Stock markets are still pushing higher, despite growing coronavirus infections across Europe. Markets shrugged off a warning from the president of the influential Robert Koch Institute for infectious diseases that there could be as many as 100,000 new infections a day in Germany if the spread of coronavirus is not curbed.

On a more positive note, the European Medicines Agency approved two new vaccine manufacturing sites, for AstraZeneca in Leiden in the Netherlands and for BioNTech/Pfizer in Marburg in Germany. And GSK and Vir Biotechnology are seeking emergency use approval from the US regulator for their antibody treatment for early-stage Covid-19 infections.

• UK’s FTSE up nearly 1%, or 63 points at 6,737
• Germany’s Dax up 0.9% at 14,755
• France’s CAC up 0.55% at 5,986
• Italy’s FTSE MiB up 0.8% at 11,099

On Wall Street:

• Dow Jones up 0.65%, or 210 points, at 32,829
• S&P 500 up 0.5% at 3,930
• Nasdaq up 0.35% at 13,023

Saunders says:

As well as reducing economic activity sharply over the last year, the pandemic has also had large effects on the economy’s potential output. [Potential output can be loosely defined as the level of output consistent with keeping inflation on target over time.]

The pandemic and associated restrictions have significantly reduced potential output over recent quarters, but the majority of these effects are likely to be fairly temporary.

I put more weight on the risk that the central forecast in the February MPR overstated the temporary drop in potential output over the last year (and hence understated the extent of spare capacity in the economy at present) and was overly pessimistic on the path for potential output in the year ahead.

In order for the output gap to close sustainably and return inflation to target on a sustained basis, activity needs to close the shortfall with post-pandemic potential output. In my view, the MPR forecast for unemployment three years ahead (4½%) is likely to be a useful benchmark in judging the extent to which this has been achieved.

Inflation is currently at 0.4%, well below the Bank of England’s 2% target.

Returning to our main story of the day – the Supreme Court ruling in favour of shop workers in the Asda equal pay case – Martin Chitty, employment partner at the law firm Gowling WLG, says:

This is a further successful challenge to engrained gender /role based differentials in pay. The same challenges were brought successfully in the public sector 10 years ago where the equal value provided by women workers against historically male dominated roles was established. We now see this happening in retail – and other sectors need to be reviewing their pay structures and realigning voluntarily before claims are made.

More than 44,000 retail staff at the supermarket chain, most of whom are women, say they should be paid the same as the predominantly male staff who work in the chain’s depots, and who receive a higher wage of £1.50-£3 an hour more than the shop workers.

And here’s another pay story: an American found 90,000 pennies covered in oil or grease at the end of his driveway, after he fought a long battle to get his former employer to pay the $915 he was owed in wages.

Andreas Flaten said he left his job at A OK Walker Autoworks in Peachtree City, Georgia in November but had difficulty getting his final payment, even turning to the Georgia Department of Labor to receive help.

In mid-March, Flaten said as he left his house with his girlfriend he noticed the pile at the end of his driveway. He said the coins were covered with some sort of oily substance and an envelope containing his final pay slip and an explicit parting message.

His nightly routine now consists of cleaning the pennies so he can cash them in. He said it took him about an hour and a half to clean several hundred coins.

“I think that’s going to be a lot of work for money I’ve already worked for,” he said. “It’s definitely not fair at all.”

Ana Boata, head of macroeconomic research at the trade credit insurer Euler Hermes, estimates that the Suez canal disruption could cost the world economoy up to $10bn in lost trade for each week that the container ship Ever Given blocks the canal – adding to around $230bn of supply chain disruption to trade seen since the start of this year.

The problem is that the Suez Canal blockage is the straw that breaks the camel’s back. Suppliers’ delivery times have lengthened and are now longer in Europe than during the peak of the Covid-19 pandemic in 2020.

Importers have been grappling with a number of issues such as a shortage of containers and semiconductors, which are already hitting delivery of goods to consumers around the world. Second-round effects will be even more important as supplier input and possibly consumer prices increase.

Businesses in the UK have also have the added headache of disruption at key ports as the country adapts to the new reality outside the EU after the end of the transition period.

We forecast global trade to grow by 7.9% in 2021 as the world recovers from the low base of last year. A significant carry-over effect due to the recovery in late 2020 and strong January merchandise trade figures (in part due to China) are propping up our forecasts for 2021. Without this carry over effect the forecast falls to 5.4%.

In other energy news, Octopus Energy, the UK’s fastest growing energy supplier, will soon become one of Europe’s biggest renewable energy investors in a deal worth more than £3bn – which could bring green energy to 50 million homes in six years, writes our energy correspondent Jillian Ambrose.

Octopus announced today that it will snap up its sister company Octopus Renewables in a move that will hand the startup a portfolio of about 300 renewable energy projects, across six different countries, enough to power more than 1.2 million homes.

The fast-growing energy supplier hopes to grow its international business to create 50 million Octopus Energy customers by 2027, and plans to increase its new renewables division to generate as much clean electricity as it sells.

In the markets, oil prices are pushing higher today following a sell-off in recent days. Brent crude is 1.8% higher at $63.04 a barrel while US light crude has gained 2% to $59.65 a barrel.

The Suez Canal is still blocked, after a vast container ship ran aground on Tuesday. The Japanese owner of the ship says it aims to free the vessel by “tomorrow night Japan time” – but cannot guarantee that the effort will be complete by then.

Global shipping companies are starting to re-route cargo away from a jam of vessels on both sides of the stricken container ship Ever Given, which is blocking one of the world’s key trade arteries.

On the other side of the pond, Kroger, the largest supermarket chain in the US which makes hundred of millions of dollars in profits, is shutting down grocery stores and laying off scores of employees in response to local hazard pay rules for essential workers, writes Michael Sainato.

In response to a local ordinance passed by the Los Angeles city council on 3 March to grant frontline workers at large employers a $5-an-hour hazard pay increase for 120 days, Kroger announced plans to shut down three grocery stores in the city, eliminating more than 250 jobs.

Neha Thethi, head of employment at Lime Solicitors, notes that the Asda case is the largest equal pay claim in the private sector, “and has the potential to open the floodgates to further claims, not just across other supermarkets but other prominent retailers”.

With the abolition of tribunal fees , such mass actions for equal pay may well increase. The introduction of gender pay reporting means more information on gender pay is available with the inevitable result that this issue is only likely to pick up steam”.

Over 40 years ago the Equal Pay Act came into force and we’re still seeing an uneven playing field for working men and women and fighting pay discrepancies. Arguably this legal test is long overdue.

Julie Taylor, employment lawyer and partner at the law firm Gardner Leader, says:

Asda has maintained throughout the proceedings that it does not believe retail shop staff can compare their work to their counterparts within the distribution centres, despite the fact that both groups share common terms and conditions of employment. This decision is very important, especially in recent times where key workers, such as supermarket retail staff, have been on the frontline maintaining all our access to essential supplies. This work has been just as important as the work of those in the distribution centres, and this decision recognises that the work can be compared for the purposes of the equal pay claims.

The outcome will have implications for the supermarket sector and wider retail industry as many business structures are set up in a similar manner. In Asda’s case, both sets of employees were subject to the same terms and conditions, which also suggested the work was closely aligned.

She said each case will be determined on its own facts so it remains to be seen how far other claims progress, but ultimately we will see a rise in equal pay cases.

The sad point highlighted by this case is that, although we would like to believe things have moved on from the introduction of the Equal Pay legislation in the 1970s, there still remains a division in pay for men and women. Moving forward, this case may empower employees, especially women, to hold employers, whether private or public, more accountable for pay. Employers will need to carefully evaluate the salaries and job specifications, reflecting this in the contracts and recognise where the workforce falls within the “same employment” for equal pay purposes.

Stefan Martin, partner at Hogan Lovells, said:

It is no great surprise that Asda’s appeal failed. However, this does not mean that the claimants will be popping the champagne corks. This is only round one. The case will now go back to the employment tribunal to decide whether there was a legitimate reason for employees in distribution centres to be paid more than those in retail stores. These cases are notoriously drawn out and no final decision is likely for many years. The champagne will need to stay on ice.

Although the judgement only relates to the issue of whether retail employees can compare themselves to those employed in Asda’s distribution centres, the judgement will be bad news for the other supermarkets and retailers facing similar equal pay claims.

Asda shop workers have won the latest stage in their fight for equal pay in a ruling that could lead to a £500m compensation claim, writes our retail correspondent Sarah Butler.

The supreme court has ruled that the shop workers, who are mostly women, can compare their work to those in the distribution centre.

More than 44,000 shop workers say they should be paid the same as the predominantly male staff who work in the chain’s distribution depots, and who receive a higher wage.

The win is the first major stage of the long-running court battle that has implications for workers in all the major supermarkets.

Here is a breakdown of the Ifo business climate index. Clemens Fuest, president of the Munich-based economic institute, says:

Companies were clearly more satisfied with their current business situation. Optimism about the coming months has also returned. Despite the rising rate of infections, the German economy is entering spring with confidence.

In manufacturing, the business climate continued to recover. Companies were considerably more satisfied with their current business. Their expectations were the most optimistic they have been since November 2010. Demand for manufactured goods rose appreciably. The indications are for recovery across all industries.

In the service sector, the Business Climate Index rose markedly. Satisfaction with the current situation grew. As to expectations, cautious optimism returned for the first time since the fall. Business was particularly good for IT service providers. But hotels, restaurants, and tourism still find themselves in a very bad situation.

In trade, the Business Climate Index surged. The indicators for the current situation and for business expectations both rose sharply. In retail, however, the situation is still bad, albeit slightly less so than the previous month. Positive exceptions were supermarkets, bicycle dealers, and florists.

In construction, the Business Climate Index is back in positive territory. The indicator of the current business situation rose to its highest value in a year. Companies’ expectations also improved.

The Ifo economist Klaus Wohlrabe says the latest business climate readings suggest that the German economy, Europe’s largest, shrank by 0.7% in the first quarter.

So the pandemic has led to a DIY boom and people are now gearing up for garden get-togethers, but fashion sales have really suffered as we are all stuck at home.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says:

Refreshing wardrobes used to be a regular past time for UK consumers but buying clothes has fallen seriously out of fashion. The volume of monthly apparel sales is more than 50% lower than before the pandemic hit.

Although many shoppers have turned their bedrooms into fitting rooms, with year-on-year growth of online clothing sales of 36%, opportunities to dress to impress have been few and far between. Whereas many younger shoppers would baulk at wearing the same outfit two weekends in a row, in lockdowns many have become used to wearing the same pair of joggers for days at a time.

Back to UK retail sales, which returned to growth last month as Brits bought garden furniture in preparation for small garden parties – allowed from Monday in England.

ING economist James Smith said:

It’s worth saying that overall sales are down ‘only’ around 4% on pre-virus levels, a marked improvement on what we saw last spring. Experience of lockdowns also tells us that it will probably only take a matter of weeks for sales to return – or exceed – pre-virus levels once the shops reopen.

All non-essential shops are set to reopen on 12 April as part of the government’s roadmap to the easing of lockdown in England.

James Sproule, chief economist at Handelsbanken in the UK, reckons that the shift to online shopping will be permanent, as it’s hard to beat the comfort of browsing from the sofa (or bed).

The UK has long been an early adopter of online sales, with some 20% of retail sales being online before the pandemic struck in Jan 2020, this rose to 32% in November 2020 during the Christmas shopping rush.

For February 2021 the proportion of online retail reached 36.1%, up from 35.2% in January 2021.

Handelsbanken is forecasting that online retail sales will account for 30% of overall retail sales post-lockdown, meaning that the progress towards online buying previously expected to take place over the next decade, has been achieved in just 12 months.

Shops selling household goods had a good month. The ONS said hardware, paints and glass retailers enjoyed the biggest growth in this sector during the pandemic, as people did up their homes.

Richard Lim, CEO, Retail Economics has looked at the shift to online shopping.

As the third lockdown took hold, shoppers effortlessly switched to digital channels as the proportion of online sales reached new record highs. Online grocery shopping continues to grow exponentially and it seems inevitable that some consumers will adopt these shopping habits for good.

Likewise, retailers have become increasingly agile operating through periods of lockdown. Strategies are in place and measures have been formed to quickly shift towards digital channels for many parts of the market. That said, the industry continues to struggle with the sheer pace of change. Significant investment has been made in boosting warehouse capacity, enhancing logistics and expanding distribution networks to meet the challenge of a step-change in online shopping.

The British Retail Consortium estimates that UK shops have now lost a whopping £27bn in sales during the three lockdowns. This resulted in 67,000 retail jobs being lost last year alone.

Helen Dickinson, the chief executive, called on the government to fix the “broken tax system” and overhaul business rates to support investment in retail stores and warehouses.

Retail remains an essential part in unlocking consumer demand and driving forward the country’s economic recovery. It is essential that all retailers are able to open – and stay open – from April 12^th, and that Government continues to offer necessary support to businesses as many begin the process of trading their way back to growth.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, is predicting a modest recovery in retail sales this year after an initial surge when all shops reopen:

Looking ahead, retail sales likely will jump shortly after all non-essential shops reopen on April 12 and probably will surpass October’s peak in May. The recovery in GfK’s composite index of consumers’ confidence this month to its highest level in a year is a positive sign that the vaccination programme has lifted spirits. Nonetheless, most continuously-employed workers will be no better off this year than in 2020.

The median pay settlement has declined to 1% this year, from 2.5% pre-Covid, according to XpertHR, while the National Living Wage will rise by just 2.2% in April, the least since 2013. By contrast, consumer price inflation looks set to average 1.6% this year, up from 0.9% in 2020. Furthermore, the tax take from wages will rise this year, given that the income tax personal allowance will increase in April by just 0.5% to £12,570.

Households probably also will prioritise consuming services when businesses reopen and will reallocate funds that recently have been spent on goods. Accordingly, the recovery in retail sales probably will fall flat, after an initial surge when shops reopen. We think sales volumes will be only about 3% above their 2019 level this year.

Here is some instant reaction to the bounceback in UK retail sales, which was bang in line with City expectations.

Lisa Hooker, consumer markets leader at the consultancy PwC, described the 2.1% rise in February as a “creditable outcome” that showed some relief for the beleaguered sector.

There are signs that consumers are getting used to the realities of life under lockdown, with online sales hitting yet another high of 36.1% of total retail sales. Home and DIY products continued to flourish as we all spent more enforced time within our four walls, as well as looking forward to being allowed to have visitors in gardens from next week.

As we edge towards the re-opening of non-essential stores after Easter, retailers will be hoping that the wave of optimism sweeping consumers as a result of the successful vaccine rollout will translate into increased sales. This is particularly true of categories like fashion that continue to languish at half the levels of this time last year, with few reasons yet to buy a new outfit.

February will also be the last month before comparing to Covid affected months, so March is certain to bring some relative relief for non-essential retailers.