overnight.

The People’s Bank of China cut its seven-day reverse repo rate, which it charges banks for short-term loans, to 2.2% from 2.4%. That’s the biggest cut in five years, Reuters says.

The move should help China’s banking sector to support the real economy, where firms have suffered from factory shutdowns and a slump in orders from abroad.

Julian Evans-Pritchard, senior China economist at Capital Economics, says:

“This will take some pressure off the banks which have so far been forced to bear the brunt of the cost of propping up struggling firms via preferential loans.

“But a lot more easing will be needed, especially on the fiscal front, to help the economy return to its pre-virus trend.”

The slump in the oil price comes as economists predict UK economic output could plunge by an unprecedented 15% in the next three months.

All due to the coronavirus, of course, as my colleague Rob Davies explains:

The deepest recession since the financial crisis is now all but unavoidable, according to analysts at the Centre for Economics and Business Research (CEBR), after businesses shut up shop and consumer spending fell dramatically as a result of lockdown restrictions.

The centre said it expected the economy to have shrunk marginally in the first three months of the year by 0.5%, followed by the steepest economic contraction since comparable records began more than 20 years ago.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

With the world economy in crisis, oil prices have sunk to fresh 17-year lows this morning.

Traders are ditching crude amid signs that energy demand will sink this year, just as the ongoing Saudi-Russia price war leaves the market saturated with supply.

Brent crude, sourced from the North Sea, has fallen 5% to just $23 per barrel -- its lowest level since November 2002. US crude oil is also tumbling, dropping below $20 towards the 17-year low hit last week.

This extends the stunning slump in crude prices over the recent weeks - Brent crude hit $70 in January, before Covid-19 struck the global economy.

The slump comes as City economists predict global growth will slump alarmingly in April-June, with many forecasting that 10% will be slashed from advanced economies such as the UK.

Kyle Rodda of IG points out that recent emergency moves by central banks may have calmed the markets, but won’t prevent a recession.

Markets are tangibly more pessimistic about the outlook for the global economy. Last week’s positivity around the US fiscal stimulus package has waned, giving way to level of risk aversion.

Risks to the financial system are lower thanks to last week’s extraordinary interventions from the US Federal Reserve.....And oil prices have hit 17-year lows, as weaker demand conditions continues compound crude’s building global oversupply.

In normal times, cheap oil would be a boost for consumers - lowering transport costs. But if you’re stuck at home, it hardly matters how much petrol costs.

David Madden of London Capital Group explains:

Even though we have seen huge intervention from central banks and governments recently, the oil market pushed lower as dealers are afraid that demand will severely drop off on account of the pandemic.

To make matters worse, the Saudi Arabia-Russia price war is hurting the oil market too as the Saudis are keen to push the price lower to get back at Moscow. The slump in oil is hitting the shale industry too, which is concerning the US government.

Overnight, US president Donald Trump abandoned his plan to end Covid-19 restrictions by Easter, bowing to pressure from medical experts. That should save lives.

However, Trump also stunned observers by claiming it would be a major success to keep deaths below 100,000 -- an admission that covonavirus is going to hit America hard, and harder than he’s claimed before.

Asia-Pacific markets have been mixed today, with Japan’s Nikkei falling 1.5%.

Australia’s S&P/ASX 200 surged by 7%, after its government launched a stimulus package. IG says that’s its best day ever:

European equity markets are currently on track for a mildly positive open, with the FTSE 100 up around 0.5% in pre-market trading.

There’s not much in the economic calendar, beyond the EC’s latest survey of eurozone confidence - which is expected to be dire.

The agenda

• 10am BST: Eurozone economic confidence index: forecast to slump to 91.6 from 103.5