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London’s blue-chip index had its worst session since late February on Friday, touching the lowest level in almost a fortnight to track a fall in global equities.
The FTSE 100 fell 70.97 points to 6,708.71, underperforming its European counterparts and recording its first weekly decline in three weeks.
Boosting the weak sentiment was the US Federal Reserve’s decision not to extend the supplementary leverage ratio, which requires US banks to hold less capital reserves in order to free up cash to inject into the economy with loans.
The Fed “undid any goodwill it generated following Wednesday evening’s meeting” when it kept rates steady and upgraded the US economic outlook, said Connor Campbell, financial analyst at Spreadex.
Reacting on this side of the pond, traders pulled out of stocks over worries that more restrictions on capital requirements could hold back an economic recovery.
A retreat in US treasury yields also weighed on banking stocks. HSBC fell 10.7p to 430.9p, Barclays dropped 1.2p to 182.6p and Lloyds edged down 0.6p to 41p.
Among other key drags was luxury fashion house Burberry, which was knocked by fears a third Covid-19 wave in Europe could delay reopenings and hit demand. The company lost 79p to £20.35, with similar drops on the Continent for groups like Cartier-owned Richemont and France’s Hermès.
Not too far behind was Scottish Mortgage Investment Trust, the flagship investment fund of parent Baillie Gifford, after portfolio manager James Anderson announced his plans to retire. Mr Anderson, who joined Baillie Gifford in 1983, plans to stand for a non-executive role at Swedish investment group Kinnevik. Shares lost 36p to £11.15.
Mining and energy stocks helped to drag the benchmark, despite a rise in oil prices. Oil recouped some of its lost ground, driven by bargain-hunting traders. Brent crude rose by 2.1pc to $ 64.61 per barrel. Gains, however, were relatively small perhaps pointing at a lack of confidence in the market.
Among them, Rio Tinto shed 87p to £54.71 and Anglo American fell 98p to £28.04, while oil heavyweights BP lost 5.3p to 306.7p and Royal Dutch Shell dropped 14.8p to £14.24.
Among the mid caps, Investec added to losses on the FTSE 250, after the Anglo-South African lender warned it expects full-year profits for 2020 to slump due to interest rates and lower client activity. It expects adjusted operating profit to be 16pc to 24pc lower than the previous year, with the drop offset by “cost containment” and lower-than-expected credit losses. Shares fell 21.4p to 209.7p.
A bright spot on the domestically focused index, which lost 148.25 points to 21,420.31, was Sanne Group.
It reported a 16pc rise in underlying pre-tax profit to £44.9m, and a 7.7pc rise in revenue to £169.7m for the year through December. It nodded to revenue growth across all regions, surging 56p to 630p.
06:53 PM
Outage over
Many WhatsApp users are reporting that they are once again able to send messages on the app.
Instagram also appears to be back online.
A Facebook spokesman said: “Earlier today, a technical issue caused people to have trouble accessing some Facebook services. We resolved this issue for everyone, and we apologise for any inconvenience.”
06:35 PM
Facebook also suffering
The outages are also affecting Facebook itself as well as Instagram and WhatsApp, according to Down Detector.
The issues started just after 1 pm New York time – 5pm UK time (the East Coast is only four hours behind us until the end of the month).
06:20 PM
‘Multiple teams are working on it’
A tweet on the Facebook Gaming Twitter account reads:
There are a number of issues currently affecting Facebook products, including gaming streams. Multiple teams are working on it, and we’ll update you when we can.
— Facebook Gaming (@FacebookGaming) March 19, 2021
06:15 PM
WhatsApp and Instagram hit by outage
Facebook platforms including online messaging service WhatsApp and photo-sharing app Instagram are down for thousands of users, according to Downdetector.com.
The outage tracking website showed there were more than 1.2m incidents of users reporting issues with Instagram, while at least 23,000 users posted about issues with WhatsApp.
Downdetector tracks outages by collating status reports from a series of sources, including user-submitted errors on its platform. The outages might be affecting a far larger number of users.
Facebook did not immediately respond to a request for comment.
06:03 PM
Rail jobs under threat, claims union
Thousands of rail jobs are at risk because of cuts in spending by National Rail, according to the Rail, Maritime and Transport Union (RMT) which is warning of a national dispute.
RMT officials say they have been told “drastic” cuts are being planned, with an announcement expected in the coming weeks.
It is seeking urgent talks with the government over National Rail’s future, as well as safety and maintenance standards on the railways.
RMT said it was moving to a “dispute footing” to fight job cuts and claimed that National Rail is also planning to freeze pay and change working practices.
RMT general secretary Mick Cash said: “Under orders from the Government, Network Rail is using the Covid-19 drop in passenger numbers and service levels to rush through the most radical restructuring of the railway infrastructure since privatisation.
“Rail staff, who have been essential workers throughout the pandemic, have already had a kick in the teeth with an attempt to impose the Government’s pay freeze.
“Now they are threatened with the loss of thousands of jobs, accompanied by a drastic dilution of safety tasks, which will have catastrophic consequences for rail safety.
“I will be seeking an urgent meeting with the Transport Secretary, but in the meantime RMT has no alternative to move to a national dispute footing to protect the livelihoods of our members and the lives of rail passengers and workers.”
05:23 PM
BoE cannot tackle climate change alone, executive warns
BoE
The Bank of England cannot tackle climate change alone, a top executive has warned, as the financial industry and Government have much bigger roles to play.
My colleague Tim Wallace reports:
Officials were given a new remit by Rishi Sunak, the Chancellor, which means they should consider net zero emissions targets in monetary and financial policy.
But Sarah Breeden, an executive director at the Bank, said tweaking its QE bond buying policies to favour environmentally friendly companies can only make a very small difference.
The corporate bond “portfolio is small. It is £20bn, it is the cherry on the top of the icing on top of the cake that is the global financial system – at best,” she told an event at the London School of Economics.
The Bank can make more of a difference in reviewing climate risks faced by the financial services industry, she said, because banks, insurers and other institutions control far more money.
But even here there are limits because the Bank does not yet know the Government’s decarbonisation plans.
The “nirvana” of central bank climate policy is to have sufficient information to track the climate risks associated with individual assets, she said, so banks could be instructed to hold more capital against riskier investments.
“Central banks and the prudential regime have got an important role to play, but it is a complement, not a substitute. It can be a really powerful catalyst and amplifier of the Government policy,” said Ms Breeden.
She said the Bank wants to avoid “overreach” in which it ends up “accused of being an unelected set of technocrats who are determining the path to net zero, which is rightly the responsibility of elected officials.”
04:49 PM
Almost 30,000 applications by Hongkongers for new visa to the UK
Some 27,000 Hongkongers have applied to come to the UK under the government’s new BN(O) visa, since it was introduced at the end of January.
The new figures were released after the prime minister held a video call with four British National (Overseas) families from Hong Kong who have come to the UK in the last year.
During the call, Boris Johnson said: “The UK has a long and proud history of embracing those who arrive on our shores seeking the inalienable rights and freedoms denied to them in their homeland. I am very proud that we have been able to make this offer to you and other British Nationals (Overseas).”
The government opened up the new route ‘s after Beijing imposed a wide-sweeping National Security Law on Hong Kong last summer, following over a year of protests in the Asian city.
Read some of our previous reports here:
04:33 PM
Man U shirt deal plunges share price of sponsor
Man U
Frankfurt-listed software firm TeamViewer – whose valuation has soared amid the pandemic – slumped the most on record today, by more than 16pc.
It came after the company announced a new shirt sponsorship with Manchester United, with investors worried about the costs of the deal.
At the same time it revised its 2021 adjusted Ebitda margin guidance range – a measure of its operating profit as a percentage of revenue – to 49pc to 51pc of billings. Last month it had predicted 55pc to 57pc. A higher percentage means a company has less operating costs and higher earnings.
According to Morgan Stanley analyst George Webb, reported Bloomberg, this update implies a €35m (£30m) increasing in marketing costs this year.
That amount may only cover the part of the football season that falls into TeamViewer’s fiscal year, he said in a note to clients, and so the annual rate might be higher.
04:02 PM
World’s third-largest plane maker posts another huge loss
Embraer, the world’s third-largest plane maker after Airbus and Boeing, reports a stonking $ 731m (£528m) loss for last year. The total was more than double the figure for 2019 as the pandemic wrecked the aviation industry.
The Brazilian firm has been gradually recovering and it made more than half its 2020 deliveries last year in the fourth quarter – 71 out of a total of 130.
Commercial jet deliveries halved, while executive jet deliveries dropped 21pc.
Embraer has not released guidance on expected financial results or plane deliveries for this year “due to continued uncertainty related to the Covid-19 pandemic and its impacts on the industry”.
03:26 PM
Brussels nears post-Brexit deal for the City
City of London
Britain and the EU are poised to strike a limited deal on post-Brexit financial services co-operation after months of fraught talks, according to reports.
My colleague Tim Wallace reports:
Partial regulatory equivalence on some financial products could be agreed, Bloomberg reported, alongside a much-anticipated memorandum of understanding on regulation.
It comes after mounting tension over the EU’s pressure on Britain to accept its rules indefinitely, and accusations of aggressive tactics from Brussels.
Andrew Bailey, the Bank of England’s Governor, has spoken of the key need to keep rule-making powers in the UK instead of deferring to Brussels – even at the cost of losing some access to EU markets.
The memorandum of understanding is expected to include agreement that regulators keep each other informed of their plans for taxation and measures to counter financial crimes.
In a parliamentary hearing Mr Bailey said the memorandum of understanding “is not automatically going to lead to equivalence” in financial services.
03:05 PM
Finland suspends AstraZeneca roll-out
Here we go again… Finland has suspended the use of AstraZeneca Covid vaccines while investigating two cases of blood clots.
This is after the European Medicines Agency confirmed yesterday that the jab is “safe and effective”.
FINLAND SUSPENDS USE OF ASTRAZENECA COVID-19 VACCINE WHILE INVESTIGATING TWO CASES OF BLOOD CLOTS – FINNISH INSTITUTE FOR HEALTH AND WELFARE
— First Squawk (@FirstSquawk) March 19, 2021
02:45 PM
SoftBank seeks $ 1.2bn in Greensill collapse
Softbank Group CEO Masayoshi Son
Greensill Capital owes more than $ 1.3bn to creditors, with the bulk of those claims so far coming from the now-defunct fintech’s largest shareholder, SoftBank.
Bloomberg has the details:
SoftBank, which had already invested $ 1.5bn in return for a stake in the company that is now practically worthless, is owed $ 1.15bn, people familiar with the matter said.
It’s not clear whether it lent that money to Greensill in addition to the equity investment, or whether the latter was structured in a way that allows it to try and recoup money in creditor talks.In total, counterparties to Greensill submitted claims for more than A$ 1.75 billion ($ 1.35 billion), administrator Grant Thornton said in a statement Friday after a call between creditors concluded.
The final tally may be significantly higher as further claims are made, and because some of the amounts submitted were placeholders while the actual damage is being determined.
The figures show Greensill owes money to some 34 creditors, including its own German banking unit and a family trust in the name of founder Lex Greensill’s brother, from which it had borrowed late last year as it struggled to raise new money ahead of a possible going public.
SoftBank had injected equity in the firm in 2019 and put hundreds of millions of dollars into funds Greensill ran with Credit Suisse Group AG. It’s collapse leaves Masayoshi Son’s Vision Fund with yet another damaging loss.
02:25 PM
Update: Toyota to close Czech plant for two weeks
Toyota has confirmed it will close its Czech Republic plant for two weeks from Monday, the FT is reporting.
02:00 PM
Market moves
That messy US open has rattled European equities further, with stock indices across the continent plunging to session lows. Are we in for a painful end to the week?
01:50 PM
US stocks extend drop
It’s proving to be something of a shaky start for US equities, with the Dow Jones now down about 1pc. The Nasdaq is flat, while the benchmark S&P 500 is down about 0.5pc.
01:43 PM
Toyota was within hours of UK plant shutdown this week – FT
Toyota was just hours away from shutting down its UK plants this week after a cold snap in the US disrupted global car production, the FT reports.
The paper says:
The Japanese carmaker was in a “daily battle to avoid a shutdown” across its European network as contagion from its North American supply chain spread, one person said.
The group briefed managers and suppliers that it was preparing to halt UK lines, before reversing its decision several hours later, another person said.
The winter blast that caused mass blackouts in Texas has deepened supply chain disruptions at the world’s largest carmakers, as the pandemic-triggered scarcity in chips is compounded by a fresh shortage in raw chemical materials used for some car components.
01:39 PM
Wall Street makes mixed open
US stocks have made a mixed open, with the Nasdaq recovering slightly amid a flat showing elsewhere.
Bloomberg TV – Bloomberg TV
01:37 PM
Federal Reserve to let Wall Street capital break expire
The US Federal Reserve has announced it will allow it supplementary leverage ratio – a form of relief offered to Wall Street banks to support them through the pandemic.
Bloomberg has more details:
The reprieve that was granted last April — a response to coronavirus that allowed lenders to load up on Treasuries and deposits without setting aside capital to protect against losses — will expire March 31 as planned, the Fed said in a Friday statement.
Though the regulator has concluded the threat that Covid-19 poses to the economy isn’t nearly as severe as it was a year ago, the agency also said that it’s going to soon propose new changes to the SLR.
01:08 PM
Canada ratifies rollover trade deal with UK
Canada has announced it is ratifying its rollover trade deal with the UK after it received royal ascent.
The agreement extends preferential access to companies on both sides of the agreement, which accounts of a bilateral trade in services of $ 14.5bn, and means 98pc of Canadian product will be exported to the UK without tariffs.
Negotiations will continue over a new trade, with three years to strike one under WTO rules.
12:57 PM
Pound hits day low against dollar
The pound has dipped back below $ 1.39 and hit its lowest level of the day, amid a broad strengthening in the dollar. The US currency is benefiting from a nervous mood across markets.
12:43 PM
Intu says it has been informed of ‘additional liabilities’
Shopping centre operator Intu said it has “recently been made aware of a number of additional liabilities” that may be owned by the company itself or its subsidiaries.
In a (pretty vague) statement, the group – which fell into administration last year – said:
The company is of the view that, if it were established that such potential liabilities are owed in the maximum quantum indicated, such potential liabilities would not likely be material in the context of the value of the company’s assets, would not likely have an immediate impact on the company’s short-term cash flow position but could have a material impact on the Company’s overall cash flow.
It warned the timing of the liabilities “is likely to have an effect on the timing and potentially also the structure” of the amendment and restructuring transaction it announced in late January.
12:26 PM
Wise mulls direct London listing – Sky News
Payments company Wise, one of Britain’s most prominent fintech groups, is mulling an unusual London listing that would bypass a typical float process, Sky News reports.
The broadcaster says:
Sky News has learnt that Wise – which until last month was called TransferWise – is in talks with its advisers about going public this year without raising money from the sale of new shares.
A direct listing, or introduction as it is often called in the London market, remains comparatively rare for capital-hungry technology companies which routinely use IPOs as a way of strengthening their balance sheets.
If Wise chooses to eschew an IPO in favour of an introduction or direct listing, it would enable the company to shorten the flotation process and sharply reduce the fees paid to investment bankers and other advisers.
12:06 PM
Burberry drop as third wave grips Europe
Burberry is among the biggest fallers on the FTSE 10 today, with the luxury goods retailers knocked by fears a third Covid-19 wave in Europe will delay reopenings and hit demand.
The FTSE 100 group is down about 3.6pc currently, with similar drops on the continent for groups such as Cartier-owner Richemont and France’s Hermès.
Further pressure is coming from chilly talks between the US and China, with the latter a huge export market for luxury goods.
11:43 AM
Fevertree losses build as analysts cut price targets
Losses are building at Fevertree today, with the group dropping as much as 8.4pc following a 12pc plunge yesterday.
The tonic-maker disappointed the City with its full-year earnings and its guidance fell short of consensus figures.
Today, analysts at Deutsche Bank, Societe Generale and Citi have all cut their price targets on the group, which used to hold growth-stock chops.
Citi’s Jemima Benstead said Fevertree’s performance in the near term will ginhe on US growth, as well as how quickly demand bounces back when bars, pubs and restaurants re-open.
11:20 AM
Market moves
European stock markets remain mired in the red, but haven’t followed Asian stocks in the full-blown sell-off we saw overnight. US stocks are set for a mildly positive open after yesterday’s drop.
10:52 AM
BA poised to ditch Heathrow HQ
British Airways may sell its Heathrow headquarters as part of a post-pandemic move away from the office, a leaked company email has revealed.
My colleague Ben Gartside reports:
The airline has appointed property consultants to consider a sale of the Waterside complex close to the airport in west London that accommodates about 2,000 workers, the Financial Times first reported.
Stuart Kennedy, the airline’s HR chief, told staff: “Many of us are based at Waterside and it’s not clear if such a large office will play a part in our future. We’ll want to consider what the ideal office layout for the future will be. Perhaps it’s less fixed desks and more casual meeting areas.”
The complex would need to be demolished if a third runway is built at Heathrow, according to Willie Walsh, former chief executive of BA’s owner IAG.
New from me: Blue chips are continuing to move to flexiwork post-Covid.
– ?? BA considering sale of their HQ
– ? Capita tell 35k they can WFH
– ? Aviva and NatWest also cut office spaceRead more here:https://t.co/RU3KmlO0CP
— Ben Gartside (@BenGartside) March 19, 2021
10:40 AM
Bank of Russia surprises with rate hike
The Bank of Russia has raised its key interest rate to 4.5pc, surprising markets and echoing hikes by central banks in Turkey and Brazil.
Governor Elvira Nabiullina has signalled further rises are likely this year, after inflation beat forecasts and the ruble slides on US sanctions.
Annual price inflation in Russia hit 5.7pc last month, the fastest pace in over four years and clear of the 4pc target.
10:29 AM
Mirror publisher to scrap London office and make most staff WFH – City AM
Reach, the publisher of titles including the Mirror and Express, plans to close offices including its London HQ and make most of its staff work from home permanently, City AM reports.
The paper says:
The company will close its Lower Thames Street office in central London and reduce its office space in Canary Wharf from two floors to one.
The majority of Reach employees will work from home on a permanent basis as the publisher aims to reduce costs by shrinking its office space.
It is not clear how much the company, which also owns the Manchester Evening News and the Liverpool Echo, will save through the cost-cutting measures.
10:02 AM
Investors including Thomson Reuters and bosses at Refinitiv sell £745m of LSE stock
Thomson Reuters, managers at Refinitiv and other investors have sold about £745m of stock in London Stock Exchange Group to raise cash that will cover the tax costs of the data business’s sale to LSE.
Holders sold about 10.4m shares at £71.50 apiece, according to a statement released this morning – a 2.8pc discount to Thursday’s closing price, and equivalent to about 1.9pc of LSE’s total equity.
After the sale, the group – which also includes Blackstone, Canada Pension Fund Investment Board and Singapore’s sovereign wealth fund – will still hold about 30pc of the stock exchange operator.
LSA completed its $ 27bn takeover of Refinitiv earlier this year, following extensive scrutiny by competition regulators. It hopes to become a major player in financial data.
09:42 AM
Investec expects profits to slump on poor interest rates
Investec has warned it expects full-year profits for 2020 to slump due to low interest rates and lower client activity.
The Anglo–South African lender said its adjusted operating profit is expected to be 16pc to 24pc lower than the previous year, with the drop offset by “cost containment” and lower-than-expected credit losses.
The FTSE 250 group also announced Perry Crosthwaite, its chair, will step down at its annual general meeting in August after three years at the helm, with two non-executive directors – Mark Malloch-Brown and Charles Jacobs – to leave at the same time.
Chief executive Fani Titi said:
While the general outlook is improving, the long-term impact of the pandemic is uncertain. Investec remains well capitalised, highly liquid, and well provisioned for impairments. With the simplification of the group now substantially complete, we are positioned to pursue long term growth.
09:26 AM
UK and EU move closer to partial finance deal
Negotiators from the UK and EU are slowly moving closer to a partial agreement on financial regulation, with hopes that a deal by the end of this month could help City firms access the single market.
Bloomberg reports:
The EU could grant the UK so-called partial regulatory equivalence for some financial products once the separate memorandum of understanding on financial regulation is reached, according to a person familiar with the negotiations.
While the two issues are formally separate, securing a common framework around certain financial services rules could help unlock some limited equivalence decisions allowing UK firms access to the wider EU market, said the person, who asked not be identified discussing private matters. The EU and Britain would retain their unilateral right to grant or retract those equivalence rulings.
EU vs the City | Wars of equivalence
09:21 AM
Aveva completes OSIsoft takeover
Industrial software maker Aveva has completed its takeover of US peer OSIsoft, it said in a statement.
The FTSE 100 group said the completed acquisition will enhance its ability “to accelerate the digital transformation of the industrial world”.
The takeover was first announced in August, and has been awaiting regulatory approvals.
OSIsoft, previousy owned by Softbank, was founded in 1980 in California and has since become a key supplier of technology to industries including manufacturing, energy and life sciences. It has around 1,400 staff.
The company’s flagship product is its PI System, which helps business customers capture and store data from sensors across their operations so they can save time and money.
09:06 AM
Spy chief calls for Chinese ‘smart city’ tech ban
Britain’s intelligence agencies are rallying for new curbs on local authorities’ use of “smart city” technology made by China, raising concerns it could be used to collect sensitive data.
My colleague Morgan Meaker reports:
The National Cyber Security Centre and MI5 are both warning about the risks of using key Chinese suppliers such as camera manufacturer, Hikvision, and are keen on efforts to blacklist certain vendors from bidding for local authority smart city contracts, according to a report by the Financial Times.
‘Smart city’ technology is software that promises to make urban areas run more effectively by giving local authorities more oversight, using sensors or surveillance cameras.
08:56 AM
Baillie Gifford’s Anderson announces retirement
James Anderson – Baillie Gifford & Co
Baillie Gifford’s James Anderson has announced plans to retire from the partnership after almost four decades, meaning he will also step down as joint portfolio manager of Scottish Mortgage Investment Trust.
He joined Baillie Gifford in 1983, becoming its portfolio manager in 2000 and carrying out the role on a joint basis since 2015.
He plans to stand for a non-executive role at Swedish investment group Kinnevik – and will recuse himself from discussion over the company, in which Scottish Mortgage holds a stake, if appointed.
Scottish Mortgage chair Fiona McBain said:
James’s approach of identifying and holding transformational growth companies has helped drive economic progress and delivered exceptional returns for shareholders. He has also pioneered our investments in private companies, one of the trust’s most important strategic initiatives to date.
Scottish Mortgage shares have taken a slight knock today (although this may also reflect the wider mood on markets):
08:44 AM
Wetherspoon boss calls for ‘sensible’ exit from lockdown
Tim Martin – Simon Dawson/Bloomberg
The boss of JD Wetherspoon has called for “sensible” policies to escape the “mayhem” of lockdown after the pub chain slumped to a significant half-year loss.
My colleague Simon Foy reports:
Tim Martin said the future of the industry, and the UK economy, depended on ministers implementing a “consistent set of sensible policies”, such as ending lockdowns and tier systems, which have “created economic and social mayhem and colossal debts, with no apparent health benefits”.
It came as the chain posted a pre-tax loss of £68m for the six months to Jan 24, after sales more than halved to £431m.
The hospitality industry has been hammered by rolling lockdowns for the last 12 months, and suffered acutely from forced closures during its key Christmas period.
08:24 AM
Full report: Borrowing hits February high
My colleague Tom Rees has a full report on this morning’s borrowing figures. He writes:
February’s borrowing was the highest on record for the month and marked a £17.6bn increase on the same period last year, shortly before Covid started to wreak havoc with the public finances.
Just under £4bn was spent on the job support scheme last month, a slightly smaller hit than January, while tax receipts were £1.5bn lower than February 2020 with dwindling revenue from VAT, business rates and fuel duty.
08:13 AM
FTSE drops at open
The FTSE 100 has opened sharply lower, with a fall in energy stocks following a crude price drop putting a drag on European shares.
Bloomberg TV – Bloomberg TV
08:03 AM
Public finances: Experts react
Here’s some reaction to this morning’s borrowing data.
Thomas Pugh from Capital Economics says it’s likely that cumulative borrowing will hit the OBR’s forecast of £355bn. He writes:
This leaves cumulative borrowing with just one month to go until the end of the fiscal year at £278.8bn. But the figures do not yet include an estimated £24bn of write-offs of government backed loans. In any case, we think that the fiscal forecasts further ahead are predicated on overly pessimistic forecasts for GDP growth.
If we are right, borrowing may be lower than the OBR expects over the next few years allowing the Chancellor to cancel some of the proposed tax hikes before the 2024 general election.
Samuel Tombs from Pantheon Macroeconomics disagreed, saying the OBR’s forecasts are likely to be broadly correct:
We doubt, however, that borrowing will come in below the OBR’s expectations in future years, given that it has assumed only a 3pc long-term hit to potential supply from the recent recession, significantly less than after prior downturns.
Borrowing also will exceed the estimates laid out by the OBR if, as we expect, the Chancellor eventually decides that the Budget plans for ongoing spending cuts and frozen income tax thresholds are too politically costly to implement. Accordingly, we think that the deficit eventually will settle at about 4pc of GDP in the mid-2020s, not just under 3pc as the OBR expects.
07:56 AM
CMA tells Taylor Wimpey and Countryside Properties to drop ground rent terms
The Competition and Markets Authority has told housebuilders Taylor Wimpey and Countrywide Properties they are required to ditch contract terms that double the ground rent on properties every 10 or 15 years.
The regulator said the increase “means people can struggle to sell or mortgage their homes, and so find themselves trapped”.
It said the group must remove the “unfair” terms from all existing contracts, and agree not to use them in future.
CMA chief executive Andrea Coscelli said:
This is unacceptable. Countryside and Taylor Wimpey must entirely remove all these terms from existing contracts to make sure that they are on the right side of the law.
If these developers do not address our concerns, we will take further action, including through the courts, if necessary.
The CMA is continuing an investigation into Barratt Developments and Persimmon Homes over the possible mis-selling of leasehold homes.
? We’ve written to Countryside and Taylor Wimpey telling them to remove contract terms that mean leaseholders have to pay ground rents that double every 10 or 15 years and not to use these terms in any future leasehold contracts.
Read more: https://t.co/NWr7ObYGZK pic.twitter.com/8Q3FnhccwT
— Competition & Markets Authority (@CMAgovUK) March 19, 2021
07:45 AM
Government sells 1.9pc stake in NatWest for £1.1bn
NatWest – Chris Ratcliffe/Bloomberg
The Government has sold a 1.9pc stake in NatWest for £1.1bn, whittling down public ownership of the lender, which was nationalised during the financial crisis.
The Treasury sold 590.7m shares on Thursday at 190.5p per share, yesterday’s closing price. It now holds about 6.9bn shares in the bank, formerly called Royal Bank of Scotland, about 59.8pc of its total share capital.
The shares were originally bought at around 500p apiece, so the sale represents a hefty loss of about £1.9bn.
07:37 AM
International comparisons put UK in middle of the European pack
The ONS has helpfully pulled together some stats comparing the UK’s debt levels with Europe’s other major economies.
The figures – measured according to the Maastricht debt definition – put Britain in the middle of the pack, with lower debt as a percentage of GDP than France, but slightly ahead of the EU average.
07:31 AM
Multi-year look
A longer look back at borrowing data shows just how strongly 2020–21 has stood out, easily dwarfing the high levels of borrowing in the aftermath of the financial crisis:
07:23 AM
A seismic year-on-year shift
Comparing borrowing figures for 2020–21 with the prior year is almost unfair: the amount of money the Government has had to borrow to fund its pandemic response has been unprecedented in peacetime. Still, the difference is stark:
07:18 AM
Net debt at 97.5pc of GDP
After a £330bn rise over the first eleven months of the financial year, public sector net debt stood at £2.1 trillion at the end of February – or 97.5pc of GDP.
The OBR expects that levels to break through 100pc, and eventually hit levels not seen since the Second World War.
07:12 AM
How borrowing has built up
Cumulative public borrowing so far this financial year is estimated to have hit £287.8bn, some £228.2bn higher than the previous year and the highest on records going back to the early ’90s.
Here’s how those figures look:
The ONS has adjusted its graphs to take in the OBR’s new forecast for end-on-year borrowing, at just over £350bn. On current trends, those figures look out of reach, although March’s Budget measures are likely to have pushed up borrowing.
07:00 AM
Feb borrowing at £19.1bn
Public sector net borrowing bounced back to £19.1bn in February – slightly less than economists had expected. It’s a record level for February as far back as records go (to 1993).
06:56 AM
Chinese stocks head for longest weekly losing streak since 2016
Chinese stocks are on track for the their longest weekly losing streak since 2016, with a 2.9pc slump on the benchmark CSI 300 index of Shenzhen and Shanghai stocks putting it on track for five weeks of consecutive losses.
The drop comes as iron, oil and copper prices fall, amid a general resurgence in nerves across global markets following the recovery-embracing rotation into miners and producers that marked the start of the year. Adding to the pressure is rising tensions over trade relations with the US, after the first high-level talks between the two sides ended in acrimony.
06:49 AM
What economists expect today
After unexpectedly small figures in January, when public debt increased by (just) £8.8bn, February’s reading for public sector net borrowing (excluding banks) is expected to show a bounceback.
Economists polled by Bloomberg expect a net £21.4bn of borrowing. But the reality has tended to undershoot predictions, with the Office for Budget Responsibility’s running estimate overshooting the reality.
The fiscal watchdog expects net government debt to break 100pc of UK GDP by the end of this year, which would be the first time that threshold has been crossed since the early ’60s.
06:40 AM
Agenda: Borrowing surge set to continue
Good morning. The latest figures on public borrowing, out at 7am, are set to show a sharp rise in February compared with the month before.
The FTSE 100 is set to open sharply lower, amid a rise in bond yields that has shown inflation fears are still at the forefront of investors’ minds.
It’s set to be fairly quiet on the corporate front, with pub chain Wetherspoon set to release interim results.
5 things to start your day
1) BoE to hold back on rate rises despite inflation fears: Governor Andrew Bailey is happy to keep rates at rock bottom until the recovery is underway, while job vacancy adverts surge.
2) Workplace testing ramped up to get workers back in the office: Companies are monitoring staff to prevent Covid outbreaks, while testing firm Excalibur Health said enquiries have shot up recently.
3) Sorrell leads attack on audit crackdown: WPP founder fears proposed changes could be “a case of bad timing” that will strangle entrepreneurial endeavor and success.
4) Cameron lobbied for Greensill access to Covid loan scheme: The former prime minister’s personal intervention came on top of 10 virtual meetings between Greensill and the Treasury.
5) Russian gas supply to Germany at risk from US sanctions: Germany is seeking greater gas supplies via Nord Stream 2, which has stoked concern over its potential to boost Russian influence in Europe.
What happened overnight
Asian stock markets followed Wall Street lower on Friday after rising US bond yields dampened buying enthusiasm driven by the Federal Reserve’s promise of low interest rates.
Shanghai, Tokyo, Hong Kong and Sydney retreated.
The Shanghai Composite Index sank 1pc to 3,426.91 and the Nikkei 225 in Tokyo lost 1.2pc to 29,851.37. The Hang Seng in Hong Kong retreated 1.6pc to 28,950.83.
The Kospi in Seoul shed 0.6pc to 3,047.81 Sydney’s S&P-ASX 200 gave up 0.6pc to 6,705.20.
India’s Sensex opened down 0.2pc at 49,133.92. New Zealand and Singapore gained while Bangkok and Jakarta retreated.
Coming up today
Corporate: Wetherspoon (Interim results); ContourGlobal, Sanne (Full year); Investec (Trading statement)
Economics: Public sector net borrowing, GfK consumer confidence (UK); producer prices (Germany)