Time for a recap

Meal delivery company Deliveroo’s stock market debut has proven to be an unappetising flop that leaves investors facing heavy losses, on paper.

It’s a blow to the UK’s hopes of attracting more tech-focused companies to float in the City.

Shares in the company slumped by 26% on the first day of conditional trading, one of the worst opening-day performances by a large company IPO on record.

Having sold shares at 390p, Deliveroo plunged when trading began this morning, and ended the day at 287.45p.

This cut its value to around £5.6bn from £7.6bn (which was already the bottom of its target range, as Deliveroo cut back its ambitions).

Analysts said that City investors had been reluctant to invest in Deliveroo because of the way it treats its couriers. Aberdeen Standard, Aviva, Legal & General and M&G had all shunned the float.

With pressure to improve workers’ rights building, it would be even harder to achieve profitability if Deliveroo were in future forced to offed basic benefits like sick pay and pensions.

Lee Wild, head of equity strategy at interactive investor, called it “a disastrous stock market debut for Deliveroo after a cool reaction from the City”.

“Firstly, the company doesn’t make a profit, even though the pandemic provided the biggest tailwind it could hope for. That benefit will fade as lockdowns end and diners return to pubs and restaurants over the summer. Remember, too, that Deliveroo had to be bailed out by Amazon last year, and it continues to operate in a highly competitive market.

“Most recently, several major City investors, including Aviva and Aberdeen Standard, opted out of the hotly anticipated IPO citing ESG concerns related to the company’s treatment of its employees. They’re also turned off by founder and chief executive Will Shu who still has over 50% of shareholder voting rights.

“Taxi firm Uber has already been forced to change its ways, especially around contracts and pay. Now, Deliveroo faces strike action to improve workers’ rights and pay.

Others pointed out that, at £7.6bn, Deliveroo was overvalued given it is curently loss-making despite the sales boost from the pandemic.

Deliveroo’s use of a ‘dual-class’ share structure, which let founder Will Shu retain more power over the company, also worried some investors.

Chancellor Rishi Sunak insisted he didn’t feel any embarrassment, having endorsed Deliveroo before its float, pointing out that shares go up and down. Facebook, he pointed out, also had a disappointing IPO.

But Labour leader Sir Keir Starmer said he wouldn’t own shares in Deliveroo, arguing that the UK needed to fight “insecure work, not proper pay, low standards” as it recovers from the pandemic.

The TUC urged the company to improve conditions for its workers.

Will Shu had said he was “very proud” that Deliveroo was floating in London, its home, and pledged to use the capital raised to benefit restaurants and grocers, customers and riders.

Shu said:

As we reach this milestone I want to thank everyone who has helped to build Deliveroo into the company it is today - in particular our restaurants and grocers, riders and customers.

In this next phase of our journey as a public company we will continue to invest in the innovations that help restaurants and grocers to grow their businesses, to bring customers more choice than ever before, and to provide riders with more work. Our aim is to build the definitive online food company and we’re very excited about the future ahead.”

Here’s the full story:

Also today...

The Bet365 boss, Denise Coates, has been paid nearly half a billion pounds in salary and dividends last year in a record-breaking deal that takes her pay since 2016 to more than £1.2bn.

The UK economy has posted a faster recovery from last spring’s record recession than first thought. GDP jumped by 1.3% in October-December, the Office for National Statistics reported.

That lifted the 2020 slump to -9.8%, from -9.9% - still the worst year since the Great Frost over 300 years ago.

In the US, private sector companies have taken on more staff as America’s economy recovers from the pandemic.

Payroll operator ADP reports that private payrolls increased by 517,000 jobs in March, the best reading in six months, with leisure and hospitality sectors

The IMF has warned that emerging market countries face the deepest long-term economic scars from the pandemic.

The insurance market Lloyd’s has predicted that payouts for claims related to the Covid-19 pandemic to exceed £6bn.

UK lender Nationwide has reported that house prices dropped 0.2% in March, as the UK property sector cooled.

PwC is rolling out a flexible working policy that will allow its 22,000 UK staff to split their time about half and half between their home and office after the pandemic.

The UK FTSE 100 dropped around 0.8% today, but still racked up a near 4% gain for the first quarter of this year.

On today’s fall, Conner Campbell of SpreadEx says:

This was in response to the pound climbing 0.5% against the dollar – returning to $1.379 – and 0.3% against the euro.

The UK index may also be smarting after the disastrous debut of Deliveroo, which has potentially damaged the appeal of a London listing for future unicorns.

On Wall Street, shares are rallying as investors anticipate president Joe Biden’s announcement of huge new spending proposals.

Goodnight. GW

The Bet365 boss, Denise Coates, was paid nearly half a billion pounds in salary and dividends last year in a record-breaking deal that takes her pay since 2016 to more than £1.2bn.

After an unusual delay in filing its accounts at Companies House, the gambling company released accounts showing that its highest-paid director, understood to be Coates as chief executive, received £421m – or £48,000 every hour of every day throughout the 12-month period.

Bet365 also paid a dividend of £95m, signalling a windfall of more than £45m for Coates, who owns more than half of the empire she built out of her father Peter’s bookmaking business.

The deal is just the latest bumper package for Coates, who – together with Peter Coates and her brother John – was 16th on last year’s Sunday Times rich list with a fortune of £7bn.

Coates paid herself £323m in 2019, including salary and dividends on her stake of more than 50% in the Stoke-on-Trent based firm. The pay packet, then a record for a UK chief executive, took her income over three years to £817m.

The new enhanced deal takes her income since 2016 to significantly more than £1bn, not including her share of a dividend expected to be about £40m.

Here’s the full story:

“Anyone thinking Deliveroo might rise phoenix like from the flames at the end of its first day of trading will be sorely disappointed,” says Danni Hewson, financial analyst at AJ Bell.

But she, like Rishi Sunak, points out that other tech companies have had disappointing starts to life on the stock market, but gone on to thrive.

“There is no happy ending to what, so far, is a cautionary tale for some investors. But will that tale have a sting at the end of it? Deliveroo is not the first company to experience a rocky start. Uber stocks fell more than 7% on its debut but, if you’d kept your nerve, you’d be up 20% today. Facebook had a torrid year or so as a listed business but if you’d hung on from those initial lows your investment would be up by more than 10-fold today.

“The stock market can be a fickle friend. Sometimes it can give you instant gratification; sometimes you have to hang on for the ride and sometimes you’ll wish you’d never jumped on in the first place. Clearly investors saw an opportunity in Deliveroo and that hasn’t disappeared. This is a business that has a point to prove. Anyone really looking at its credentials in recent days couldn’t miss that. What’s changed is that now the business needs to prove it quickly and publicly.”

After a truly grim session, shares in Deliveroo have closed down over 26% today.

The ‘debut of the decade’ turned into a day to forget, with the meal company’s shares ending the day at 287.45p in the first day of conditional trading.

That’s a sharp plunge on the 390p which they were sold in its initial public offering, and wipes £2bn off its value.

It takes Deliveroo’s market capitalisation down from around £7.6bn to £5.6bn.

Reuters reports that this is the worst opening-day performance by a big IPO:

Fabian de Smet, head of investment banking at Berenberg, called it a “sector problem”.

“Investors are turning away from the work-at-home play and putting their money into the economic recovery play. Deliveroo got caught in the middle of a huge rotation. It was the last IPO of the old COVID world,” he said.

Having hit a low of 271 pence, the stock recovered slightly to close the day at 287.45 pence. It was still down 26.3%, making it the worst first-day performance for a sizeable London IPO - above 1 billion pounds - on record, markets platform Dealogic said.

UK chancellor Rishi Sunak has insisted he doesn’t feel embarrassed by Deliveroo’s share price slide today, given his previous support for the company.

Earlier this month, Sunak welcomed Deliveroo’s decision to float in London, calling it a “true British tech success story”, at a time when the UK was changing listing rules to attract tech firms.

During an interview with ITV’s Robert Peston (online here), Sunak was reminded of this:

Q: You endorsed Deliveroo as a great technology company. Shares have tanked. Do you feel a bit embarrassed?

Sunak insisted he doesn’t, saying:

Oh gosh, no.

Having spent my life previously to politics being in business, share prices go up, share prices go down.”

Sunak adds that we should celebrate success in this country, and pointed to “fantastic” UK life sciences company Oxford Nanopore’s decision yesterday to go public in London.

It’s important businesses like that feel that they can stay in the UK to raise capital.

That’s why we’ve made some reforms to how capital is raised here which will be good for our competitiveness.

Sunak also points to Facebook’s IPO - pointing out that its share price fell sharply in the months after its float in 2012, but have soared since.

You talk about Deliveroo, I think I remember Facebook when it first IPO’d - I think the share price halved over the next few months, and then obviously we all know what happened after that.”

The International Monetary Fund has warned that emerging economies will suffer more serious long-term economic damage than advanced ones from the pandemic.

In a new blog post, the IMF predicts that the long-term damage of Covid-19 will be less severe than after the financial crisis, but it will also hit developing markets harder.

Despite higher-than-anticipated growth as the global economy recovers from the COVID-19 shock, we expect world output in the medium-term to be about 3 percent lower in 2024 than pre-pandemic projections. Because financial stability has largely been preserved, this expected scarring is less than what we saw following the global financial crisis.

However, unlike what happened during the global financial crisis, emerging market and developing economies are expected to have deeper scars than advanced economies, with losses expected to be largest among low-income countries.

Counties dependent on tourism will clearly suffer -- GDP in the Pacific Islands, for example, is estimated to be 10 percent lower in 2024 than forecast before the pandemic.

But its also because emerging economies have less ‘policy space’ to fund major health responses or support livelihoods (ie, through furlough schemes or stimulus payment).

The IMFis pushing countries to avoid financial distress and maintain effective policy support until the recovery is firmly underway.

Otherwise, the long-term consequences could be very painful for those in low-income countries.

Widespread school closures have occurred across countries, but the adverse impacts on learning and skills acquisition have been larger in low-income countries. The resulting long-term individual earnings losses and damages to aggregate productivity could be a key legacy of the COVID-19 crisis.

Deliveroo’s “calamitous” float is a bad look for London, and will damage ambitions to become a hub for technology listings, warns Bloomberg’s Alex Webb.

Webb writes:

Attracting one of Europe’s hottest startups was hailed as a win for the U.K., one that would draw more unicorns to the London market. But the mismanaged IPO is likely to have the opposite effect, further setting back London’s ambitions to steal listings from New York and Amsterdam. When investors lose money on IPOs, they tend not to be too eager to buy into the next one.

Deliveroo’s showing undoes, for now, much of the effort to make London more attractive to tech firms. The government is pushing through new proposals that will let founders retain control of companies for five years after an IPO, while making it easier for special-purpose acquisition companies to list in the U.K. Companies with dual-class shares will also become eligible for inclusion in top indexes like the FTSE 100. Deliveroo was taking advantage of some of those rules, with Chief Executive Officer Will Shu owning 58% of the voting shares while owning only 6.3% of the economic interest.

Plus, on top of concerns about workers’ rights, the company’s valuation was simply too aggressive:

Deliveroo is years away from profitability in a market where competition with the well-capitalized Uber Technologies Inc. and Just Eat Takeaway.com NV is fierce.

Here’s the full piece:

Back in London, Deliveroo is continuing to suffer a torrid stock market debut.

Its shares are currently down 25% from the IPO price of 390p, at around 290p.

Concerns about the treatment of its workers, and about its prospects for reaching profitability, are both hurting the stock, says Fawad Razaqzada, analyst at Think Markets.

As well as valuation concerns, with the company not making any profit yet, investors have been put off after a number of fund managers said they won’t be investing in the business because of the firm’s treatment of its riders.

Deliveroo’s gig economy model means drivers won’t get paid holidays, pensions and other benefits. But if the government were to force Deliveroo to treat its worker as employees, then serious questions will be raised about the company’s path to profitability given that its margins are already thin as they are and the competitive nature of the delivery industry.

Reuters points out that Deliveroo’s float had been highly anticipated too:

The highly-anticipated listing, the biggest on the London market in a decade, had been hailed by British finance minister Rishi Sunak as a “true British tech success story” that could clear the way for more initial public offerings (IPO) by technology companies.

Over in America, employers have hired more than half a million new staff this month, a survey shows, as the US economy recovers from the pandemic.

The ADP National Employment Report shows that private payrolls increased by 517,000 jobs in March, the best reading in six months.

It suggests that the progress on the vaccination programme, and the $1.9trn stimulus package, are boosting confidence in economic prospects this year.

February’s report was revised up too, to show that 176,000 new private sector jobs were created - up from the 117,000 first reported.

Economists had expected an even bigger jump in payrolls, around 550,000, but this is still a decent reading -- the best since September, after several months of weak payroll reports:

ADP reports that the services sector took on 437,000 new staff, while payrolls in the goods-producing sector swelled by 80,000.

Leisure and Hospitality payrolls jumped by 169,000, highlighting that some bars and restaurants reopened despite concerns about rising Covid-19 cases and new variants this month.

“We saw marked improvement in March’s labor market data, reporting the strongest gain since September 2020,” said Nela Richardson, chief economist at ADP, adding:

“Job growth in the service sector significantly outpaced its recent monthly average, led with notable increase by the leisure and hospitality industry.

This sector has the most opportunity to improve as the economy continues to gradually reopen and the vaccine is made more widely available. We are continuing to keep a close watch on the hardest hit sectors but the groundwork is being laid for a further boost in the monthly pace of hiring in the months ahead.

The UK housing market has cooled off this month, as the boost from the stamp duty holiday fade.

Mortgage lender Nationwide has reported today that house prices dipped 0.2% month-on-month in March on a seasonally-adjusted basis, following a rise of 0.7% in February.

That pulled the annual rate of house price inflation down to 5.7% in March from 6.9% in February.

Although the government has extended the stamp duty holiday to the end of June, from today, demand seems to have ‘softened’, says Robert Gardner, Nationwide’s Chief Economist:

“Given that the wider economy and the labour market has performed better than expected in recent months, the slowdown in March probably reflects a softening of demand ahead of the original end of the stamp duty holiday before the Chancellor announced the extension in the Budget.

“Recent signs of economic resilience and the stimulus measures announced in the Budget, including the extension of the furlough scheme and the stamp duty holiday, as well as the introduction of a mortgage guarantee scheme, suggest that housing market activity is likely to remain buoyant over the next six months.

Here’s our full story on Deliveroo’s float, by Rob Davies:

Labour leader Sir Keir Starmer has weighed in, saying he wouldn’t buy shares in the meal delivery company.

He cited the need to improve the treatment of workers in the gig economy.

The Press Association has the details.

On shares in Deliveroo, Labour leader Sir Keir Starmer said:

“No, I wouldn’t buy shares in Deliveroo. I accept the argument that we have got to have economic growth coming out of this pandemic, that is an absolute priority, but what we can’t do is go back to the broken system that we had before.

“Insecure work, not proper pay, low standards. We need to have the ambition to go forward to an economy which is long term, high standards, high wage, with proper protection for those within the workforce.

“That has to be the ambition, it’s a fork in the road really as we come out of this pandemic, very clearly we’re not going back to that way of doing economics and running the economy. We’ve got to go forward to something which is long term, better and more secure.”

Sir Keir added:

“What I think there needs to be is a framework that makes it very clear that our economy of the future has to be one which is about security at work, fairness at work, longer-term investment, skills.

“That is obviously better and fairer for those within either the gig economy or any part of our economy.

“It actually makes business sense, I think, good businesses recognise that the arrangements we had going into the pandemic were part of the problem and we need to have an ambition to do better than that as we come out.”

Lee Wild, head of equity strategy at interactive investor, sums up the situation:

“It’s been a disastrous stock market debut for Deliveroo after a cool reaction from the City.

“After months of speculation and drama, shares in Deliveroo – ticker ROO - began trading on the London Stock Exchange at 8am on Wednesday. But it wasn’t the start the takeaway food delivery firm had wanted, with the price plunging by 30% in quick time.

“The run-up to Deliveroo’s stock market debut has been marred by criticism of the company’s treatment of delivery riders, and by doubts among many top fund managers who chose not to invest in the flotation.

“It announced this morning that existing shareholders had sold £500m of Deliveroo stock at 390p a share, with new shareholders subscribing for at least £1bn of shares. This valued the company at £7.59 billion.

“That looks like great business for the sellers as Deliveroo shares began falling as soon as the market opened. They quickly hit a low of 271p, over 30% below the offer price, before recovering slightly to around the 300p level.

“IPOs typically rise in value when they begin trading publicly, which has attracted criticism from retail investors and investment platforms, including interactive investor. But preparations for this float have not been ideal, and there were several clear warning signs that all was not well.

“Firstly, the company doesn’t make a profit, even though the pandemic provided the biggest tailwind it could hope for. That benefit will fade as lockdowns end and diners return to pubs and restaurants over the summer. Remember, too, that Deliveroo had to be bailed out by Amazon last year, and it continues to operate in a highly competitive market.

“Most recently, several major City investors, including Aviva and Aberdeen Standard, opted out of the hotly anticipated IPO citing ESG concerns related to the company’s treatment of its employees. They’re also turned off by founder and chief executive Will Shu who still has over 50% of shareholder voting rights.

“Taxi firm Uber has already been forced to change its ways, especially around contracts and pay. Now, Deliveroo faces strike action to improve workers’ rights and pay.

“It is also worth remembering that Deliveroo can cancel the IPO at any time until 7 April. That’s because the shares are currently trading conditionally – what’s called a ‘when issued’ basis. It is highly unlikely this will happen, but it’s worth pointing out.”

The sight of investors shunning Deliveroo should force the company to rethink how it treats its workers, says UK unions chief Frances O’Grady.

O’Grady, general secretary of the TUC, says:

“Deliveroo has no excuse for the way it treats its workers.

“It’s a damning indictment of the company’s exploitative business model that so many major funds have publicly shunned this float.

“Instead of setting aside hundreds of millions of pounds to fight legal battles on workers’ rights, Deliveroo should just treat its riders fairly and pay them properly.

“And if the company thinks it can just cash in on this listing without improving working conditions, it should think again. Deliveroo will face greater scrutiny as a publicly listed company, and responsibilities to stakeholders. It needs to get start treating its workers decently.”

Several major City investors, including Aberdeen Standard, Aviva Investors, BMO Global, CCLA, and Legal & General all indicated they were shunning the IPO.

Phil Webster, a portfolio manager at BMO, which is one of the largest banks in North America, pointed to the treatment of Deliveroo couriers.

Webster said labour issues represented a “ticking bomb on the side” for Deliveroo, which contributed to making it “uninvestable”.

The nicknames are pouring in.

As if ‘Deliveroops’ wasn’t bad enough, AJ Bell investment director Russ Mould says:

“Deliveroo has gone from hero to zero as the much-hyped stock market debut falls flat on its face. It had better get used to the nickname ‘Flopperoo’.

Mould agrees that the concerns of several major investors over Deliveroo’s working conditions was a blow to the float.

“Initially there was a lot of fanfare about the Amazon-backed company making its shares available to the public, including the ability for customers to buy stock in the IPO offer.

“Sadly, the narrative took a turn for the worst when multiple fund managers came out and said they wouldn’t back the business due to concerns about working practices.

Also... the appetite for fast-growing, but currently unprofitable, tech companies has fallen in recent weeks, as investors have anticipated an end to the pandemic, Mould adds:

“There are multiple ways of looking at the business. Bulls will say the pandemic has made online food ordering part of everyday life and this trend will remain intact once life returns to normal. Bears will say it is a highly competitive space, Deliveroo doesn’t make any money and that takeaway ordering volumes will ease once the pandemic ends.

“Fast growth jam tomorrow shares are no longer in fashion as investors now prefer lowly-valued stocks that offer jam today. That meant Deliveroo was already fighting a headwind as soon as it hit the stock market.”

The Financial Times also reckons Deliveroo’s shaky debut is a blow to ambitions to lure more British tech companies to list in the UK.

Here’s the FT’s early take:

The initial public offering had given Deliveroo an opening valuation of around £7.6bn, the highest in London since resources group Glencore’s 2011 IPO, according to Dealogic data.

But the food delivery app quickly shed more than £2bn in market value in its first moments as a public company, in one of the sharpest drops for a major new listing in years.

As recently as Tuesday, Deliveroo had insisted that it had seen “very significant demand” from investors and the deal had been covered “multiple times”, even as it moved to lower its pricing range earlier this week.

Deliveroo sold shares worth £1.5bn in the offering, raising gross proceeds of around £1bn for the company to invest in new growth initiatives such as its Editions network of delivery kitchens, while existing investors will cash in to the tune of £500m.

Yet retail investors, who had been allocated £50m worth of stock in the IPO that was marketed within the Deliveroo app, will be unable to trade until next Wednesday, when unconditional dealings begin.

More here: Deliveroo tumbles 30% in London debut

The City’s biggest concern about Deliveroo is future regulation around worker rights, says Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

That’s because the company would find it harder to reach profitability if it was forced to guarantee more benefits to its couriers.

Uber, for example, has recently guaranteed minimum wage, holiday pay and pensions, following a supreme court ruling against it.

And pressure is growing on gig economy companies - 40 major legal challenges have been filed around the world as delivery drivers and riders try to obtain basic employment rights such as minimum wages and sick pay.

Lund-Yates explains:

The biggest concern is regulation around worker rights. The flexible employee model of Deliveroo’s riders is a huge pillar of the group’s plans for success.

If forced to offer more traditional employee benefits, like company pension contributions, Deliveroo’s already thin margins would struggle to climb, and the road to profitability would look very tough indeed. Throw in the recent developments at Uber, and general market volatility, and the net effect is one of increased anxiety. Sadly for the group, anxiety doesn’t tend to inflate share prices.

Also... investors must wonder whether demand for takeaways will hold up once the Covid-19 lockdowns are over, Lund-Yates adds:

The pandemic has offered a structural growth opportunity, but it’s worth asking if lockdowns mean things are as good as they will ever be for a takeaway service. The longer-term outlook depends on how demand holds up in a post-pandemic world, and if that road to profitability looks any clearer.”

Shares in Deliveroo got off to a horrible start on the market, says Neil Wilson of Markets.com.

He blames several factors -- including the City’s wariness of the ‘dual-class’ share structure which gave founder Will Shu more power than other shareholders. Plus, many large investors had concerns over Deliveroo’s working practices and governance.

A lot of the big UK funds are not on side, which was failure number one. Will Shu could have avoided that by going for a premium listing and eschewing the tech stock desire for a dual-class structure that leaves power with the founder. Old City habits die hard, despite what the FCA wants to do.

Negative stories about Deliveroo in recent days have also dampened demand (one survey found a third of the riders received less than the legal minimum hourly wage for over-25s)

But ultimately, the firm was overpriced at £7.6bn, or 390p per share, Wilson explains:

Chiefly though it reflects the fact that even pricing the IPO at the bottom of the range, Deliveroo was demanding too high a price tag for a loss-making delivery platform in a very competitive space with a questionable path to profitability.

The books were covered, it was just plain mis-priced.

Shares in meal delivery company Deliveroo are slumping as it makes its debut on the London Stock Exchange today.

Shares in Deliveroo opened at 331p, down from the 390p which investors paid for the company in its initial public offering -- the biggest in almost a decade.

And they’re continuing to slide, falling as low as 271p at one stage. They’re currently changing hands at around 310p each.

That’s a slump of around 20%, and a remarkably bad start to Deliveroo’s new role as a listed company.

Deliveroo had already been forced to price the IPO at the bottom end of its range, to get the offering away.

Several major City investors had resisted the chance to take part in Deliveroo’s IPO, including Aviva Investors, which cited a combination of investment risk and social issues.

A key concern for some investors was Deliveroo’s employment practices. The food delivery group does not guarantee minimum pay rates, as it argues couriers are independent self-employed contractors not entitled to benefits such as holiday pay and thee national minimum wage.

As we reported last week:

The IPO has provoked a sense of unease among some in the City.

A portfolio manager at another large investor said Deliveroo’s treatment of workers would raise concerns, while others in the investment industry have questioned Deliveroo’s decision to list with two share classes, a move that will give co-founder Will Shu tighter control over the business for three years.

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

The UK economy grew faster than expected in the second half of last year, as it struggled back from its worst slump in centuries.

Updated data from the Office for National Statistics show that UK GDP rose by 1.3% in October-December, a sharper recovery than the 1% first estimated for the final quarter of 2020.

It means the level of GDP in the UK is now 7.3% below its Quarter 4 2019 level, revised from the previous estimate of 7.8%

The ONS has also revised up its estimate for the recovery in the third quarter. It now believes GDP surged by 16.9% in July-September when restrictions were lifted, an upwards revision of 0.8 percentage points.

But... the slump during the first wave of Covid-19 caused even more economic pain than thought. GDP in April to June 2020 is estimated to have fallen 19.5%, a downwards revision of 0.5 percentage points, with the lockdown wiping out almost a fifth of economic activity.

That means in 2020 overall, the economy is now thought to have contracted by 9.8% -- marginally better than the 9.9% first estimated, but still the worst year on record.

So the annual picture is largely the same -- the UK has just suffered its worst annual contraction since Britain was gripped by the Great Frost over 300 years ago.

Jonathan Athow, ONS’s deputy national statistician for economic statistics, explains:

“Our revised quarterly figures show the economy shrank a little more than previously estimated in the initial stages of the pandemic, before recovering slightly more strongly in the second half of last year,”

Also coming up today

Shares in meal delivery group Deliveroo will start trading among investors today, in London’s biggest stock market float in a decade.

But amid concerns over its treatment of riders, and choppy stock markets, Deliveroo will be valued somewhat less than it had hoped.

Shares are being sold at £3.90 each, giving a valuation of £7.6bn. That’s a meaty valuation, but around £1bn less than the top-end of expectations set by Deliveroo during the IPO process.
Deliveroo insists it has seen very significant demand from institutional investors - but several major City names are ducking out of the IPO.

My colleague Zoe Wood explains:

Although the listing is still expected to be biggest initial public offering in London for a decade, a number of leading fund managers are avoiding the shares owing to concerns about Deliveroo’s labour practices, which do not guarantee minimum pay rates for its couriers.

Along with other operators in the gig economy, Deliveroo, which is backed by Amazon, has faced legal challenges around the world from couriers and drivers seeking access to basic rights, such as minimum wages and holiday pay.

The listing will raise £1bn for the company and £500m for selling shareholders, including Amazon and Will Shu, the former investment banker who launched the service from his London flat in 2013.

The fallout from the collapse of Archegos Capital Management continues, with UK and US regulators reportedly examining whether global investment banks breached rules by holding group discussions shortly before launching a fire sale of nearly $20bn worth of assets.
The Securities Exchange Commission is said to have requested further information from major US banks Goldman Sachs, Wells Fargo and Morgan Stanley, as well as Japan’s Nomura and Swiss lender Credit Suisse about a meeting with Archegos founder Bill Hwang on Thursday. Those talks were followed by a flurry of heavy sales of stock, in which Nomura and Credit Suisse ended up taking highly significant losses while other brokers escaped more unscathed. Analysts at JPMorgan Chase have estimated that these losses could reach $5bn to $10bn, much more severe than a typical fund unwinding.

The latest eurozone inflation data, due at 10am UK time, is likely to show that the cost of living rose at a faster rate this month, partly due to increased energy prices. Yesterday, German inflation picked up, hitting 2% on a harmonised annual basis.

Investors are also keen to see the monthly US private sector payroll report from ADP, which may give insight into Friday’s non-farm payroll (the main US unemployment report). A strong reading will bolster hopes for a rapid US recovery, which could put further pressure on bond yields.

The agenda

• 7am BST: Nationwide house price index for March
• 8.55am BST: German unemployment data for March
• 10am BST: Eurozone inflation data for March
• Noon BST: US weekly mortgage applications
• 1.15pm BST: ADP payroll survey of US private sector employment in March
• 3.30pm BST: EIA weekly oil inventory figures