Good morning, and welcome to our continued coverage of the world economy, financial markets, the euro zone and business.
The economic cost of Covid-19 is increasing, forcing struggling companies to cut jobs, even as governments try to unlock their savings without fueling the spread of the virus.
In the last few minutes, the British travel food group SSP confirmed that it plans to cut up to 5,000 jobs. This would represent more than half of its workforce, as it implements a reorganization to face the crisis.
The company, which manages the Top crust and Caffè Ritazza points of sale at airports and train stations, has been badly hurt by the drop in travel since the pandemic began. He concluded that sales will remain very weak for months – with demand for long-haul flights likely to remain very low per month.
In a bleak statement to the stock market, the SSP says:
Our expectation is that, by the fall, only 20% of units in the UK have been opened. Therefore, we have come to the very difficult conclusion that we will need to simplify and reshape our businesses in the UK and we are now starting a collective consultation on a proposed reorganization.Advertisement
If the pace of recovery continues at the current level, this could lead to up to c. 5,000 functions that become redundant at UK headquarters and operations.
That crash forced aerospace giant Airbus to announce 15,000 job cuts last night, including 1,700 in the UK.
As Chief Executive Guillaume Faury said:
"Airbus is facing the most serious crisis this sector has ever experienced."
This crisis is also forcing EasyJet to cut thousands of jobs, but it also goes beyond the travel industry. The furniture chain Harveys and shirt maker TM Lewin joined the administration on Tuesday, costing 800 jobs – with another 1,300 at risk.
The fall of Covid-19 now reached the UK real estate sector, with some people much more reluctant to risk a new mortgage – or possibly even risk visiting properties.
The national construction society reported this morning that prices fell 0.1% in June, the first annual fall since 2012.
Monthly house prices in the UK fell 1.4% compared to May (when they had shrunk 1.7%).
Robert Gardner, the country's chief economist, said:
“It is not surprising that the annual growth in house prices has stopped, given the magnitude of the shock to the economy as a result of the pandemic. Economic output fell by an unprecedented 25% over March and April – almost four times more than during the entire financial crisis.
“Activity in the housing market has also declined sharply as a result of blocking measures in place to control the spread of the virus. Although the latest HMRC data showed a slight pick-up in residential property transactions from the April low, in May they were still 50% lower than in the same month of 2019.
“Mortgage activity slowed down even more dramatically – there were only 9,300 approvals for home purchases in May, down 73,700 in February and 86% less than in May 2019. However, our ability to generate the price index of housing was not affected. date, as the sample size remained large enough (and representative) to generate robust results.
More to follow …
- 8h55: BST: unemployment count in Germany in June – expected to increase by 120,000
- 9:30 am: BST: UK industrial PMI for June – expected to rise to 50.1, showing small growth
- 14h BST: US industrial PMI in June – expected to rise to 49.6, showing a slight contraction