Coronavirus latest: Trump demands reopening of 'houses of worship' – Financial Times

Trump tells governors to reopen houses of worship

Demetri Sevastopulo in Washington

Donald Trump said he had directed the Centers for Disease Control and Prevention to deem religious services to be “essential” and threatened to “override” any governors who did not comply with the new federal guidance.

Mr Trump said he was identifying all “houses of worship” – including churches, synagogues and mosques – as places that provided essential services, in his latest effort to reopen the country.

“Some governors have deemed liquor stores and abortion clinics as essential, but have left out churches and other houses of worship,” Mr Trump said in brief comments at the White House. “I’m correcting this injustice and calling houses of worship essential.”

Mr Trump said governors should “do the right thing” and allow churches and other houses of worship to open this weekend as Americans prepare to celebrate the Memorial Day holiday.

“If they don’t do it, I will override the governors,” the US president said without providing any legal justification for the threat.

Mr Trump made the announcement just before a press conference by Kayleigh McEnany, his relatively new press secretary, who later refused to explain under what authority the president had to force governors to open churches.

2,400 lose jobs as UK holiday group goes into administration

Alice Hancock in London

The UK holiday company Specialist Leisure Group, which runs Shearings Holidays and UK Breakaways, has fallen into administration, leaving 2,400 employees redundant.

The group, which specialises in holidays for over 50s, operates 44 brands in the UK. All holidays scheduled by the company have been cancelled leaving customers to claim refunds.

Sam Woodward, a restructuring partner at EY, said SLG had been “significantly impacted by the Covid-19 pandemic as all tours, trips and events have been cancelled and the hotels closed to the public, leading to a significant cash shortfall”.

Despite discussions around a possible sale, no buyer for the Wigan-based company has been found.

Restructuring experts are warning there could be a spate of administrations across the retail and leisure sectors as government support begins to be withdrawn and companies have to take on previously frozen costs.

The impact on the travel sector has been particularly acute owing to the government’s enforced closure of hotels and the collapse in international travel as a result of coronavirus. Tui, the world’s largest tour operator, last week announced that it planned to lay off 8,000 staff, while Airbnb said earlier this month that it planned to cut its headcount by a quarter.

In its latest accounts, SLG said profits had fallen from £2m in 2017 to a loss of £3.4m in 2018 in part owing to the adverse weather that year and the impact of Brexit on consumer confidence.

New York City suburbs could begin gradual reopening next week

Joshua Chaffin in New York

The suburbs around New York City could reopen next week, Governor Andrew Cuomo announced on Friday, as the state that has been hardest hit by coronavirus gradually resumes activity.

Both Long Island and the mid-Hudson Valley region — which includes Westchester County and other areas north of the city — have met most of the seven criteria set out by the governor in order to reopen. What remains for them is to further reduce death rates and finalise their tracing programmes, the governor said, predicting they could complete both tasks this week.

Long Island and Westchester, which boast large numbers of commuters, both suffered high numbers of coronavirus cases, making their approaching reopenings a notable milestone in the state’s recovery.

As New Yorkers prepared for the holiday weekend, Mr Cuomo reported that new coronavirus cases in the state over the last 24 hours were now lower than they were when the crisis first began 83 days ago. Deaths from Covid-19 were 109, a level that has been fairly consistent in recent days.

Spain’s death toll revised higher after new data from Catalonia

Daniel Dombey in Madrid

Spain has reported a coronavirus death toll of below 100 for a sixth successive day, but upward revision of previous totals, largely because of late information from Catalonia, raised some doubts about the robustness of the data.

According to ministry of health figures, 56 people died in the most recent 24-hour period after contracting coronavirus, capping a week in which the death toll has remained around two-month lows.

Fernando Simón, the doctor helping lead Spain’s efforts against the pandemic, hailed the “very favourable” figures, which he said set the country on a path towards reducing the virus to undetectable levels.

As of Monday, all of the country will have begun the process of phasing out the two-month-old lockdown, including Madrid and Barcelona, the two worst-hit cities.

However, Dr Simón highlighted his concern that Catalonia had not provided the government with its complete death toll for “a long period of days”, which has led to an upward revision of earlier figures.

“We are going to pay a lot of attention to what happens because it is not trivial that we are not able to know what is happening in a specific area,” he said. He added that the decision to allow Barcelona to pass to the first phase of the lockdown loosening was based on data handed in at the start of the week.

As of Friday, Spain said that 28,628 people have died after testing positive for coronavirus, 688 more than the official figure for Thursday. In explaining the disparity with the most recent daily death toll of 56, Dr Simón said Catalonia had only now provided data on some patients who had died some time ago.

BP to halve number of top managers

Anjli Raval in London

BP is halving the number of top managers as the coronavirus pandemic accelerates a strategy shift under the new chief executive to transform the UK energy major into a “smaller and nimbler” company.

The pool of managers will be cut from 250 people to around 120, with many who held leadership positions under former chief Bob Dudley leaving the company in the next few months, a person familiar with the change said.

In an email to staff sent on May 14, Bernard Looney said the company was working towards a new operational and leadership structure as it seeks to achieve its ambition to be a net-zero emissions company by 2050.

“Work has not stopped on our plans to reinvent bp,” said Mr Looney in the email, first reported by Reuters. “The spread of Covid-19 has only strengthened our resolve to progress our transformation plans.”

“We expect the reinvented bp to be smaller and nimbler,” he said. “We have already started by removing a layer of management at Tier 1 and 2…We will sadly be saying farewell to many friends and colleagues.”

Mr Looney told the Financial Times last month that while BP did not plan on making any redundancies for the three months from March, “there will be job cuts globally, towards the end of this year” as the company seeks to drive down costs and reorganise the business.

BP has already announced it will cut capital spending to $12bn from $15bn. It is also deferring some exploration and appraisal activities and aims to cut costs by $2.5bn by the end of next year compared with 2019 levels.

It has secured new credit lines and tapped the bond market for almost $7bn. BP has kept its dividend intact and will review its dividend policy quarter by quarter.

London boroughs lobby for funding as outbreak expected to cost £1.8bn this year

Andy Bounds in Huddersfield

Coroanvirus will cost London’s boroughs an estimated £1.8bn this financial year, they said as they lobbied for more government money.

The UK capital’s 32 councils said they had received only £500m from central government, and local services would suffer without a bigger bailout.

As well as £700m in extra spending, particularly in looking after the elderly and disabled, they expect to lose £1.1bn in income as the economy is in lockdown.

Councils have lost money from car parking, leisure centres, commercial property, planning applications and the like, while many people and businesses are not paying their taxes.

Local authorities are responsible for essential services such as waste collection, housing rough sleepers, shielding vulnerable people, assisting public health and channelling support to businesses.

London boroughs received £500m from a £3.2bn government funding package for English local authorities.

WHO warns 80m children at risk from diseases as pandemic disrupts routine vaccinations

Camilla Hodgson

At least 80m young children are at risk from diseases including diphtheria, measles and polio, as Covid-19 upends routine vaccination services, the World Health Organisation warned on Friday.

The Covid-19 pandemic has “substantially” disrupted life-saving immunisation services in at least 68 countries around the world, which is likely to affect about 80m children under the age of one, the organisation said.

In 53 per cent of the 129 countries for which data were available, vaccinations were either suspended or moderately to severely disrupted during March and April, the WHO added.

“Immunisation is one of the most powerful and fundamental disease prevention tools in the history of public health,” said Tedros Adhanom Ghebreyesus, WHO director-general. “Disruption to immunization programmes from the Covid-19 pandemic threatens to unwind decades of progress against vaccine-preventable diseases like measles.”

The organisation made a joint plea with Unicef, Gavi, the Vaccine Alliance, and the Sabin Vaccine Institute for an international effort to support the safe delivery and resumption of vaccinations.

Belgian cafe chain Le Pain Quotidien strikes franchise deal to save US stores

Javier Espinoza in Brussels and Alice Hancock in London

Aurify Brands, which manages franchises for fast food chain Five Guys, has struck a deal to save the US arm of Belgian bakery chain Le Pain Quotidien, according to two people with direct knowledge of the transaction.

The deal, which will see the US business become a franchise by a licensee, should result in a reduction in the number of stores, but it will also lead to a renegotiation of leases, which in some cases represent 20 per cent of sales.

“The corona epidemic is a turning point for the business,” Le Pain Quotidien founder Alain Coumont told the Financial Times. “The US has a profitability problem with rents being way too speculative. But now restaurants are able to renegotiate rents and pay half. It was a necessary thing to do.”

Separately, the Belgian company has also struck a deal with private equity group M80, which will become the majority shareholder for its business in France and Belgium.

The coronavirus crisis has been particularly acute for the restaurant industry as global lockdowns have forced many to shut doors, but it has also thrown into sharp relief the precariousness of the industry which was facing increasing pressure from rising overheads and a glut in supply.

Le Pain Quotidien is actively looking for a buyer for its UK business and it is exploring bids with a deal possible in a couple of weeks, Mr Coumont said. “The whole restaurant industry has survived two world wars, and September 11 and I think we can reboot. But we will have to adapt.”

Free to read: UK faces puppy shortage as demand for lockdown companions soars

The UK is facing a puppy shortage as demand for new pets among lonely workers and harassed families forced to stay at home during the pandemic sends prices for the animals soaring.

Breeders report that demand for new dogs has risen sharply since the start of the lockdown, with prices being quoted at twice the level before the coronavirus outbreak and waiting lists for new puppies increasing fourfold.

Read more on this story here.

Early trial shows Chinese biotech group’s vaccine produces immune response

Hannah Kuchler in New York

An early trial for a Covid-19 vaccine co-developed by Cansino Biologics has found it is safe and effective at producing an immune response in humans, according to a paper published in The Lancet medical journal on Friday.

The study of 108 patients between 18 and 60 found that the vaccine from the Chinese biotech group produced neutralising antibodies and a response in the participant’s T-cells, a type of white blood cell. The vaccine uses a weakened cold virus to deliver the genetic material that codes for the virus’s spike protein, to teach the immune system to recognise and respond to it.

Wei Chen, a professor from the Beijing Institute of Biotechnology, which is co-developing the vaccine and is responsible for the study, said the results were an “important milestone”.

“However, these results should be interpreted cautiously. The challenges in the development of a Covid-19 vaccine are unprecedented, and the ability to trigger these immune responses does not necessarily indicate that the vaccine will protect humans from Covid-19,” he said.

More than 80 per cent of participants had some side effects, such as fever, headache and muscle pain, but there were no serious adverse events reported in the 28 days after injection.

ECB points way to more bond-buying next month

Martin Arnold in Frankfurt

The European Central Bank has intensified investors’ expectations that it will expand its €750bn pandemic stimulus programme of bond purchases next month, after revealing that its top officials had agreed they needed to be ready to do so.

The ECB’s governing council members agreed at their last monetary policy meeting on April 30 that they would “stand ready” to expand its flagship bond-buying response to the pandemic if needed to tackle the economic and financial turmoil, according to the minutes of the meeting published on Friday.

Many investors anticipate the ECB will step up its support for the eurozone economy, which is heading for its worst postwar recession, by adding at least an extra €500bn to its asset-purchase plans at its next monetary policy meeting on June 4.

After its April 30 meeting, the ECB said it was “fully prepared” to increase the size of its recently launched €750bn pandemic emergency purchase programme (PEPP) and to “adjust its composition, by as much as necessary and for as long as needed”.

Bank of England says money markets are ‘more stable’

Matthew Vincent in London

The Bank of England has said money market conditions have become “more stable” since the height of the coronavirus crisis – enabling it to end one of its emergency liquidity measures.

On Friday morning, the central bank said it would discontinue its 3-month Contingent Term Repo Facility as of next week, with the final transactions scheduled to take place on 28 May.

The CTRF is a flexible liquidity insurance tool that allows institutions to borrow central bank reserves in the form of cash by offering other, less liquid assets as collateral.

It is designed to support the functioning of financial markets by providing participating banks with “predictable and reliable sources of liquidity” and “reducing the cost of disruption to critical financial services”.

But the BoE’s regular liquidity facilities will continue to operate as usual – including the weekly six-month Indexed Long-Term Repo (ILTR) and the on-demand Discount Window Facility (DWF).

CTRF operations may also be reintroduced at any point if market conditions worsen, the bank said.

Highest daily rise in coronavirus cases pushes total above 5m

Steve Bernard in London

The worldwide number of confirmed Covid-19 cases surged through 5m yesterday, as a further 106,122 infections were reported, which represents the highest daily increase since the pandemic began.

A further 4,755 people died of the disease caused by coronavirus yesterday. This figure is in line with the weekday average of the past seven days. The global death toll now stands at 326,844.

The US death toll rose by 1,513, bringing the total to 88,895. Pennsylvania and Michigan led the increase with a further 245 and 159 deaths, respectively. The country also recorded 25,118 new infections yesterday, pushing the national total to 1.56m.

Brazil saw a slight fall in the number of new infections yesterday but still recorded its second-highest daily rise with 18,508 cases confirmed. The country is on course to surpass Russia as the second-most infected country over the coming weekend. The highest number of daily fatalities in the country to date were recorded on Thursday as a further 1,188 people lost their lives to the virus, pushing the death toll above 20,000.

Explore data about the pandemic to better understand the disease’s spread and trajectory in the live-updating and customisable version of the FT’s Covid-19 trajectory charts.

Downing Street open to easing lockdown measures earlier in certain regions

Laura Hughes in London

Downing Street has not ruled out easing lockdown measures in London ahead of other parts of the country.

“As we are able to gather more data and have better surveillance of a rate of infection in different parts of the country then we will be able to lift measures quicker in some parts of the country … than in others,” a spokesman said.

“And equally we will be able to put the brakes on in some parts of the country while not having to do so in other parts.”

No 10 also confirmed that anyone deemed to be at “high-risk” of having contracted Covid 19 will be asked to self-isolate for 14 days.

Referring to the test and trace programme launching next month, a spokesman said:

It’s certainly the case that anyone who tests positive for coronavirus will be asked to provide information about anyone they came into close recent contact with and anyone who may be at risk of having caught the virus…We will then swiftly get in touch with anyone considered to be at heightened risk of being exposed to the virus…We will advise them if they need to self-isolate to stop the spread of coronavirus and to protect others from getting the disease.

France to hold second round of local elections on June 28

Victor Mallet in Paris

France will hold the second round of its nationwide municipal elections, delayed for more than three months by the coronavirus pandemic and lockdown, on June 28, prime minister Edouard Philippe announced on Friday.

“Having considered the pros and cons, we think it’s right that democratic life should resume,” he said, while warning that the decision could be reversed if the health situation deteriorated.

The government decided to proceed with the first round on March 15 despite an imminent lockdown, and turnout fell by 20 percentage points from the previous such elections in 2014 to just 45 per cent. The second round, due on March 22, was postponed.

Many contests are fought on purely local issues. In the first round, President Emmanuel Macron’s liberal La République en Marche party, founded only four years ago, performed poorly in its first attempt at the municipal elections, while established parties from the far right to the left clawed back some of the political ground lost since Mr Macron’s rise to power.

In Paris, the incumbent Socialist mayor Anne Hidalgo is in the lead going into the second round of the elections, having won almost 30 per cent of the vote, compared with almost 23 per cent for Rachida Dati of the centre-right Les Républicains and 17 per cent for Mr Macron’s candidate Agnès Buzyn, the former health minister.

Toyota to reopen factories in Europe next week

Andy Bounds in Huddersfield

Toyota is the latest carmaker to reopen plants in Europe as the coronavirus lockdowns across the continent ease.

The Japanese company will resume manufacturing at Derby in the UK and Kolin in the Czech Republic next week.

After restarting its engine factory in Deeside, North Wales, on May 13, Burnaston near Derby will restart activities on May 26. Burnaston, where production has been suspended since March 18, manufactures the Corolla Hatchback and Touring Sports.

The Czech plant, part of a joint venture with PSA of France, makes the Toyota AYGO, and closed on March 19.

Much of the UK car industry is back at work, albeit at reduced output. Jaguar Land Rover has opened one of its three UK plants, at Solihull, since May 18 to supply cars for China. Rolls-Royce, Bentley, Aston Martin and BMW’s Mini — all of which are exported globally — have also restarted some production. Ford’s engine plant in Bridgend reopened this week and PSA restarted its Vauxhall van plant in Luton, though the car plant at Ellesmere Port remains shuttered.

Meanwhile, Nissan has said its giant Sunderland plant will remain closed until at least June.

Spain allows Madrid and Barcelona to begin easing restrictions

Daniel Dombey in Madrid

The Spanish government has finally given the go-ahead for Madrid and Barcelona to begin phasing out the country’s harsh lockdown after a two-week long stand-off with authorities in the capital.

As of Monday, both cities – the regions worst hit by coronavirus – will be able to begin the so-called stage one of the loosening of the lockdown, under which people can meet in groups of up to 10 and travel within their provinces, while bars and restaurants will be allowed to serve clients outdoors.

Since some provinces of Castile-Leon are also moving to stage one, this means all of the country has now begun phasing out the lockdown, a process the government hopes to complete by mid-July at the latest.

Meanwhile, 47 per cent of the country’s population – including people in large parts of Andalusia and Catalonia – will move on Monday to phase two, when people can meet in larger groups, visit family members in care homes and eat inside restaurants.

The status of Madrid was contentious, since the government had twice rejected requests from the region’s authorities to loosen the lockdown in the last two weeks – leading officials in the capital to complain of political bias, warn of the economic cost and begin legal action in the Supreme Court.

The ministry of health insisted that it had to be particularly cautious, because of the Madrid region’s dense population and its links to the rest of the country, and called for improvements in primary care and tracking of coronavirus cases.

Deere forecasts hit to equipment sales amid pandemic

John Deere on Friday warned of a drop in full-year profits and sales of agricultural and industrial equipment as a result of coronavirus lockdowns, but said its quarterly earnings fell less than feared.

The tractor maker expects global agriculture and turf equipment sales to fall between 10 to 15 per cent in fiscal 2020 ending in November from a year ago. Agriculture equipment sales are projected to be down 10 per cent in the US and Canada, while Asian sales are expected to be “down moderately due in large part to the pandemic-related shutdown in India”.

The Moline, Illinois-based company predicted a larger 30 to 40 per cent drop in sales of construction and forestry equipment over the same period. “The outlook reflects market uncertainty as a result of Covid-19 as well as efforts to bring down field inventory levels,” the company said.

The slump in demand is expected to drag on its bottom-line and Deere forecasts net income of between $1.6bn to $2bn, sharply lower than the $3.25bn it reported in 2019.

The grim outlook accompanied a smaller than expected drop in quarterly results. In its fiscal second quarter ending May 3, overall revenues fell 18 per cent from a year ago to $9.25bn, while equipment sales fell 20 per cent to $8.22bn, ahead of Wall Street expectations for $7.69bn. The start of the year is typically strong for Deere as farmers stock up on planting equipment.

The company, which continued to operate throughout the crisis, said keeping operations running “in the face of the pandemic has been a challenge as a result of various regulatory, economic, and other barriers that have affected production facilities and the supply chain”.

Net income fell to $665.8m or $2.11 a share, down from $1.14bn or $3.52 a share in the same quarter a year ago. That topped analysts expectations for earnings of $1.62 a share. Shares in Deere gained 3 per cent in pre-market trade.

Drug taken by Trump linked to higher Covid-19 death risk

Hannah Kuchler in New York

The antimalarial being taken by President Trump has been linked with increased rates of death and heart problems in Covid-19 patients, according to a study published in the prestigious medical journal The Lancet.

The study’s authors recommend that hydroxychloroquine, and the closely related drug chloroquine, should not be used to treat patients outside of clinical trials, as they found it did not benefit people suffering from Covid-19, but may have serious side effects.

Prof Mandeep R. Mehra, lead author of the study and executive director of the Brigham and Women’s Hospital Center for Advanced Heart Disease, said randomised clinical trials would be essential to confirm harms or benefits of the treatments.

“This is the first large scale study to find statistically robust evidence that treatment with chloroquine or hydroxychloroquine does not benefit patients with Covid-19. Instead, our findings suggest it may be associated with an increased risk of serious heart problems and increased risk of death,” he said.

The paper analysed data from almost 15,000 Covid-19 patients, receiving a combination of four drug regimens, and compared it to a control group of 81,000.

Plane carrying more than 90 passengers crashes in Pakistan

Stephanie Findlay in New Delhi

A plane carrying more than 90 passengers in Pakistan has crashed into a residential area near Karachi airport, two weeks after domestic flights reopened following a nationwide lockdown to curb coronavirus infections.

The crash of the A320 Airbus created huge dark plumes of smoke and chaos in a densely packed neighbourhood close to Jinnah International Airport. It is unclear if there are any survivors.

The Pakistan International Airlines flight was arriving from Lahore when it crashed. Footage from the scene showed emergency workers carrying out people on stretchers to ambulances.

Islamabad had restarted limited domestic flights between five major cities last week ahead of the Eid festival marking the end of Ramadan this weekend. The government is easing its lockdown despite rising coronavirus infections.

“Shocked and saddened by the PIA crash,” tweeted prime minister Imran Khan. “Prayers and condolences go to families of the deceased.”

Three scientists report dangerous situations in UK Covid-19 testing labs

Camilla Hodgson in London

Three scientists working in UK Covid-19 testing laboratories have reported dangerous situations that are now being investigated by the Health and Safety Executive.

Two people working at the government’s lighthouse labs – new diagnostic facilities set up to increase coronavirus testing – and a third person in an NHS Trust lab have reported concerns under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations, said Professor Andrew Curran, chief scientific adviser of the HSE.

Giving evidence to the House of Commons’ science and technology committee, he said it was not yet clear whether the people had contracted the virus as part of their work, or whether they had raised concerns about a dangerous situation that could lead to infection.

“Clearly what we don’t want is workers who are doing the testing developing symptoms of Covid-19,” he said. “We shouldn’t forget that those people who are doing the lab testing are still at risk, if not more at risk” since they handle “concentrated” samples of the virus, he added.

India eases travel restrictions after pressure from diaspora

Amy Kazmin in New Delhi

India has relaxed some travel restrictions to permit foreign nationals of Indian origin to enter the country, even though regular international flights remain suspended.

India’s state-owned carrier, Air India, is running repatriation flights to pick up Indian citizens stranded by New Delhi’s ban on incoming international passenger flights on March 22.

But New Delhi has been under pressure from its vast diaspora – many of whom hold foreign passports – to relax travel restrictions so they could fly to India.

New Delhi does not permit dual citizenship. The country has a category called “Overseas Citizens of India”, entitling foreign nationals of Indian origin permanent residency status – akin to the rights of US green card holders. Foreigners married to Indians are also eligible for OCI status.

In an order issued on Friday, New Delhi said OCI cardholders will now be permitted to travel to India if they are children whose parents are Indian citizens; university students whose parents are Indian citizens living in the country; spouses of Indian citizens; and those who have family emergencies.

However, India will continue to bar entry to other foreigners, with no indication of when it intends to resume regular international flights.

India now has one of the world’s fastest-growing epidemics, with 119,000 confirmed cases – 3,602 have died.

What you may have missed

Congressional efforts to provide additional stimulus for the US economy have stalled. The Republican-controlled Senate adjourned for a 10-day recess without considering a $3tn-plus economic relief bill passed with Democratic votes in the House of Representatives.

China’s National People’s Congress has abandoned setting a gross domestic product target for the first time as the country faces its most severe economic downturn since the 1970s in the wake of the coronavirus outbreak.

British retail sales plunged by the most on record in April despite a spike in online sales. It came as the UK’s public finances lurched into the red last month as the coronavirus crisis led to a record increase in the government’s borrowing.

Travellers coming into the UK will face fines of £1,000 if they breach rules requiring them to self-isolate for 14 days after arriving in Britain, under plans expected to be set out on Friday afternoon.

Oxford University researchers have immunised 1,000 people in the first phase of their Covid-19 vaccine trial and have begun recruiting more than 10,000 volunteers for the second stage.

Australia has slashed the estimated cost of its flagship Covid-19 jobkeeper scheme by A$60bn ($39bn) due to a “reporting error” in an embarrassing but hugely positive development for the public finances.

Taking the coronavirus antibody test – free to read

Our correspondent David Crow has taken a coronavirus antibody test. He writes about the experience here in a free-to-read article.

Some excerpts:

My own test came back negative. ‘I’m sorry this isn’t the result you wanted,’ my sympathetic doctor told me over the phone.

I had not developed the antibodies, I had never had the virus. Case closed. Well, not quite.

It is possible that I had a mild case of coronavirus that was dispatched by my innate immune system before the adaptive system had to kick in. Cold comfort, however, because I still wouldn’t have antibodies to protect me against future infection. 

Given all the uncertainty, it is perhaps unsurprising that many public-health experts have greeted the arrival of antibody tests with scepticism.

Schools in England should not reopen on June 1, warn scientists

Camilla Hodgson in London

Schools in England should not reopen on June 1 because there is “no clear evidence” that it is safe for them to do so, an independent group of scientists warned on Friday.

Local authorities must be certain of low community infection rates and have the ability to track and trace new cases of coronavirus before schools can reopen, according to a report by the group of researchers known as the “independent Sage” committee.

“It is clear from the evidence we have collected that June 1 is simply too early to go back. By going ahead with this dangerous decision, the government is further risking the health of our communities and the likelihood of a second spike,” said David King, the group’s chair and the government’s former chief scientific adviser.

More on this story here.

UK government borrowing and debt surges

Chris Giles in London

The UK’s public finances lurched into the red in April as the coronavirus crisis deepened, leading to record increases in the government’s borrowing and a rise in the ratio of its debt to national income to the highest level in 57 years.

With economic activity likely to have dropped by about 30 per cent and ministers removing controls on public spending, the emerging official figures suggest the hit to the nation’s finances was worse than the Office for Budget Responsibility, the fiscal watchdog, expected.

Although it is early in the crisis, the figures will reinforce ministers’ desire to address the pandemic so they can restart much of the economy and begin to repair a huge hole in the government’s books.

Read the full story here

Russia reports record number of daily deaths

Henry Foy in Moscow

Russia reported a new record daily death toll from coronavirus on Friday as the number of new cases remained high.

The government said 150 people had died of Covid-19 overnight, to take its total death toll to 3,249. Total confirmed cases rose by almost 9,000 people to 326,448, the world’s second highest total after the US.

The country’s death rate — of roughly 1 death per 100 infections — is more than six times lower than the global average death rate. Russia has defended its statistics, and said that many Covid-19 patients who died were killed by other health problems.

Late on Thursday, state news agencies reported Ramzan Kadyrov, the strongman ruler of Chechnya in southern Russia, had been hospitalised after reportedly contracting coronavirus.

Oxford university begins immunising volunteers for vaccine trial

Clive Cookson in London

Oxford university researchers have immunised 1,000 people in the first phase of their Covid-19 vaccine trial and have begun recruiting more than 10,000 volunteers for the second stage.

They are looking for people in three age groups: over 70s, 56-69 and children aged five to 12.

Because of the urgency in developing a vaccine, the Oxford team is overlapping clinical trial phases that would normally be carried out sequentially. So phase two is beginning before the results from phase one have been analysed and released.

The only results released so far show that the ChAdOx1 vaccine reduced symptoms of Covid-19 in rhesus macaques but did not completely prevent infection.

AstraZeneca, the drugmaker that is Oxford’s main manufacturing partner, said yesterday it had secured orders for at least 400m doses of the vaccine: 100m for the UK and 300m for the US, which is investing $1bn in the project through the federal Biomedical Advanced Research and Development Authority.

‘Reporting error’ helps Canberra slash $39bn from benefit programme

Jamie Smyth in Sydney

The Australian government has slashed the estimated costs of its flagship Covid-19 “Jobkeeper” programme by A$60bn ($39bn) due to a “reporting error” in a slightly embarrassing but very positive development for the nation’s finances.

Josh Frydenberg, Australia’s treasurer, said on Friday the treasury now expected businesses to access government payments on behalf of 3.5m employees, rather than the 6.5m employees it had been forecasting up until this week. The total cost of the programme, which covers the wages of furloughed employees, is now estimated at A$70bn, rather than the A$130bn previously forecast.

The huge miscalculation in the number of employees covered by the scheme relates in part to a reporting error by about 1,000 companies, which filled in application forms incorrectly. Australia’s success in suppressing the spread of the virus has also reduced social distancing restrictions much faster than initially anticipated by the government, reducing the number of staff reliant on government support.

“It is welcome news that the impact on the public purse from the programme will not be as great as initially estimated,” said Mr Frydenberg, pictured, who noted the reporting error held no consequence for any Jobkeeper payments already made.

Opposition parties seized on the reporting error by the government, which has resisted repeated calls to allow casual employees or those staff working for companies owned by state-owned enterprises, to access public funding.

The opposition Labor party described the reporting blunder by the treasury as “another day, another shambles” from the government and called on Canberra to immediately expand its Jobkeeper programme.

“For weeks they’ve been telling casuals and others that the programme was full when in reality they were 3m workers short,” said Jim Chalmers, Labor’s treasury spokesman.

IMF strikes $5bn loan deal with Ukraine

Roman Olearchyk in Kyiv

The IMF has reached a $5bn loan deal with Ukraine to shore up public finances during the pandemic and a deep recession.

In an overnight statement, IMF mission chief for Ukraine Ivanna Vladkova Hollar said the 18-month stand-by arrangement “aims to provide balance of payments and budget support to help the authorities address the effects of the Covid-19 shock, while consolidating achievements to date, and moving forward on important structural reforms to reduce key vulnerabilities”.

The loan is subject to approval by the fund’s executive board.

The development came hours after Volodymyr Zelensky, Ukraine’s president, signed into law bank sector legislation, as required by the IMF, which goes against the interests of Igor Kolomoisky, an oligarch who backed his presidential campaign last year.

Mr Kolomoisky has challenged the 2016 nationalisation of PrivatBank, which he and partners owned before Ukraine’s central bank found a $5.5bn hole in its balance sheet.

The bank law is designed to prevent previous owners of almost 100 banks, which were liquidated or nationalised under a banking sector clean-up, from reclaiming ownership or obtaining compensation through Ukraine’s unreformed court system.

Agreement with the IMF, whose loans have stabilized Kyiv since Russia’s 2014 annexation of Crimea and orchestration of a separatist war in eastern regions, stands to unlock billions of dollars of additional funding from the EU, World Bank and other international financial institutions.

Travellers to be fined £1,000 for breaching UK quarantine rules

Jim Pickard in London

Travellers coming into the UK will face fines of £1,000 if they refuse to self-isolate for 14 days after arriving in Britain, under plans expected to be set out on Friday afternoon.

Those arriving in the UK – whether foreign nationals or British citizens – will be told to share their contact details with the authorities. There will then be spot checks in homes by health officials and police with those breaching the rules facing fines of £1,000 under the Health Protection (Coronavirus) Regulations 2020, which were published in March.

Priti Patel, home secretary, will unveil the full details of the new quarantine proposal at a press conference after weeks of wrangling between different departments.

Some critics have questioned why the quarantine is only being brought in now, two months into the crisis, just as some MPs want the lockdown to be eased. Ms Patel will say that the measures will be reviewed every three weeks to ensure they remain in line with the best scientific advice.

The Home Office is set to exempt some crucial professions from the quarantine including road hauliers, medical officials and certain security personnel. Those coming in and out from Ireland will be unaffected.

New guidance will also be given to airports to ensure safe practices such as social distancing between staff and passengers, regular cleaning and appropriate use of PPE.

Treasury and FCA to extend mortgage payment holiday for three months

Jim Pickard in London

Homeowners struggling to pay their mortgage due to coronavirus will be able to extend their mortgage payment holiday for a further three months, or start making reduced payments, in proposals published today by the Treasury and Financial Conduct Authority.

The availability of a three-month mortgage holiday was first announced in March as part of an unprecedented package of support for individuals, businesses and the economy.

Over 1.8m mortgage payment holidays were taken up, and the first of these will be coming to an end in June.

The financial regulator said homeowners that need help to pay off their mortgage should be in contact with their lender to discuss a way forward. Where consumers can afford to re-start mortgage payments, it is in their best interest to do so, it added.

However, if people are still struggling and need help, a full extension of the mortgage holiday for a further three months will be one of the options open to them.

UK retail sales suffer record fall in April

Valentina Romei in London

British retail sales plunged by the most on record in April despite a spike in online sales as people stayed indoors and non-essential shops were shut.

The volume of UK retail sales fell 18.1 per cent in April compared with the previous month, according to data from the Office for National Statistics. This is by far the largest drop since records began in 1996 and dwarfs the 5.2 per cent fall in March, itself a record low.

The plunge is larger than the 16 per cent contraction forecast by economists polled by Reuters.

“The effects of Covid-19 have contributed to a record monthly fall in retail sales of nearly a fifth. Fuel and clothing sales fell significantly while spending on food also dropped after the surge from the panic buying seen last month,” said Jonathan Athow of the ONS. “Online shopping has again surged as people purchased goods from their homes.”

Compared with the same month last year, sales were down 22.6 per cent.

Online sales rose 18 per cent in April compared with the previous month. The proportion spent online soared to the highest on record in April 2020, at 30.7 per cent. In April last year, the proportion was 19 per cent.

Alcohol stores also reported a 2.3 per cent growth.

Sales of most other items tumbled, including a 50.2 per cent fall in clothing in April compared with the previous month, following a 34.9 per cent drop in March.
Sales in fuel stores declined by a record 52 per cent.

Separately, the research company GfK said British consumer confidence fell one point to minus 34 in May, the lowest reading since 2009, despite the easing of the lockdown.

“Consumer confidence remains battered and bruised despite efforts at loosening the Covid-19 restrictions,” said Joe Staton, GfK’s client strategy director. “With unemployment claims rising by the highest rate on record and warnings of a severe recession and possible tax hikes, the damage done by the coronavirus pandemic to the UK economic landscape has been laid bare.”

India announces unexpected rate cut

Stephanie Findlay in New Delhi

The Reserve Bank of India has cut its benchmark interest rate from 4.4 per cent to 4 per cent and extended a loan moratorium by another three months as it seeks to address a collapse in demand caused by the coronavirus pandemic.

Governor Shaktikanta Das said at an unscheduled monetary policy meeting on Friday that India’s outlook was gloomy, projecting that gross domestic product growth over the next year would remain in negative territory. “Investment demand has virtually been halted,” said Mr Das.

He said the inflation outlook had become “complicated” by the partial release of information from the consumer price index by the national statistics organisation which was “obscuring” a comprehensive assessment of prices.

India’s banks will defer loan payments for another three months until the end of August, offering businesses more time to recover from the shock of the coronavirus pandemic.

“Whatever maximum measures we are able to take,the RBI is at the forefront and is taking the measures,” said Mr Das. “We will continue to be resilient and we will take whatever measures are necessary to meet the Covid-related challenges ahead of us.”

Ethiopia steps in to deliver respirators to Latin Americans

Andres Schipani in São Paulo and David Pilling in London

Ethiopia has emerged as a key transit hub for the shipment of much sought-after medical equipment to Latin America, as poorer countries complain they are being muscled out of the market by richer nations and their cargo seized during refuelling stops in Europe and the US.

Authorities in the impoverished north-eastern Brazilian state of Maranhão switched to Ethiopia after they saw two cargoes of respirators purchased from China seized during refuelling stops in Europe and the US. “There are market forces and government pressures at play, competition is fierce [to get medical equipment],” said Flávio Dino, the governor of Maranhão. After such “frustrations”, he added, he decided to bring equipment through Addis Ababa. Only then, he said, “deu certo” — it went right.

“We said, ‘OK guys, you are in need of assistance, we are here in good times and bad times and we are going to support you’,” said Girum Abebe, director for Latin America at Ethiopian Airlines, the state-run airline.

Ethiopian Airlines, the main foreign currency earner of the east African country and considered Africa’s best-run carrier, has expanded rapidly in recent years. Before Covid, it was flying to 130 international destinations, transforming Addis Ababa into a transport hub alongside cities such as Johannesburg and Nairobi. The airline, desperate to keep ticking over during the crisis, has offered cargo customers deep discounts.

Read more here

Coronavirus pandemic exposes lack of social safety nets in Asia: UNDP

John Reed in Bangkok

The Covid-19 pandemic has created “a perfect storm of crises across Asia” and exposed regional economies’ lack of social safety nets, leaving hundreds of millions of people at risk of hardship and increased poverty, according to the UN Development Programme.

“Underdeveloped and weak social security systems have limited the capacity of governments across Asia to respond adequately to growing needs brought about by Covid-19,” the UNDP said in a forthcoming report on how the crisis might be addressed through social protection measures, seen by the Financial Times.

Low and middle-income Asian countries have responded to Covid-19 by expanding existing social security programmes or introducing new ones. However, these were “still too small to constitute effective economic stimulus packages”, the UNDP said, with fiscal responses ranging in size between just 0.02 per cent and 0.8 per cent of GDP.

“This report says you’ve got to bite the bullet and put more of your fiscal stimulus package into taking care of your people and not just taking care of your big companies.,” Kanni Wignaraja, UN assistant secretary-general and head of the UNDP’s regional bureau for Asia-Pacific, said.

The UNDP is recommending that developing countries offer universal basic income grants to prevent people from falling back into poverty.

“You can see poverty rising like we haven’t seen it before, mainly due to food insecurity,” Ms Wignaraja said. “You can’t treat that with just a one-off emergency cash transfer.”

The World Bank has estimated that the impact of Covid-19 will push 40m to 60m people into poverty, with sub-Saharan Africa and south Asia the hardest hit regions.

Bank of Japan to boost lending to SMEs

Robin Harding in Tokyo

The Bank of Japan has launched a new programme to boost lending to small and medium-sized companies at an exceptional board meeting on Friday that left monetary policy unchanged.

Under the new Covid-19 programme, the BoJ will provide banks with zero interest loans for a term of up to one year. The maximum a bank can borrow will depend on the amount of interest-free and other loans it has made to SMEs under the government’s emergency economic programme.

The new measures come on top of programmes to buy corporate debt and accept the private debt of larger companies as collateral for BoJ lending. It will mean funds are effectively free to banks making emergency loans to companies struggling because of Covid-19.

However, banks will still have to consider their credit risk, and companies may be reluctant to borrow if they can see no prospect of repaying the loans.

Unions warn Virgin Australia deal could fail without government stake

Jamie Smyth in Sydney

Australian trade unions have warned the planned sale of Virgin Australia could fall apart unless the government agrees to buy a stake in the troubled airline to provide some certainty to four private equity suitors about its future.

The Transport Workers Union said on Friday Canberra should follow the example of the German government, which is finalising a €9bn Covid-19 rescue package that would see it take a 25 per cent stake in Lufthansa.

The appeal follows a warning from the administrator that Virgin could run out of cash if the sale process extends beyond the end of June and that there could be a need for some additional “interim funding” before any new owner can take control.

“So far the administration has popped up some good bids but without federal government certainty here those bidders may well walk away, one already has,” said Michael Kaine, Transport Workers Union national secretary, with reference to a decision by Canadian investor Brookfield to withdraw — at least temporarily — from the bidding process.

Mr Kaine said Australia was one of the most dependent nations in the world on air travel, but unlike many international governments Canberra’s decision to only play an observer role in the administration of Virgin raised the risks of the process failing.

Last month Virgin’s board of directors placed the airline into administration with debts of almost A$7bn ($4.6bn), as Covid-19 travel restrictions grounded the majority of flights across Australia.

Four private equity suitors have been shortlisted by administrators Deloitte to submit bids for the airline — BGH Capital, Indigo Partners, Bain Capital and Cyrus Capital Partners. But people close to the bidding process have warned of complexities due to the difficulty in valuing an airline without knowing when international, or even statewide, travel in Australia can resume.

Canberra has appointed an observer to the administration but has so far balked at providing any cash.

Mexico reports record highest single-day increase in cases

Jude Webber in Mexico City

Mexico recorded its highest daily rise in officially confirmed coronavirus cases, with 2,973 new infections bringing the total to 59,567.

The new tally was a sharp increase on the 2,248 cases recorded on Wednesday.

Confirmed deaths rose to 6,510, an increase of 420 from Wednesday’s count, which had marked the highest daily increase in deaths to date with 424 new fatalities.

Hugo López-Gatell, the health undersecretary who is Mexico’s coronavirus tsar, acknowledged there remained “a quantity of cases to be determined” but said those had only light Covid-19 symptoms.

Mexico, which began opening up its economy this week, will implement a traffic-light system for a gradual return to the “new normal” from June 1 based on the spread of the virus in various parts of the country. But authorities have been accused of grossly underestimating the true case numbers and conducting the lowest level of testing in the OECD.

Japan moves back into deflation as coronavirus shock hits

Robin Harding in Tokyo

Core consumer prices in Japan fell by 0.2 per cent in April compared with a year earlier as the coronavirus shock pushed the country back into deflation.

Falling prices for energy, travel and tourism, as well as government cuts to tuition fees, all weighed on the consumer price index. The core index excludes volatile fresh food prices.
Including them, the headline index was up by 0.1 per cent compared with a year earlier.

The economic impact of coronavirus has reversed any progress made by the Bank of Japan during seven years of monetary stimulus aimed at getting inflation to a target of 2 per cent.

“We look for inflation to remain negative with the decline in energy prices stemming from the drop in oil, a widening negative output gap under economic recession and falling hotel charges,” wrote Kazuma Maeda, an economist at Barclays in Tokyo

Hong Kong stocks tumble on Chinese national security announcement

Hudson Lockett in Hong Kong

Hong Kong stocks tumbled on Friday after the Chinese government said it planned to impose national security legislation on the city. The market turmoil is the latest sign of how simmering geopolitical tensions are adding to concerns for investors already rattled by the coronavirus pandemic.

In early trading, the city’s Hang Seng index fell 3.4 per cent amid rising fears that the show of legal force could reignite mass protests in the Asian financial hub and worsen tensions between Washington and Beijing, which have intensified after US accusations that China was responsible for the pandemic. China’s CSI 300 stock index slipped 0.8 per cent.

The official agenda of China’s National People’s Congress, released on Thursday, included a proposal to “improve” national security protections in Hong Kong but did not give details of the planned changes.

The falls followed Wall Street’s decline overnight as President Donald Trump claimed China was behind a disinformation and propaganda attack on the US and Europe. The S&P 500 closed down 0.8 per cent and the technology-dominated Nasdaq was 1.0 per cent lower.

China drops GDP target for first time in history

Don Weinland in Beijing

China’s National People’s Congress has not set a gross domestic product target for the first time as the country faces its most severe economic downturn since the 1970s in the wake of the coronavirus outbreak.

The growth target has in the past been included in the work report presented at the political event, which was delayed by almost three months this year due to the outbreak. The work report this year does not contain the target.

While many experts do not trust China’s reported economic figures, the target often provides guidance on the central government’s confidence in underlying economic conditions.

Growth in the first quarter of the year contracted by 6.8 per cent after China’s economy ground to a halt during the coronavirus outbreak. Many economists’ outlooks for 2020 are less than half of the rate of growth posted last year.

China reports 4 new coronavirus cases, no new deaths

Health authorities in China reported four new coronavirus cases to the end of Thursday, with half the new infections found in a province that is battling a recent outbreak of Covid-19.

Two of the new cases were found in people returning from overseas while the remaining cases were discovered in Jilin province, in the country’s north-east. Jilin has sacked officials and moved to reimpose lockdown measures following an outbreak that was discovered at the beginning of May.

The new cases were close contacts of people already found to be infected with coronavirus, according to authorities in Jilin.

China has now reported 82,971 cases of Covid-19 and 4,634 deaths linked to the virus.

There were 35 people found to be infected with coronavirus on Thursday who did not show any symptoms.

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Facebook chief executive Mark Zuckerberg announced plans to shift towards a more remote workforce.

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Richard Clarida, vice-chair of the Federal Reserve pointed to the possible need for “additional support” by the US central bank to help markets and businesses cope with the recession.

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New York Governor Andrew Cuomo left open the possibility that the state’s schools would remain closed in September, citing the risk of a coronavirus-related inflammatory syndrome that has recently been discovered in children.

Nissan is to resume car production at Sunderland on June 8, the company said on Thursday.

Boris Johnson has reversed UK government policy and announced that migrant care workers and NHS workers will be exempt from a mandatory immigration health surcharge for use of the NHS.

Asia-Pacific equities edge lower as US-China tensions escalate

Asia-Pacific equities were broadly lower on Friday after US stocks fell following escalation in US-China tensions and as Beijing moved to tighten its control on Hong Kong.

In Japan, the Topix was down 0.1 per cent, in South Korea the Kospi was down 0.2 per cent and Australia’s S&P/ASX 200 was down 0.1 per cent. Futures for Hong Kong’s Hang Seng index were down 1.6 per cent.

Overnight on Wall Street, the S&P 500 ended down 0.8 per cent after President Donald Trump claimed China was behind a disinformation attack on the US and Europe. Beijing’s move to imposed national security legislation on Hong Kong was seen as likely to to add to tensions between the US and China.

President Donald Trump said that if Beijing passed the law then the US would “address that issue very strongly”.

Investors are also awaiting details of any infrastructure-led stimulus measures to prop up the economy following the Covid-19 outbreak from China’s National People’s Congress, the rubber-stamp parliament, on Friday.

US death toll approaches 89,000

Peter Wells in New York

The US coronavirus death rate hit its highest daily level in a week, pushing the total number of fatalities nationwide since the crisis began to just shy of 89,000.

A further 1,513 people died over the past 24 hours, according to data compiled on Thursday by the Covid Tracking Project, from 1,402 on Wednesday.

It was the biggest increase since May 14, although daily rates this week have generally been lower than levels seen in the first half of May indicating that the pandemic continues to slow in the US.

Thursday’s increase was led by Pennsylvania and Michigan, the fifth- and fourth-hardest hit states overall, which had a further 245 and 159 deaths, respectively, over the past day. New York, with 107 deaths, had the third-highest daily increase, and only one more than California.

Since the pandemic began in the US, 88,985 people have died from coronavirus, exceeding even the number of confirmed cases in China, where the pandemic originated.

Trump refuses to wear mask during tour of Ford’s mask factory

Peter Wells in New York

Donald Trump on Thursday chose not to wear a mask while taking a tour of Ford’s mask factory, despite being surrounded by Ford executives wearing masks as part of company policy to prevent the spread of coronavirus.

The president fronted reporters maskless this afternoon while touring the Ford components plant in Michigan that began producing face masks during the pandemic.

Asked about not wearing a mask, the president told reporters he wore one in another area of the Rowansville factory “where they preferred it”.

Responding to the follow-up question of why he would not wear one in front of the cameras, Mr Trump said he “didn’t want to give the press the pleasure of seeing it” and that the decision of Ford management to wear face coverings was “their choice”. The president did, at one point, hold a plastic face shield over his own face.

Ford issued a statement, saying executive chairman “Bill Ford encouraged President Trump to wear a mask when he arrived” and that he wore a mask “during a private viewing” of three Ford GT sports cars. “The President later removed the mask for the remainder of the visit,” the company said.

Asked whether the company had given the okay to Mr Trump not wearing a mask, Ford chief executive Jim Hackett said: “It’s his choice.”

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