FTSE falls after Boris Johnson halts further easing of lockdown
‘A hammer blow to business’: Boris’s sudden slamming on of brakes will devastate the UK’s economy and cost more jobs, say experts as FTSE 100 slumps 1.2% by 72 points to 5,918
- British Chambers of Commerce says consumer confidence is damaged again
- FTSE 100 index of Britain’s leading firms falls 72 points or 1.2% to 5,918 today
- Comes after Boris Johnson postponed further easing of lockdown in England
- Chief Medical Officer warns it might not be possible to ease lockdown further
Published: 08:27 EDT, 31 July 2020 | Updated: 11:15 EDT, 31 July 2020
Business leaders today warned that Boris Johnson postponing a further easing of England’s coronavirus lockdown was a ‘hammer blow’ to the economy.
The British Chambers of Commerce said businesses and consumer confidence will be damaged again after the Prime Minister warned the UK ‘cannot be complacent’ amid a rise in the Covid-19’s prevalance in communities.
It comes as the FTSE 100 index of Britain’s leading firms was trading down by 72 points or 1.2 per cent at 5,918 by this afternoon in London, having initially been up at 6,043 this morning.
In a further blow to the economy, England’s Chief Medical Officer Chris Whitty warned that it might not be possible to ease lockdown further.
However, the PM said the Government was sticking to its plan of giving ’employers more discretion over how employees can work safely, whether by continuing to work from home, or attending a Covid-secure workplace’ from next week.
Mr Johnson added: ‘We know that employers have gone to huge lengths to make workplaces safe so that guidance remains unchanged.’
TODAY: The FTSE 100 was trading down by 72 points or 1.2 per cent at 5,918 this afternoon
Meanwhile it was revealed today that face coverings will also become mandatory in indoor settings such as museums and places of worship from August 8.
BCC co-executive director Claire Walker said today: ‘While tackling the public health emergency must be the priority, these announcements – made at short notice – will be a hammer blow to business and consumer confidence at a time when many firms were just starting to get back on their feet.
‘Businesses communities need as much clarity as possible from government if they are to plan ahead and rebuild their operations in the coming months.
‘Ministers must also consider extending support to all firms, many of whom will be forced to close for an even more prolonged period, as well as targeted measures to help businesses placed under localised lockdowns.’
TEN DAYS: The FTSE 100 index has fallen from a level of about 6,300 over the past ten days
UKHospitality called on the Government to provide more business support after the news that measures due to be lifted tomorrow, including small wedding receptions and reopening bowling alleys and casinos, were postponed for at least two weeks.
Its chief executive Kate Nicholls said: ‘We understand that safety is the priority, but it is still devastating news for hospitality businesses.
‘They have spent a lot of time and money, which they can ill afford to lose at the minute, getting ready to reopen. For those people who work in those sectors, the security of their jobs remains uncertain.
‘We now need clear communication to ensure that consumer confidence is not damaged further.
SINCE MARCH: Stock markets have been hammered by the coronavirus pandemic this year
‘We are also going to need further support for those businesses that cannot reopen. Full furlough ends tomorrow and businesses that remain closed are going to need help to protect jobs and keep their operations afloat.’
And Matthew Fell, the Confederation of British Industry’s chief UK policy Director, said: ‘This news will come as a real disappointment for some businesses, but firms know that public safety comes first. Businesses will continue to do what is necessary to avoid an infection spike.
‘Delayed reopening will unfortunately lead to even more financial pressure for some companies. So there may yet be a need for more direct support to shore up cash flow, including extended business rates relief.’
Today’s announcement comes after local lockdown measures were announced in parts of North West England and West Yorkshire, banning people from different households meeting indoors or in gardens following a spike in virus cases.
Stocks across Europe also struggled today amid rapidly-shrinking economic activity, highlighting the ‘devastating impact’ of coronavirus on the global economy.
France’s economy contracted by a record 13.8 per cent in the second quarter, and Spain went into recession after its gross domestic product slumped 18.5 per cent.
The sun rises behind a view of St Paul’s Cathedral and the City of London this morning
Portugal’s economy contracted 14.1 per cent, and Italy’s GDP plunged 12.4 per cent, while the European Union as a whole saw GDP down 11.9 per cent.
Oxford Economics analyst Rosie Colthorpe said: ‘GDP figures released today confirmed the devastating economic impact of the pandemic.
‘Today’s GDP figures all showed historic contractions in output, but that the pandemic has caused such massive economic damage is not a surprise.’
Across the Atlantic, the Commerce Department sent shockwaves across markets with news that the US economy contracted 32.9 per cent between April and June as businesses were shut down to prevent the spread of the killer disease.
That was the worst US quarter since records began in the aftermath of the Second World War, adding to fears about the long-running economic impact of Covid-19.
The news also overshadowed a better-than-forecast read on Chinese factory activity that suggested the country is slowly emerging from the crisis.
Prime Minister Boris Johnson speaks during a media briefing at Downing Street this afternoon
Speaking at a Downing Street press conference today alongside Mr Whitty, Mr Johnson said: ‘As we see these rises around the world, we can’t fool ourselves that we are exempt. We must be willing to react to the first signs of trouble.’
He said that with numbers rising ‘our assessment is that we should squeeze that brake pedal… in order to keep the virus under control’.
The Office for National Statistics said there has been an increase in the number of people testing positive for coronavirus in England.
According to the ONS, between July 20 and 26 there were around 0.78 new Covid-19 infections for every 10,000 people in the community population in England – equal to around 4,200 new cases per day.
This is up from an estimated 2,800 new cases a day in the previous week.
Blackburn with Darwen will be subject to new lockdown rules, as will Burnley, Hyndburn, Pendle, Rossendale, Bradford, Calderdale and Kirklees as well as all of Greater Manchester
Yesterday evening it was announced that people from different households in Greater Manchester, parts of east Lancashire and West Yorkshire would no longer be allowed to meet each other inside their homes or in gardens.
The new rules, which came into effect from midnight, also ban members of two different households from mixing in pubs, restaurants and other hospitality venues, but these businesses will remain open for those visiting individually or from the same household.
Prof Whitty told the briefing said: ‘I think what we’re seeing from the data from ONS and other data is that we have probably reached near the limit or the limits of what we can do in terms of opening up society.
‘So what that means potentially is that if we wish to do more things in the future, we may have to do less of some other things.
‘And these will be difficult trade-offs, some of which will be decisions for government and some of which are for all of us as citizens to do.
‘But we have to be realistic about this. The idea that we can open up everything and keep the virus under control is clearly wrong.’
