Sales of existing homes in the US have come in stronger than expected, rising 0.7% to 6.76m in December, versus expectations of 6.56m.

The opening bell has rung on Wall Street, and US stocks are down, after hitting record levels earlier this week. Tech firms IBM and Intel are falling following their quarterly results.

• Dow Jones down 207 points, or 0.67%, to 30,968
• S&P500 down 18 points, or 0.48%, at 3,834
• Nasdaq down 51 point, or 0.38%, at 13,479

European markets are also still in the red, as traders worry about Covid-19 lockdowns being extended and the impact on economies.

Let’s take a look at some of today’s other news.

Britain lost almost 6,000 licensed premises in 2020, according to fresh data charting the severe toll that Covid-19 is taking on the struggling hospitality sector, writes my colleague Rob Davies.

Beware scalper-bots – consumers are being warned of a surge in the use of computer software that lets internet profiteers snap up in-demand items in bulk – from games consoles to home exercise equipment – at the expense of genuine shoppers, writes Miles Brignall on our Money desk.

And Frank Kane in Dubai has taken a look at how the emirate is faring in coronavirus times.

Manufacturing and services activity in the UK slumped to an eight-month low in January as the combined impact of the Covid pandemic and higher barriers to trade that followed the Brexit deal took its toll on businesses, writes my colleague Phillip Inman.

Ruth Gregory, senior UK economist at Capital Economics, has taken a closer look at the survey.

She says it tallies with her view that the third lockdown, like the second, was much less damaging for the economy than the first lockdown in March-April.

But it suggests that our forecast for a 2% m/m fall in GDP in January may prove to be too optimistic.

The drop in the composite flash PMI from 50.4 in December to 40.6 in January was sharper than the consensus forecast for a fall to 45.5. And it was far bigger than the fall in the flash PMI in the euro-zone from 49.1 to 47.5, as Brexit and January’s COVID-19 lockdown measures weighed on the UK index.

The decline primarily reflected a drop in the services component. The fall in the services PMI from 49.4 to 38.8 (consensus 45.0) took the index below the level reached during November’s lockdown and to its lowest level since May 2020. But that still left the PMI far above the 13.4 it reached during the first lockdown in April 2020, with many businesses suggesting that efforts to adapt and prepare for the COVID-19 restrictions had been successful.

At least the new orders balance did not fall quite as sharply, dropping from 48.5 to 42.8. And the future activity index ticked up from 73.1 to 73.9, suggesting firms are more upbeat about the near-term outlook. What’s more, the still-elevated input prices balance pushed the output price balance back above the 50 no-change mark for the first time in five months, perhaps a sign that firms are feeling confident enough about demand to pass on some of their higher costs to the consumer.

Meanwhile, manufacturers were relatively immune to the third lockdown. The manufacturing PMI fell by less, from 57.5 to 52.9 –- suggesting the sector expanded in January, as it remained above the 50 mark that separates expansion from contraction.

Taken together, the composite PMI points to a fall in GDP in January of about 5% m/m. This suggests that the fall in GDP in January could be almost double the size of November’s 2.6% m/m decline. Although that drop would be mild in the context of the 18.8% m/m decline seen during the first lockdown in April 2020.

Meanwhile, the fall in the composite employment balance (from 47.2 to 45.1) suggests that worse is yet to come for the labour market and that more support may be needed in the Budget on 3^rd March.

Here is our full story on UK government borrowing hitting the highest December level on record:

JPMorgan economist Allan Monks has looked at the broader picture in the UK, and sums it up as:

• Fast UK vaccine rollout pace looks encouraging for a strong 2Q recovery, but struggles with the second wave suggest current restrictions are likely to remain in place a month longer (we revise down 1Q GDP)

The UK’s vaccine rollout has been impressive to date, with the government this week reaching its goal of two million in a single week. This would leave the UK on track to meet its ambitious target of vaccinating 15 million people by mid-February, although there is still plenty of scope for setbacks to that aim. Infections (and possibly new hospital admissions) appear to have already peaked.

However, new infections are not falling as quickly as expected due to the new strain, but also reports of non-compliance with the rules. The number of patients in hospital is still rising, as is ventilator bed use and deaths...

Thinking from the government seems to be leaning towards delaying an easing until April. The picture could yet change, but we are lowering our 1Q GDP forecast from -3.6% to -4.1%q/q (i.e. from -13.5% to -15.5% annualized) in expectation of a post-Easter easing. This is a delay of around a month, and would leave the recovery from 2Q broadly intact.

While it appears unlikely there will be a big bang approach to easing after Easter, we continue to expect the economy to make a rapid recovery with a 6%q/q (27% annualized) gain in 2Q. We also expect activity to reach broadly the same level as before at the end of this year – with the economy returning to 4Q19 levels by early next year.

Our full year 2021 forecast is now 5.2%, instead of 5.5%.

Oil prices are tumbling too. Brent crude has fallen $1.43 a barrel, or 2.55%, to $54.68 a barrel, while US crude has lost $1.5 a barrel, or 2.86%, to $51.61 a barrel.

Traders worry that new Covid-19 restrictions in China will translate into lower demand for crude – the country is the world’s biggest oil importer.

Stephen Brennock of broker PVM told Reuters:

The biggest source of concern for the energy complex right now is rising coronavirus cases in China. This will dampen the near-term consumption outlook in the world’s epicentre for global oil demand growth.

European restrictions are also likely to limit demand for oil. Analysts at Fitch Ratings said:

Global oil demand could decline marginally in the first quarter of 2021 as many regions, including many European countries, have reintroduced mobility restrictions.

The positive effects of vaccination programmes on the oil demand recovery may not be visible for several months until a critical mass of population is inoculated.

European stock markets have sunk deeper into the red, as investors worry about extended lockdowns.

• UK’s FTSE 100 down 0.93% at 6,653
• Germany’s Dax down 0.69% at 13,811
• France’s CAC down 1.08% at 5,530
• Italy’s FTSE MiB down 2.1% at 21,953

Germany’s health minister Jens Spahn has warned against relaxing the country’s restrictions too soon.

He told a news conference that Germany’s latest infection numbers are encouraging, but remain too high, and that the new, more contagious Covid-19 variants make it imperative to reduce cases further. Germany reported almost 18,000 new infections today and more than 800 deaths. The seven-day incidence fell to 115 cases per 100,000, the lowest since 1 November.

Spahn said:

It’s like an antibiotic: if you stop too early, stop too soon, resistance can develop. We don’t want to be accused of having relaxed too soon.

The German chancellor, Angela Merkel, and the leaders of Germany’s 16 states agreed on Tuesday to extend the current hard lockdown – with schools, restaurants and all non-essential businesses shut – until 14 February.

You can read more about the latest coronavirus news here:

Stock markets are in the red this morning, due to fears that European governments may introduce tougher coronavirus restrictions. Here in the UK, the prime minister has refused to rule out the possibility that restrictions could last into the summer.

David Madden, market analyst at CMC Markets UK, says:

There are several different stories doing the rounds, the UK’s lockdown might last until the summer, the EU might close internal borders as well as halt visitors from the UK. Nothing has been confirmed but judging by the headlines, it seems that things will get worse with respect to restrictions before they get better, hence the fall in stocks.

Airline stocks are among the biggest fallers, as international travel might be impacted. Tui shares tumbled 11%, while IAG, BA’s parent, ist the biggest faller on the FTSE 100 index, down 4.1% and easyJet has lost 4.37%. Retailers such as Next, miners, banks and housebuilders are also falling.

Madden is expecting the Dow Jones to open 226 points lower at 30,950, and the S&P 500 to open 28 points lower at 3,828.

Chris Williamson, chief business economist at IHS Markit, said:

A steep slump in business activity in January puts the locked-down UK economy on course to contract sharply in the first quarter of 2021, meaning a double-dip recession is on the cards.

Services have once again been especially hard hit, but manufacturing has seen growth almost stall, blamed on a cocktail of COVID-19 and Brexit, which has led to increasingly widespread supply delays, rising costs and falling exports.

Worryingly, January also saw companies reduce headcounts at an increased rate again – albeit less so than seen between March and November. The steepest loss of jobs was recorded in the hotels, restaurants, travel and leisure sectors, reflecting the new lockdown measures.

Encouragingly, the current downturn looks far less severe than that seen during the first national lockdown, and businesses have become increasingly optimistic about the outlook, thanks mainly to progress in rolling out COVID-19 vaccines. Business hopes for the year ahead have risen the highest for over six-and-a-half years, boding well for the economy to return to solid growth once virus restrictions ease.

The Unite union welcomed assurances from Nissan’s chief operating officer Ashwani Gupta that its Sunderland factory is safe.

Its national officer for automotive Steve Bush says:

Mr Gupta’s backing for the Nissan plant in Sunderland is welcome and no less than this incredible, dedicated workforce deserves.

Through continued economic and public health uncertainty, they have battled to maintain this plant as one of the most productive in the autos sector and to put it in the best place to transition to the next generation of vehicles...

This is the time for the government to show that it has a plan for UK automotive manufacturing beyond the next two or three years. That means becoming an active partner in providing the infrastructure, component supply and smooth trade arrangements.

Some reaction to the Nissan news. The Japanese carmaker said it will buy more batteries from within the UK to avoid tariffs. The owner of the UK’s largest car factory, in Sunderland, also said it would push ahead with the production of a new version of its Qashqai SUV this year, after it delayed the new model as the coronavirus pandemic wrought havoc on car sales and production, writes my colleague Jasper Jolly.

Here’s our full story on the grim UK retail sales figures, which showed 2020 was the worst year on record for retailers, from our economics correspondent Richard Partington:

Happy New Year? The picture in the eurozone is pretty bleak, according to the latest survey readings from IHS Markit.

Tomas Dvorak, economist at Oxford Economics, says:

Today’s reading is symptomatic of the current situation in the eurozone, where high infection rates are again forcing governments to extend and tighten containment measures. This tallies with the persistent outperformance of the industrial sector over services, which are much more affected by the restrictions, a trend we expect to continue in the coming months.

However, supply bottlenecks in industry such as the current global shortage of microchips in the automotive sector pose a risk to the industrial sector’s ability to offset weak services.

Hand in hand with a disappointing vaccine rollout so far, the flash PMIs point to a looming contraction in the eurozone GDP in Q1. We don’t expect any meaningful economic recovery before the pandemic is brought under control.

In other news this morning:

The new James Bond flick No Time To Die has been delayed *again* as Hollywood grapples with the continued disruption caused by the pandemic. Daniel Craig’s final outing as 007 will now arrive on 8 October rather than April, the official Bond Twitter account announced.

Netflix paid just £3.2m in UK corporation tax in 2019, despite making an estimated £940m from British subscribers who have joined the binge-watching streaming revolution.

John Lewis is to repay a £300m government Covid support loan almost two months early, as the retailer upgraded its profit guidance following stronger than expected sales during the crucial festive season.

Jamie Dimon, the billionaire boss of JP Morgan who has warned income inequality has “bifurcated the economy” in America, was paid $31.5m in 2020, the bank announced on late last night.

In a somewhat surprising twist, Nissan has said Brexit has given the company an edge, as the Japanese carmaker said it will buy more batteries from within the UK to avoid tariffs.

Paul Dales, chief UK economist at Capital Economics, has sent us his thoughts on UK retail sales.

To recap, the 0.3% money rise in retail sales in December was much weaker than expected and reversed only a small part of the 4.1% drop in November, caused by the closure of non-essential retailers. However, sales were still 2.7% higher than their pre-pandemic level in February last year, Dales notes.

Clothing sales were up 21.5% in December, more than reversing November’s 19.6% decline. How many Christmas jumpers do we need?? But clothing is still the retail loser of the pandemic as sales were still an eye-watering 15.9% below February’s level, he says.

The tiny rise in retail sales in December shows that it wasn’t a very merry Christmas for retailers. And January’s lockdown means it won’t have been a happy start to the new year either. But at least retailers are more immune to lockdowns than many other consumer-facing businesses.

The upshot is that retail sales added almost nothing to GDP in December and January’s lockdown means sales will probably drop back again this month. Admittedly, they won’t fall as far as non-retail consumer spending. According to daily data of electronic card payments, so far this month consumption has declined from being slightly above its pre-pandemic level in December to about 35% below. We suspect that GDP may fall by around 2% m/m in January. But hopefully that will be the last decline.

The PMI surveys are coming out, starting with France. The data points to a quicker contraction in French business activity in January, partially driven by the imposition of stricter coronavirus curfews. The result extended the period of contraction in the private sector to five months.

Key findings:

• Flash France Composite Output Index at 47.0 in January (49.5 in December), 2-month low
• Flash France Services Activity Index(2 ) at 46.5 in January (49.1 in December), 2-month low
• Flash France Manufacturing Output Index at 49.5 in January (51.7 in December), 2-month low
• Flash France Manufacturing PMI at 51.5 in January (51.1 in December), 6-month high

Indeed, Rishi Sunak, the chancellor, just reiterated that the government would put the public finances on “a more sustainable footing” once the economy begins to recover –- with hopes that mass vaccination will lead to the easing of coronavirus restrictions.

Turning back to government borrowing... the public sector borrowed £270.8bn between April and December –- £212.7bn more than in the year-yearlier period, and the highest borrowing in this period since records began in 1993, as the pandemic took its toll on the public finances.

But borrowing is well below the £315bn anticipated by the Office for Budget Responsibility in its November forecasts. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, says:

It is still plausible that the full-year borrowing total will be close to the OBR’s £393.5bn forecast, given that Q1 GDP will undershoot its projection, due to the third lockdown.

Continued high borrowing in December chiefly reflected a 26.1% year-over-year jump in central government expenditure, mostly related to the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme. Tax receipts were only down 1.2% year-over-year, thanks to growth in corporation taxes and stability in income tax receipts.

However, borrowing will fall once the support schemes expire at the end of April –– and next year we could see sharp tax rises, to get the public finances back on track, Tombs predicts.

Public borrowing will fall sharply from about 20% of GDP this year to between 8% and 10% in 2021/22, if the government stops the furlough and self-employment income support schemes in the spring, and healthcare spending declines. We doubt that the Chancellor will go a step further in the Budget on March 3 and push through large immediate tax rises or non-health spending cuts.

But the Treasury will not tolerate a 10% deficit indefinitely and the timing of the next general election in 2024 suggests that Mr. Sunak will not wait until the economy has fully recovered before actively tightening fiscal policy. Accordingly, we expect taxes to rise sharply in 2022.

Lisa Hooker, consumer markets leader at the consultancy PwC, says:

In a month where non-essential shops and the high street hospitality industry experienced revolving doors of lockdown, changing tiers, Christmas and finally another lockdown, flat headline retail sales vs. November seems almost a miracle...

As we enter the new year, what gives us confidence is seeing how quickly the sector bounced back following the reopening of non-essential retail after lockdowns 1 and 2 in June and early December.

There’s little doubt that consumers are ready and willing to support the high street once able. Non-essential stores will be hoping current restrictions are lifted quickly as we head into spring. While e-commerce has shown that it can replace some of the volume lost during the pandemic, for many purchases nothing can replace the personal experience of visiting a physical store.

Here’s some instant reaction to the official figures.

Ian Geddes, head of retail at Deloitte, says:

Despite the challenges that 2020 brought, retail overall has shown some resilience in the final month of the year. Strong performance in grocery and record-breaking online sales for non-food meant that Christmas 2020 was the most digital ever.

Having entered 2021 under renewed lockdown restrictions, retailers will be looking to consumer behaviours during the pandemic to predict which new trends are likely to emerge, and which will carry over. For some consumers, the move to remote work has strengthened their ability to both save and pay down debts. For others, lockdown periods provided an opportunity to experiment; be that with online shopping, exploring new products at home, or even trying out new looks. Combined with greater consumer interest in buying locally, the question for retailers is where to focus efforts in the year ahead.

Some consumers will have permanently converted to the convenience of online shopping, accounting for 29.6% of all retail sales this month, and the highest annual growth since 2008. For retailers, this doubles down the importance of an online shopfront and engaging virtual shopping experience. Whilst the role of the physical store will remain competitive, the wider retail landscape will likely see reinvention. A new era of ‘hyper-localisation’ and ‘fast fail’ shops could herald a revived and more relevant high street longer-term.

For now, pent-up demand is likely to see shoppers out in force once restrictions lift, as we saw in summer at the end of the first lockdown. Crucially, the reopening of the high street will this time coincide with the ongoing vaccine rollout, which should boost consumer confidence and see them return to stores once more.

2020 clearly was the year of internet sales. The ONS says the value of online retail sales shot up by 46.1% in 2020 from the year before, the highest annual growth since 2008.

Food stores (up 79.3%), “other stores” (up 73.9%), household goods stores (up 73.4%) and department stores (up 65.9%) all recorded record annual increases in values of internet sales last year.