Cineworld workers on zero-hours contracts in the UK could be left without pay beyond Thursday after the cinema chain’s chief executive said the government’s job support scheme would not save 5,500 jobs.

My colleague Jasper Jolly explains:

Mooky Greidinger, the Cineworld chief executive, whose family trust owns a fifth of the company shares, said the job support scheme “cannot work for us” because it did not help companies earning no income. The comments were contained in a memo sent to employees seen by the Guardian.

The job support scheme is a central plank in Rishi Sunak’s plan for the UK economy as the furlough scheme comes to an end. Under the scheme the government will support a maximum of only 22% of the salaries of workers on reduced hours – significantly less generous than the 80% offered at the start of its predecessor. The new scheme has been criticised by some economists and opposition MPs for not incentivising job retention.

Cineworld on Monday confirmed it would close its 127 UK cinemas after distributors for the James Bond spy franchise delayed the release of the latest instalment, depriving the industry of another potential blockbuster. The chain will also shut more than 500 US cinemas, and a total of 45,000 UK and US workers are expected to be made redundant once contractors, such as cleaners and security guards are included. It is understood workers may be encouraged to reapply for jobs once the cinemas reopen, but there is no clear timeline for that to happen.

In the staff memo, Greidinger wrote: “The UK government announced a new job support scheme last week and as you know, the aim of this is to support viable jobs. This said, the new government scheme places a greater financial burden on employers, which cannot work for us when we have almost no income.”

Here’s the full story:

Credit rating agency Fitch has downgraded Cineworld to CCC-, a very low rating which indicates the company is likely to default on its loans.

In a statement, Fitch says Cineworld is approaching “a short-term liquidity crisis”, and could need new funding by the end of this year.

The agency explains:

The downgrade reflects the temporary suspension of operations in the US and UK, fast-depleting liquidity and the continued, significant uncertainty on the pace of recovery as a result of the coronavirus pandemic. Lower-than-expected cinema attendance across Cineworld’s operating footprint is driving a longer and deeper period of cash burn than we originally anticipated. Our base-case forecasts indicate that, the company’s current liquidity levels may only be sufficient until November to December 2020, assuming no revolving credit facility (RCF) extensions.

The pace of Cineworld’s recovery is highly dependent on cinema attendance and new film releases. Both factors are not in Cineworld’s control and they remain susceptible to the current increase coronavirus cases and the instigation of further lockdown measures. Cineworld’s scale and cash- generative business model are supportive of a rapid recovery if sufficient cinema attendance levels were to return. However, they now face insufficient liquidity in the short term.

Donald Trump continues to be criticised for his trip to see supporters outside Walter Reed medical center yesterday, but the appearance seems to have calmed the markets.

Wall Street has opened higher, amid speculation that the president could be discharged soon, three days after being taken in for Covid-19 treatment.

The Dow Jones industrial average has jumped by 249 points, or 0.9%, to 27,932 points, while the tech-focused Nasdaq is up 1% in early trading.

Trump’s precise medical condition remains unclear, with the White House’s medical team saying it “has continued to improve”.

The president’s chief of staff says he’s ‘optimistic’ that Trump could be back to the White House later today.

Meanwhile, the security officers who accompanied Trump on his “completely unnecessary Presidential ‘drive-by’” - as one doctor of emergency medicine put it - must now quarantine.

Time for a quick recap.

Cineworld, Britain’s largest cinema chain, has confirmed it is mothballing all its screens in the UK and the US, due the impact of Covid-19 on the industry.

The move could mean up to 45,000 job losses, including over 5,000 in the UK.

The company told the City this morning that:

In response to an increasingly challenging theatrical landscape and sustained key market closures due to the COVID-19 pandemic, Cineworld confirms that it will be temporarily suspending operations at all of its 536 Regal theatres in the US and its 127 Cineworld and Picturehouse theatres in the UK from Thursday, 8 October 2020.

News of the closures broke on Sunday morning, upsetting and angering staff who hadn’t been informed by the company at that stage.

CEO Mooky Greidinger blamed the decision on the lack of major blockbuster releases, including the delayed James Bond film. He explained:

We are like a grocery shop with no food. We had to take this decision”

Shares in Cineworld promptly halved when the London stock exchange opened at 8am, and are currently down 40% at 23p (down around 90% this year).

Cineworld also warned that it is looking at all possible ways of raising more funds, amid talks of a debt restructuring.

Boris Johnson has urged people to go to the cinema and help the sector, but the Prospect union has criticised the government for not providing more help.

Other cinema chains are also facing the consequences of the pandemic, with Odeon deciding to close a quarter of its cinemas on weekdays.

The pandemic has also hit the UK car industry, which just posted its weakest September sales figures since 1999. However, sales of more environmentally friendly cars did rise, as buyers shunned diesel and petrol models.

A survey of the UK services sector has found that firms kept cutting jobs last month, despite a rise in activity.

In the eurozone, service sector activity fell following the introduction of tighter curbs. Economists fear Europe could suffer a new downturn this winter, as the pandemic continues to hit growth.

Odeon is to shut a quarter of its cinemas during the week as a dearth of Hollywood blockbusters and the second wave of the pandemic keeps movie-goers at home.

Odeon, which operates 120 cinemas in the UK and Ireland, has contacted members of its Limitless loyalty scheme to say that some of its outlets will move to a weekend-only model from this Friday.

The shift to Friday through Sunday opening, which sources say was made before the announcement that the premiere of the latest James Bond film is to be delayed until next April, comes as rival Cineworld moves to temporarily shut all of its cinemas in the UK and the US.

Odeon, which is owned by AMC Theaters, the world’s largest cinema chain with over 1,000 outlets, blamed the lack of almost any new films.

In an email to customers, the company said:

“We look forward to reopening full time when the big blockbusters return,”

“But in the meantime, we promise to bring you a great choice of big-screen films to enjoy at the weekends.”

Cinema owners are stuck in a grim cycle as distributors and studios hold back the release of high profile films, from the next instalment in the Fast & The Furious franchise to Marvel’s Black Widow, amid concerns audiences won’t go and see them (as Cineworld’s CEO Mooky Greidinger explained earlier)

In the past week the top 10 films in cinemas in the UK and Ireland made less than £2m at the box office. Last year, an average week notched up £24m.

Bectu, which represents workers in broadcasting, entertainment, communications and theatre, agrees that major studios must bear the blame for Cineworld’s closures:

Philippa Childs, head of Bectu, says:

“Confirmation that Cineworld is mothballing all its cinemas will be devastating for everyone who works there.

“Cinemas are currently able to operate safely so this decision is entirely the result of distributors choosing to delay the release of blockbusters in the hope of making extra money further down the line. This is short-sighted in the extreme and if other chains follow Cineworld’s lead it’s hard to see how there will be a fully functioning industry to return to in six months’ time.

Bectu will be working with the UK Cinema Association to pressurise distributors to follow Christopher Nolan’s lead in bringing pictures forward to help maintain a functioning cinema industry.

[Nolan’s Tenet is one of the few blockbusters to hit the screens in recent months].

Childs also warns Cineworld not to treat its staff badly (many are on zero-hours contracts).

“It is our expectation that Cineworld will continue to fulfil its legal obligations with respect to its employees, retain as many as possible, and that those it has to let go will be done so on as positive terms as possible.

“The pandemic continues to highlight those industries which build their considerable success on the back of workers who are paid badly and have zero job security. This is an unsustainable situation that has to change if we are to build any form of resilience into the workforce.”

The boss of Cineworld, Mooky Greidinger, has told Sky News that there was “no alternative” to the temporary closure of sites in the UK and US.

Greidinger blamed the movie studios decision to postpone several major releases, such as Black Widow, The King’s Man and Wonder Woman 1984 since the pandemic began.

The delay to No Time To Die on Friday was the final straw, as a new Bond film is always the biggest movie release of the year in the UK, Greidinger explained.

This has forced Cineworld to close for the second time this year, as it didn’t have the goods to offer customers.

“From a liquidity point of view, we are bleeding much bigger amounts when we are open than when we are closed.

We are like a grocery shop with no food. We had to take this decision”

Greidinger argued that these delays are a mistake:

People are saying to us that they feel safe in the cinema, so I guess it is a wrong decision by the studios to move the movies in such a way.

But he also pointed out that cinemas remain closed in New York, and parts of California, which is encouraging the studios to hold new releases back.

The news that Cineworld was preparing to close its UK cinemas broke yesterday, casting a shadow over the whole sector.

My colleague Julia Kollewe spoke with cinemagoers arriving at the Vue cinema in Islington for a Sunday treat.

Clemmie Jacques, 39, who came to see Disney’s Pixar animation Onward, with Tim Osman, 33, said this was her fourth trip to the cinema since the pandemic.

“There was so much space. There’s barely anyone in the cinema at the moment and it’s probably safer than going to the pub....

I like going to cinemas and I want to support the film industry. I don’t really drink so it’s a social thing for me to meet mates.”

“It’s a real pity,” Jacques said about Cineworld’s demise.

“I imagine because cinemas are so big, they have massive rent to pay... There’s not a market for big cinemas any more.”

Jacques thinks smaller boutique chains and independent cinemas such as the Everyman chain, which “has sofas and is more of an all-round experience” might fare better.

“It’s better for dates as well,” Osman chipped in.

Rachel and Michael Thorn, with their children Zadie, 6, and Jack, 3, spontaneously decided to go to the Vue cinema in Islington in north London on Sunday, for the first time since the Covid-19 outbreak.

“It is a very rainy day, so what do you do?

We are not regular cinema goers.”

Her husband, who was buying tickets for Onward along with popcorn and drinks, said about the Cineworld closures:

“It’s sad news, but we don’t use Cineworld. We go to our local cinema, the Rio.”

India Townsend, a 29-year-old solicitor, had arrived at the Vue cinema to see Tenet. She has been to Vue and the local Odeon several times since the outbreak.

“It’s as safe as going on an aeroplane, with social distancing and masks,” .

Eren Dogan, 21, customer assistant at the Vue, said customers appreciated being able to visit the big screen again.

“Having the cinema back is a bit of normal life in the same way as going to the pub.”

He estimated that 300 to 500 people are now coming to the cinema every day, but noted that “there is limited film availability”.

To combat Covid-19, Vue has introduced hand sanitiser stations, physically distanced seating, staggered film times, extra cleaning and made face masks compulsory for cinema goers and staff. Screens are disinfected after every screening, including arm rests, and staff have been instructed to wash their hands every hour.

Peter Bradshaw, our film critic, has got the James Bond producers firmly in his sights this morning.

He writes that the postponement of No Time To Die until spring 2021 has sent a chill through the industry (as well as triggering Cineworld’s decision to close screens across the UK and US).

It shows a spectacular lack of nerve, which 007 certainly wouldn’t approve of.

Here’s a flavour:

For the first time, everyone in the industry is beginning to entertain the queasy thought: what if our cinema industry is like vaudeville? Or silent movies? Or evensong – that once widespread middle-Britain churchgoing habit wiped out by TV? Is cinemagoing finished? A loss-leader adjunct to the home entertainment industry that’s long been vulnerable to infection?

I think the answer is still no. But the other question is: who is to blame for the Cineworld debacle? Big blockbuster movies are routinely nicknamed “tentpoles” for a reason. They keep the whole big top upright. The announcement is that the new James Bond film, No Time to Die, will come out next spring (a transparently vague and unreliable promise) having been already delayed from the spring of this year.

It is enraging that Eon (the Bond producers) has lost its nerve so spectacularly, pulling the movie on which the industry had been relying – the big-screen exhibitors that have been supporting and nurturing the 007 franchise since the 60s. It was just as dismaying for the industry that Disney released their high-profile live-action entertainment Mulan to streaming services. But somehow Disney wasn’t stringing us along in quite the same way....

Here’s the full piece:

Cineworld’s decision to shut its UK and US screens is awful news for around 45,000 staff, who are now out of work, explains my colleague Jasper Jolly:

Shares in Cineworld have plunged after it confirmed it will temporarily close all of its cinemas in the UK and US as it struggles with the pandemic-induced lack of new films to draw in audiences, including the twice-delayed new James Bond instalment.

Some 45,000 employees will be out of work because of the closures, including about 5,500 staff in the UK and 20,000 in the US, as well as contractors such as cleaners and security workers. Staff were informed on Sunday.

The world’s second biggest cinema operator said its 127 Cineworld and Picturehouse UK cinemas its 536 Regal cinemas in the US would shut from Thursday....

Here’s his full story:

Britain’s services companies continued to cut jobs last month, despite growth holding up better than feared.

The latest survey of purchasing managers across UK services firms shows that layoffs continued last month -- a trend that is worsening with Cineworld’s closures.

Data firm Markit explains:

The near-term outlook remains unusually uncertain and firms continued to take an extremely cautious approach to cost management and hiring...

Latest data indicated that employee numbers in the UK service sector continued to fall. Whilst easing to the slowest since March, the rate of job losses was again marked amid evidence of ongoing spare capacity despite some tentative evidence of emerging capacity pressures: backlogs of work increased modestly during September, and for the first time in two years.

Despite this, Markit’s latest UK service sector PMI has come in at 56.1 for September, better than the ‘flash’ reading of 55.1 recorded during the month.

That shows solid growth, although still down on the five-year high of 58.8 seen in August. It’s notably better than the eurozone, where service sector activity fell (see earlier post).

Firms reported that business continued to pick-up in September. But, growth slowed amid the move back to home-working and the 10pm closure for pubs and restaurants.

Markit explains:

Supporting activity was a further increase in levels of incoming new work, also the third in successive months. With the withdrawal of the UK government’s Eat Out to Help Out scheme, plus an introduction of some tighter restrictions on activity in September, growth in new business was softer than in August.

A lack of international tourism was also reported to have weighed on foreign business, which overall continued to fall sharply.

James Fairclough, CEO of AA Cars, says September’s drop in car sales is disappointing, as consumers cut back due to the pandemic:

“September is traditionally one of the busiest months in the calendar for dealerships because of the introduction of new plates, and so it’s a great disappointment that there was no increase in sales at a time which usually sees high demand.

“Registrations are down 4.4% on last year, which marks the weakest September since the introduction of the dual number plate system in 1999, and it’s clear that the recovery in the latter part of 2020 is likely to be gradual and inconsistent from month to month.

“Dealerships are frantically playing catch up for the months of sales lost during lockdown. Even though many have made great strides over the summer, the winter months will be decisive in determining how sustainable the momentum is.

“Drivers’ concerns about the stability of their finances could also be pegging back demand for new cars and prompting many to look for better value on the second hand market instead.”

Karen Johnson, head of retail & wholesale at Barclays Corporate Banking, points out that some people are putting their lockdown savings towards greener vehicles:

“Lots of consumers now have both the funds and the motivation to commit to a big ticket purchase like a new car. Months of lockdown allowed many to save significant chunks of money, whilst evolving working patterns mean buyers are investing in motors that will work for them no matter what changes lay ahead.

The prevailing trend appears to be towards smaller vehicles with an electric fuel source, as reduced mileage (and continuing environmental concerns) factors into recent purchasing decisions. In fact, hybrid/electric vehicle categories were the only ones to see growth in this latest month’s figures.

Sue Robinson, chief executive of the National Franchised Dealers Association, says supply chain problems amid the pandemic are partly to blame - and warns that a no-deal Br4exit would compound this:

Dealers have been experiencing high levels of enquiries, but consumer interest was partially offset by supply constraints that have affected a number of brands over the past weeks.

With the UK’s exit from the EU approaching, we urge the Government to reach a deal which protects the supply of vehicles and parts to the UK.”

Newsflash: Britain’s car industry has just experienced its weakest September sales in two decades.

The UK new car market declined -4.4% in September, according to figures published today by the Society of Motor Manufacturers and Traders, with just 328,041 new registrations.

That is the weakest September since 1999, when the dual number plate system (updated twice-yearly) came in -- and 15% below the September average over the last decade.

The SMMT reports that demand from business and consumers was notably weak last month -- which usually buoyant for car sales, as people upgrade to get a new licence plate:

Private registrations fell by -1.1% over the month. Demand from business was also muted, with around 10,000 fewer cars joining larger fleets, representing a -5.8% decline.

More details to follow....

We also have confirmation that the eurozone’s service sector struggled last month, as governments imposed new restrictions as Covid-19 cases rose.

The latest Services PMI report, which measures activity in the sector, has slumped into contraction in September.

Service sector firms in France, Italy and Spain all reported that conditions worsened last month, pulling the overall eurozone services PMI down to 48.0 (showing a fall in activity) from 50.5 in August.

Chris Williamson, chief business economist at IHS Markit says Europe’s recovery is floundering:

“With the eurozone economy having almost stalled in September, the chances of a renewed downturn in the fourth quarter have clearly risen.

Spain has been especially hard-hit as rising Covid19 case numbers led to further disruptions to daily life. With the exception of the March-to-May period at the height of the first wave of infections, Spain’s service sector contraction in September was the largest recorded since November 2012.

However, renewed service sector downturns were also recorded in France and Ireland, while a nearstalling was recorded in Germany, underscoring the broad-based geographical spread of the worsening service sector picture. Virus containment measures remained particularly strict in both Spain and Italy during September, and were also tightened in France and Germany

While Cineworld’s shares have slumped, the broader stock market has opened higher today.

The FTSE 100 has risen by 32 points, or 0.5%, to 5932, which would be its highest closing level in two weeks.

After Friday’s panic about Donald Trump’s Covid-19 infection, the markets are calmer this morning -- and digesting a poll which gives Joe Biden a 14-point lead over the president.

Mohit Kumar of Jefferies explains:

Slightly positive risk tone overnight as Trump is expected to be discharged from the hospital today and there were no news reports of either senior members of the Trump administration or Biden testing positive. The reports on Trump health are a bit confusing – even though his medical staff suggested that he is doing fine, the drugs that he has been given are typically administered to severe cases indicating that his condition may not be as good as suggested. The coming days would see further updates on his health and on the election probabilities.

The last opinion poll, taken before Trump’s diagnosis but after the Presidential debate, showed that Biden has taken a 14 point lead vs Trump which puts him in a leading position.

Shares in Cineworld have more than halved at the start of trading in London, to a new all-time low.

They’ve slumped by 56% to 17p, as City traders react to the temporary closure of screens across the UK and US - two major markets for the group in better times.

Cineworld’s shares had been worth 220p each back at the start of 2020, before the Covid-19 pandemic.

Here’s Mooky Greidinger, Cineworld’s chief executive, on the decision to shut cinemas in the UK and US:

This is not a decision we made lightly, and we did everything in our power to support safe and sustainable reopenings in all of our markets - including meeting, and often exceeding, local health and safety guidelines in our theatres and working constructively with regulators and industry bodies to restore public confidence in our industry.

“Cineworld will continue to monitor the situation closely and will communicate any future plans to resume operations in these markets at the appropriate time, when key markets have more concrete guidance on their reopening status and, in turn, studios are able to bring their pipeline of major releases back to the big screen.”

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

We start with some breaking news - Cinema chain Cineworld has just announced it is temporarily suspending operations at all of its 536 Regal theatres in the US and its 127 Cineworld and Picturehouse theatres in the UK.

It’s taken the move following the lack of new films to draw in audiences, including the twice delayed new James Bond instalment (which has been pushed back to next year).

These closures will impact approximately 45,000 employees, says Cineworld, which employs around 5,500 people in the UK.

In a statement to the City, Cineworld blamed “an increasingly challenging theatrical landscape and sustained key market closures” due to the COVID-19 pandemic.

So with major films delayed, it simply can’t provide enough compelling new films to attract filmgoers.

As major US. markets, mainly New York, remained closed and without guidance on reopening timing, studios have been reluctant to release their pipeline of new films.

In turn, without these new releases, Cineworld cannot provide customers in both the US and the UK - the company’s primary markets - with the breadth of strong commercial films necessary for them to consider coming back to theatres against the backdrop of COVID-19.

The closures will begin on this Thursday (the 8th October).

News of the closures broke yesterday, sparking anger among staff that they learned of the plan through the newspapers.

The latest delay to the next James Bond film was the final blow to Cineworld, which wrote to government ministers warning the industry has become “unviable” without major blockbusters to lure customers to the big screen again.

More details to follow....

Cars and services companies are also on the agenda today, as investors also watch Walter Reed military medical center for the latest on Donald Trump’s health.

September is usually a very strong month for UK car sales, as driver scramble to buy a new licence plate to impress the neighbours. But last month, sales slumped by 4% as the coronavirus crisis continued to hit demand.

Figures due at 9am are expected to show that fewer than 330,000 new cars were sold in September, which would be the lowest in over 20 years.

That would intensify concerns that the UK economy is struggling as it faces a tough winter, with many commuters still working from home - and others fearing for their jobs.

We also get the final healthcheck on service sector companies in September, from data firm IHS Markit. It’s expected to show that service growth slowed in the UK and the US last month, and lurched into reverse in the eurozone.

Stock markets in Europe and the US are on track to open higher following signs that president Trump’s health is improving. There have already been gains in Asia-Pacific markets overnight including a 2.5% surge on Australia’s ASX index.

The latest word from Washington is that Donald Trump “has continued to improve” since Saturday, after contracting Covid-19, and could be released as early as Monday.

Last night Trump said he was receiving ‘great reports’ from his doctors, before taking a trip to see the crowd outside Walter Reed - a move blasted as astoundingly irresponsible by one emergency medical physician at the site.

Trump was helicoptered to Walter Reed on Friday night (after Wall Street had closed), less than a day after reporting his positive test, and has received a series of treatments, from an experimental cocktail of antibodies to the steriod dexamethasone.

So there’s some confusion over his health, which will keep the markets on edge today.

The agenda

• 9am BST: UK car sales for September
• 9am BST: Eurozone service sector PMI report for September
• 9.30am BST: UK service sector PMI report for September
• 10am BST: eurozone retail sales for August
• 2.45pm BST: US service PMI for September