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Testing times: How one firm is trying to solve the return to work riddle

Mon, 03/08/2021 - 23:00

With light at the end of the Covid-19 tunnel, thoughts are increasingly turning to what the ‘new normal’ might look like. Part of that may well include testing. Stuart MacLennan, CEO of testing firm Circular1 Health, tells City A.M. how they’ve operated testing sites at major manufacturing and military sites since the beginning of the pandemic.

For all the talk of vaccines and herd immunity, it is becoming increasingly clear that monitoring Covid-19 case rates will remain a part of our lives for some time to come. 

So the question is – how to do it?

The debate over mass testing took one step forward and two steps back in the Autumn, and the sad truth is that confusion over what constitutes a reliable way of testing large numbers of people in a short space of time continues to reign. 

But if we are to win the fight, we need to go on the offensive, to cut through the confusion and identify the most reliable methods of testing that will support the economic and financial turnaround.

The somewhat disastrous trial in Liverpool, using lateral flow tests, did little to build confidence in the system. Some 60 per cent of asymptomatic people who actually had the virus went undetected.

This issue of false negatives, and similarly important false positives, is an ongoing concern, but there is no doubt that part of the problem rests with how the tests were conducted.

Read more: Premier League tester to launch Covid testing ‘pods’ at UK offices

While lateral flow testing is quick and easy to perform, and has a very high specificity, these advantages are quickly swept away if the results cannot be relied upon or a mutation of the virus leads to an even greater number of erroneous results.

How we have been addressing the issue in the immediate term is through the development of a different system that combines two methods of testing – LAMP (Loop Mediated Isothermal Amplification) and PCR (Polymerase Chain Reaction) – and conducting both tests in series. 

LAMP/PCR tests provide a very high degree of accuracy (more than 99 per cent). 

The risk of a false positive is extremely rare (1 in 20,000 tests compared with 1 in 200 with lateral flow) and false negatives rarer still. 

Only 0.9 per cent of LAMP/PCR tests will miss the virus compared to anything up to 43 per cent of tests using Lateral Flow.

Through these tests, developed by a British manufacturer, employers have been able to bring their employees safely back to work. 

In certain businesses like the nuclear decommissioning site in Sellafield and others that are of national importance, we have helped them to remain open and operate in a COVID-free environment. At other sites too, like BAE Systems, we have supported the safe return of 5,000 employees to its submarine business in Barrow, delivering a much higher level of confidence to employers and employees alike, as well as helping support the local economy and supply chain.

To put the scale of the challenge into context, we have to date delivered more than 250,000 tests and now have the capacity to deliver more than 100,000 tests every day, anywhere in the country.

Fighting our way out of this pandemic and moving forward into the sunlit uplands means not only having a multi-faceted approach, and offering the broadest range of solutions (including Lateral Flow within a quality assurance framework) but also being multi-faceted in our thinking, and not allowing potential barriers to stand in our way. If sending tests off-site to a laboratory is causing delays, then creating mobile laboratories and having them in situ is the answer, as we have proven. It is a route we are continuing to deploy with multiple customers. 

Read more: Service sector confidence hits 12-month high on UK vaccine rollout

For it is not just in those mission critical areas that we can see mass testing supporting us through the pandemic and beyond. The same theory is also now being applied in the leisure industry, for example, to create safe ‘bubbles’ of passengers and staff to re-invigorate the Cruise sector, or re-open residential holiday and activity centres. 

Given the UK tourism industry is estimated to be valued at £106 billion and support some 3.8 million jobs, the economic and financial imperative is clear for all to see. Recovering even a small percentage of that volume will deliver real economic value, and send a positive message to other industries that a recovery is possible.

This new model known as ‘Test to Operate’ (T2O) – an active combination of testing and screening – will help us take the offensive and get the country open again. The financial support measures introduced by Government – thought to have totalled £280 billion in 2020 – cannot go on indefinitely, and it is incumbent upon businesses like ours to find new ways of helping businesses get back to work and fuel the economic recovery. Confidence is key, which means that a robust testing regime, and the ability to create safe havens for returning employees, will be essential to maintaining the dynamic of the City, and supporting the wider financial and social ecosystem.

We also need to be thinking beyond COVID-19, for example in the wider impact it is having on people’s mental health and wellbeing, and the economic costs this also has in terms of absenteeism in the workplace. Fighting our way through the pandemic means supporting people on the other side, monitoring and tracking trends in their physical and mental state. 

It also means acting responsibly in terms of the environment and seeking ways of limiting the impact that testing products and waste materials will inevitably have on the environment.

Read more: Editorial: Long-term growth worryingly absent in a tax-hiking, business-battering Budget

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Categories: City of London

Raab demands release of Myanmar leader Aung San Suu Kyi as coup rolls on

Mon, 03/08/2021 - 20:21

The foreign secretary joined Myanmar’s ambassador to the UK, Kyaw Zwar Minn in urging the release of Aung San Suu Kyi after a military coup ensued the country’s election.

It comes after the military deposed the State-counsellor Suu Kyi on 1 February, declared the November election invalid, and gave power to Commander-in-Chief of Defence Services Min Aung Hlaing.

In a statement, Dominic Raab praised Minn for speaking out against the arrest of Myanmar’s President and condemning the military’s violence.

“I commend the courage and patriotism of Myanmar ambassador Kyaw Zwar Minn in calling for Aung Sung Suu Kyi and President U Win Myint to be released and for the results of the 2020 election to be respected.

“The military regime must end their brutal crackdown, and restore democracy.”

Read more: Saturday Read: Investors are fleeing Myanmar as coup grows more deadly

Earlier today I spoke to Myanmar Ambassador Kyaw Zwar Minn. I praised his courage and patriotism in standing up for what is right. We join his call for the immediate release of Aung San Suu Kyi and President Win Myint, and for a return to democratic rule pic.twitter.com/B7PGhspwL9

— Dominic Raab (@DominicRaab) March 8, 2021

Both Raab and his Myanmar counterpart agreed on a set of positions regarding the crisis. In a statement both parties recognised the need to follow a diplomatic path for solving the crisis, adding that it could only be rectified at the negotiation table.

Additionally, it was also agreed that the Myanmar Embassy in London would remain open for the UK Government and Myanmar to fulfil diplomatic functions on a daily basis.

As law and orderdeteriorated in Myanmar, the UK slapped sanctions on the Asian nation o n18 February. These include the freezing of assets and travel bans against three members of the Burmese military regime.

Read more: Two more killed in Myanmar as protests rumble on

The Foreign Office is advising any British citizens in Myanmar to stay at home as a curfew has been introduced between 8pm and 4am. There are also reports of the internet being shut down and disruptions to phone lines.

As the military has suspended commercial flights until 31 May, the FCO is looking into reparation flights for any stranded brits.

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Categories: City of London

Dutch to lift ban on flights and ferries from UK tomorrow

Mon, 03/08/2021 - 20:12

The Dutch government will tomorrow lift a travel ban on commercial flights and passenger ferries from the UK, local media reported.

As with many European countries, the Netherlands banned incoming travel from Britain back in January in a bid to prevent the spread of a new, more infectious variant of Covid-19.

Read more: More than a third of the UK has had first dose of Covid-19 vaccine

However, with that variant now the dominant strain in the Netherlands, the ban no longer has a purpose, the Dutch Cabinet has reportedly decided.

In reality, the lifting of the ban will have little impact on travel between the two nations.

Boris Johnson has earmarked 17 May as the earliest date from which international travel for leisure purposes can begin for the UK.

And despite the continued success of the country’s vaccine rollout, Johnson today insisted that the dates set out in his “roadmap” for lifting restrictions would not change.

Before the Open: Get the jump on the markets with our early morning newsletter

As of today, more than 22m people in the UK have received a first dose of a coronavirus vaccine, far outstripping most European countries.

But the news is yet another sign that restrictions are slowly being relaxed across the continent.

Last week the Cypriot government said that it would open to all British citizens who had been vaccinated against Covid-19 from 1 May.

Along with fellow Mediterranean nation Greece, which also depends on tourism, Cyprus has been pushing for a loosening of travel rules so as not to lose out on another summer season.

Read more: North Sea firm NEO Energy snaps up Zennor Petroleum for $625m

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Categories: City of London

More than a third of the UK has had first dose of Covid-19 vaccine

Mon, 03/08/2021 - 20:06

More than one third of the UK population has received their first dose of a Covid vaccine.

The Department of Health announced more than 22m people have got their first jab. The succesful rollout of the vaccine means that people aged 50 to 59 will start receiving their first dose of the vaccine today, which includes Boris Johnson among others.

So far, more than one million people have also received their second dose of the Covid-19 vaccine.

The vaccine progress has taken a toll on Covid-19 deaths, which dropped to their lowest total in five months.

Read more: Service sector confidence hits 12-month high on UK vaccine rollout

The UK’s Covid-19 daily death toll fell to only 65 yesterday, which is down 34 per cent since last Monday and is the lowest since October 12 when 50 people died.

This brings the total deaths within 28 days of a positive Covid-19 test to 124,566.

Data from the Department of Health also showed that 4,712 people have tested positive for Covid-19 on Monday, up slightly from 3,751 cases last Friday.

The vaccine rollout has increased service sector confidence, which has risen to a 12-month high, according to data compiled by accounting firm BDO.

“The speed of the vaccine rollout across the UK has given businesses a much-needed shot of relief,” said Kaley Crossthwaite, partner at BDO.

“With business lifelines extended in the shape of the prolonged furlough scheme, and an extra dose of support provided to hospitality via extensions in business rates relief and the VAT cut to five per cent, there is reason to believe this optimism can be sustained as we gradually emerge from the depths of lockdown.”

However, OBR committee member Sir Charlie Bean told MPs today that of the £180bn in excess savings Britons have accumulated during Covid-19, only “a relatively small fraction will be leaking into consumer spending”.

Read more: Squeamish ministers must include casual sex exemption in lockdown roadmap

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Categories: City of London

Boris Johnson rules out bringing forward reopening timetable

Mon, 03/08/2021 - 16:40

Boris Johnson has stressed the need for caution and has ruled out bringing the unlocking timetable forward despite the better-than-expected vaccine rollout.

In a Downing Street conference the Prime Minister stressed the need for a “cautious and irreversible approach”. 

“People would rather trade some urgency and haste in favour of certainty and security about the roadmap dates we’ve set out,” he said. 

Read more: Greensill files for administration putting thousands of steel jobs at risk

On the first day children returned to school Johnson said the risk of rise in infections is “inevitable.” 

“There is a big budget of risk involved in opening schools today in the way that we are – that’s just inevitable,” Johnson said, warning we must be “very, very careful” in the next steps of easing restrictions. 

He added that immunity has “bedded in” for millions of people who have received their vaccine which means it is safe to continue with reopening plans. 

Read more: Fries and Prejudice: Burger King accused of using ‘sexism as clickbait’ in latest tweet

The key factor will be the impact it has on hospitalisations up and down the country which deputy chief medical officer Dr Jenny Harries said would be “considerably less”.

In the past 24 hours 688 patients have been admitted to hospital, bringing the total to 10,898 with 1,542 patients on ventilators.

It comes as figures show more than 22m people have received their first dose of the Covid-19 vaccine, while deaths have fallen to their lowest level since October. 

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Categories: City of London

Women's Day: Female leaders speak out as Covid threatens glass ceiling

Mon, 03/08/2021 - 11:07

As the world comes together to celebrate International Women’s Day, the fight for gender equality enters a defining era.

Today is a celebration of empowerment and inspiration, but tomorrow is even more important.

The recent news that all-male boards had disappeared from the FTSE 350 was a win for diversity, but the economic challenges posed by Covid-19 has put gender equality on a knife-edge.

Research from City & Guilds revealed that the Covid-19 fallout could threaten to set the clock back on progress made towards female empowerment and equality in the workplace.

Campaigners are calling on employers and the government to ensure gender equality does not fall behind by taking active steps such as flexible working policies.

Ann Cairns, executive vice chair of Mastercard, believes Covid-19 has put women in a more vulnerable position.

“Clearly the pandemic has led to a step back in the fight for diversity within business, as a crisis can always lead to the retreat of those who would otherwise strive to make change in times of prosperity,” she said.

“I say differently, and will continue to work with Mastercard to use action rather than words to create more diverse businesses across the globe.”

Read more: Mastercard vice chair: We can’t let Covid crisis hold back female entrepreneurs

There are one million women working in the NHS

If you know one, if you are one, if you work with one, please give them a shout out with the hashtag #OneMillionNHSWomen

Let’s celebrate their courage and their contribution both at work and outside it#InternationalWomensDay pic.twitter.com/NaOpQ35A7A

— NHS Million ???? (@NHSMillion) March 8, 2021 ‘Reach for the stars’

NASA has urged women to “reach for the stars” and wants its latest Mars mission to inspire females to pursue sectors traditionally dominated by men.

Space roboticist Vandi Verma hopes women’s high profile in the Mars venture will ignite further change, but challenges lie ahead.

One in four women have experienced a fall in income over the past year, and more than half have seen their career and mental health deteriorate, according to Fidelity International.

As the firm puts it, the financial challenges of Covid-19 must not be a permanent blow for women and unwind years of progress.

Alexandra Altinger, CEO of J O Hambro Capital Management, urged businesses not to take their foot off the pedal.

“Gender pay gap enforcement may have been delayed due to the pandemic, but the chickens will come home to roost before the year is out,” she said.

“With the pandemic having huge consequences for women in the workforce, businesses will have to act fast to avoid action being taken by the equalities watchdog.”

Read more: Let’s celebrate the number of women on FTSE boards, but smaller companies will face regulatory hurdles if they don’t step up

In her stride, the nation will succeed.#InternationalWomensDay pic.twitter.com/FFtC8KNnzU

— Congress (@INCIndia) March 8, 2021 Pandemic dents female career confidence

New data from the Equal Power campaign, which is working to get more women into politics, showed that action on female representation is needed now more than ever.

The movement found that 74 per cent of women would be unlikely to stand as an MP, compared to 59 per cent before the pandemic.

Three quarters of the women surveyed felt their diverse needs had rarely been represented in the UK during the crisis.

While the pandemic has shifted some attention away from social issues, finding new ways to maximise women’s access to professional development must remain a priority in every sector.

International Women’s Day is an opportunity to highlight the role more flexible approaches can play when it comes to inclusion.

Gender equality wins have been met by unprecedented hardship and the direction of progress is left in the hands of society.

Today acts as a reminder of the importance of tomorrow.

Read more: Four women nab top roles at City watchdog the FCA

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Categories: City of London

City A.M. TV - Daily Market Snapshot (video)

Mon, 03/08/2021 - 10:53

Rising bond yields and weakness in tech growth stocks has continued to hold back the advance of the global equity market in recent weeks.

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On Friday the US market managed a turnaround in the cash trading session, rallying sharply intraday to close notably higher (e.g. Philly SOX +3.1 per cent, S&P500 +1.9 per cent).

In the UK, the FTSE100 & 250 were both down on Friday. Given the poor past few weeks, markets are now oversold and increasingly fearful. All of which begs the question as to whether this is now a buying opportunity (for traders & investors alike).

Read more: Oil price through the roof following Saudi drone attack

Key events this week include an ECB meeting and monetary policy announcement (Thursday). There will also be a press conference and updated economic projections.

On Wednesday, the global data has an inflation focus with both the US & China releasing their latest consumer price inflation data. Those countries also both release producer price inflation data this week.

Elsewhere the Chinese National People’s Congress is ongoing for the first part of the week, whilst the Chinese key monthly bank lending and money supply data is released this week as well. President Biden is expected to sign the latest stimulus package into law later this week, following its passage through the Senate over the weekend.

Read more: £54bn pandemic export hit: UK losing market share in US, Germany and China

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Categories: City of London

The Week Ahead: ITV, Rolls Royce, Morrison, ECB and UK GDP data

Mon, 03/08/2021 - 09:44

It’s Monday morning. City A.M. looks ahead at what this week has in store.

China Trade for February

This morning – The Chinese economy finished 2020 on a strong note, its surplus hitting a record high in December. Exports rose by 18.1 per cent, slightly down from November’s 21.1 per cent but still better than expected, and the seventh successive month of growth.

“The strength was primarily as a result of the continued lockdowns in the rest of the world saw the export of PPE and other medical related products do well,” explained Michael Hewson, chief market analyst at CMC Markets UK in London, this morning.

As vaccines continue to get rolled out across the world this trend could well slow in the coming months.

“In the latest trade numbers this week for February the overall numbers will also cover the lead up to Chinese New Year, which could well help boost the imports numbers, given they cover the January period as well,” Hewson shared with City A.M. this morning.

Read more: Investors are fleeing Myanmar as coup grows more deadly

With imports rising 6.5 per cent in December, he thinks it would be “very surprising if we didn’t get a strong number this week,” with expectations of a 15.8 per cent rise.

“This bounce will also be skewed due to the comparison with February last year when the Chinese economy was locked down, due to its own set of coronavirus restrictions. Exports are also set to increase with a 41 per cent rise year on year. The timing of Chinese New Year will also be a factor in this week’s combined numbers for January and February,” he added.

ITV

Tomorrow – When ITV reported its H1 numbers in August both sides of its business were impacted as a result of the various shutdowns of the UK economy, with total advertising revenue for the period declining 21 per cent to £671m, while broadcast revenue dropped 17 per cent to £824m.

ITV Studios, normally an outperformer saw a 17 per cent decline to £630m due to having to pause its production capabilities due to various lockdown measures. In Q3 this deteriorated further on a percentage basis with a 19 per cent decline to £902m.

“Overall, there wasn’t that much to cheer even if advertising trends did improve in July and August, notably with respect to travel companies advertising getaways, and car and indoor furnishing companies boosting ad spend,” commented Hewson.

Read more: ITV shares rise as channel secures Meghan and Harry Oprah interview

“In order to preserve cash, the company pulled its interim dividend while saying it would continue to focus on reducing costs by £60m on a temporary basis, with a view to making around half of those savings permanent,” he shared with City A.M.

In Q3, the picture improved a little as production resumed, albeit with higher costs due to Covid-19 mitigation measures. Advertising trends also improved with total advertising revenue improving slightly to be down 16% in Q3. In terms of the outlook the picture for Q4 was more optimistic with an expectation that advertising revenue would rise by 4 per cent.

“While the return of sport to our screens will have helped boost ITVs advertising revenues in the second half, and Britbox revenues are likely to see an improvement, it is likely to be an uphill struggle for this terrestrial broadcaster unless advertising revenue shows evidence of a sustained pickup,” Hewson noted.

Rolls Royce

Thursday – At one point there was some concern as to whether Rolls Royce would be able to survive the in the wake of the collapse in air travel as a result of the pandemic.

With the company reliant for 50 per cent of its revenue on aviation air miles the company was facing a cash crunch. In October, Rolls Royce shares fell to their lowest levels since 2004, after the the company announced its plans to raise extra cash to bolster its finances.

The launch of a £1bn bond issue as well as a £2bn 10 for 3 rights issue at a 41 per cent discount to 130p was eventually taken up by shareholders, and along with the progress on the vaccine rollout the car giant has seen a decent rebound in the share price, Hewson pointed out.

Read more: Rolls-Royce picks former Deloitte partner Kakoullis as finance chief

“The company still isn’t out of the woods yet announcing that it is likely going to have shut its factories in the summer for two weeks to help stem the losses,” he continued, adding that “at its last trading update the company estimated a free cashflow outflow of £2bn.

This is based on 2021 wide body engine flying hours of 55 per cent of the levels of 2019, with an expectation of turning cash flow positive at the end of the second half of the next fiscal year.

“This seems a touch optimistic, given that air travel is unlikely to be able to return to any semblance of normal this year. And that’s even before allowing for the various cuts to headcount and any planned asset disposals,” Hewson said.

 In 2019, annual revenues came in at £15.45bn, with half of that coming from maintenance and other aftermarket services. Rolls Royce will do well to get anywhere near to half that number for 2020, he added.

Morrison

Thursday – The first week of January generally tends to be a decent bellwether for economic activity over the Christmas and New Year period, and Morrison was quick out of the blocks at the beginning of the year with a rise of 9.3 per cent in like for like sales over the festive period, which augurs well for a decent full year performance.

The digital business has been the main beneficiary over the past 12 months, Hewson stressed, and in the early of its final quarter these saw a rise of 24 per cent, over the same period a year ago, helped largely by the Morrisons on Amazon service, as well as the new relationship with Deliveroo.

Read more: Deliveroo offers share hungry investors access to £50m ahead of IPO

Costs have risen as a result of the pandemic, with Morrisons saying that these are likely to be higher by £50m by the end of the financial year, taking the total cost to £280m for 2020/21, due to the tighter restrictions since December.

Hewson said management still expects pre-tax profit to come in between £420m and £440m, before the £230m deduction in respect of the repayment of business rates for the year 2020/21.

“On a more positive note, Morrisons is also expected to benefit from the decision earlier this month to extend its supply agreement with McColls for a further three years,” he noted.

ECB rate meeting

Thursday –  Over the last 12 months the ECB has really been the only game in town when it comes to supporting the European economy, despite the lack of urgency from EU policymakers in taking fiscal actions of their own, Hewson remarked.

“They’ve not been helped by a weaker US dollar either which recently pushed the Euro up above the 1.2000 level and added to the deflationary pressure on an economy that has tipped back into recession and is unlikely to recover much in terms of its services sector before the second half of 2021, due to tighter lockdown restrictions that have been in place for most of Q4 last year, and look to get extended into Q2 of this year,” he explained.

Hewson called “one saving grace” the performance of the manufacturing sector which appears to be performing well.

To offset the weakness in the services sector which is struggling with various lockdown restrictions the central bank expanded its Pandemic Emergency Asset Purchase program in December for the second time in 2020, from €1.35 trillion to €1.85 trillion, as well as extending it another 9 months until March 2022.

Read more: City Corporation creates new Covid Business Recovery Fund

“While this helps buy time, along with new loan programs in the form of TLTRO’s the ECB can’t act alone given it is already operating at the limits of its mandate. It needs help on a much bigger fiscal scale, which at the moment is only just coming in a fairly limited form in the form of the EU recovery fund, and only €390bn of the €750bn of that fund, in the form of grants, far too low to really make much of a difference,” Hewson said.

“While the ECB has gone to great lengths to insist that their monetary toolbox still has plenty of ammunition to deal with the prospect of a double-dip recession, the rise of the euro and a weaker US dollar is not helping their cause, nor is a sharp rise in borrowing costs, which could cause problems for the like of southern European countries with large debt burdens,” he added.

The huge fiscal stimulus plan in the US is starting to prompt concerns of a sharp rise in real yields which central bankers appear to have been slow in pushing back against.

With the Federal Reserve solely focussed on its role as the US central banker, it appears to have forgotten it is also the world’s central banker. The ripple out effect of the recent sharp rise in yields gives the ECB a real problem in trying to keep a lid on borrowing costs.

“While we are seeing localised measures to address the pandemic, the slow response in rolling out the vaccine in Europe is making life much more perilous for the fragile economies of Spain, Italy and Greece who are in the most economic need. With the damage from the pandemic likely to extend well into 2021, Europe really needs to get its act together, otherwise further economic schisms could open up further over the next 12 months,” Hewson noted.

Read more: Brexit disruption to shave 0.5 per cent off GDP as UK starts its recovery

UK GDP

Friday – Having seen a gain of 1.2 per cent in December, the monthly GDP number for January is likely to be “a sobering affair,” as Hewson puts it, given the tighter measures that were imposed at the beginning of the month.

“Services in particular are expected to take a hammering, and while the UK economy appears to have avoided the dreaded double dip recession, the only unknown about the contraction we’re about to see in the first quarter of 2021 is how big is it likely to be,” he said.

The Bank of England estimates a contraction of 4 per cent for Q1, which seems quite modest given that non-essential retail isn’t expected to return until 12 April. Index of services saw a 1.7 per cent rise in December. This is expected to reverse in the latest numbers for January, Hewson concluded.

Read more: Brexit fuels sharper fall in takeovers by UK investors in continental Europe than worldwide average

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Categories: City of London

Before the Bell: Europe set for positive start despite softness in Asia markets

Mon, 03/08/2021 - 07:25

No one can complain about a lack of volatility in financial markets at the moment. The tug-of-war between economic recovery and inflation risks continued on Wall Street on Friday and spilt out onto the street in Asia.

Friday’s outsized 379,000 gain in Non-Farm Payrolls caused US yields to spike initially. Still, equity markets just couldn’t keep saying no to the recovery story, and unwound all their ugly intra-day losses to post strong finishes, commented Jeffrey Halley, senior market analyst at OANDA, this morning.

“US 10-year yields peeped their head over 1.60 per cent, before helpfully retreating to 1.55 per cent, aiding the equity recovery story,” he told City A.M. this morning.

The weekend had plenty of interest as well. China’s Balance of Trade exploded higher in Dollar terms to $103.25 billion for JAN-FEB yesterday, Halley pointed out.

“For all the noise about its comparison to Jan-Feb 2020, it flatters to deceive. The same period last year being the start of the Covid-19 economic implosion. Still, given that the number encompasses Lunar New Year, the data is impressive,” he said.

Read more: Biden’s $1.9 trillion Covid stimulus package passed by Congress

The US Senate passed the Biden $1.9 trillion stimulus package over the weekend, which has continued the market sugar rush this morning after equities closed positively on Friday.

“Apart from ditching the minimum wage and tweaking whom is entitled to the fiscal goodies, the bill is relatively intact. It will now pass back to the House tomorrow in its amended form, and then onto President Biden’s desk for signing,” Halley said.

An attempted drone attack on a giant Saudi Arabia oil refinery and transport hub in the Kingdom this morning by the Yemeni Houthis has seen oil prices spike higher once again. No damage was caused, but Brent crude and WTI are 2.5% higher. Brent crude is now well above the $70.00 a barrel mark at $71.30 a barrel.

US payrolls on Friday

Meanwhile, Michael Hewson, chief market analyst at CMC Markets UK, zoomed in on Friday’s payrolls report this morning, as it saw US 10-year yields post a new one year high before slipping back from their peaks, but still closing higher on the day.

“All in all, there was little to find wrong with Friday’s report, the headline number was a huge beat at 379k, while the upward revision in January to 166k, was also very welcome while the unemployment rate also declined to 6.2 per cent,” Hewson shared with City A.M. this morning.

Read more: Number of new jobs in the US smashes expectations with 379,000 roles added in February

The rebound in the US labour market, since the negative number in December appears to suggest that the slowdown in December was just a blip, and when you dig a little deeper into Friday’s report there is plenty of optimism that the current rebound in hiring could well continue into March, he continued.

“This is because the bulk of the rebound in February was driven by the leisure and hospitality sector as businesses started to reopen with a gain of 355k. As the weather warms up and the vaccination program gets rolled out there is plenty of scope for further gains in the coming months,” Hewson noted.

With the Senate also approving the latest $1.9trn stimulus program, the gateway to a successful ratification in Congress, and Presidential approval later this week paves the way for an enormous fiscal boost starting from Q2, and over the rest of the year. The lack of market reaction to this suggests that for the most part this is already priced in.

“The most striking part of the package is a means tested direct payment to most US individuals worth $1,400 per person, along with much more generous unemployment provisions,” Hewson remarked.

While he called all of this “welcome news” for the prospects for a strong economic rebound, it also raises questions about how much further US long term yields can go, in terms of their current move higher.

“One thing seems certain, US long term yields look set to continue to rise with the 1.8 per cent level on the US 10 year the next target, though we could see a pullback to 1.4 per cent first,” Hewson noted.

“US equity markets, even though they managed to undergo a big turnaround on Friday, finishing the day higher, still finished lower for the third week in succession, raising some important questions as to whether we’ve seen a short-term peak, along with the prospect of further downside,” he added.

Read more: AIM outperforms London’s main market during 12 months of Covid-19

The US Federal Reserve certainly doesn’t appear to be expressing any undue concern at the current moves in US bond markets, and why should they, given US 2-year yields remain stubbornly well anchored.

The biggest concern appears to be around inflationary pressures, Hewson continued, which have shown signs of accelerating quite sharply, with Brent crude prices closing the week back above $70 a barrel its highest level in 13 months, and prices paid data at multi year highs.

Look ahead

As we look ahead to the next few days it’s been notable that despite the falls seen in US markets over the last three weeks, European markets have held up fairly well, Hewson observed, with the DAX hitting a record high last week, and UK markets also doing well in the aftermath of last week’s budget.

“This upbeat tone looks set to continue this week with a positive open expected, even though Asia markets have experienced a somewhat more mixed start, despite some fairly decent China trade data for January and February, which showed a big rebound in exports as global demand continues to show resilience,” he said.

Read more: Want to boost UK exports? Help ignored service providers

“Exports surged over 60 per cent from a year ago, and while you can argue that the number is flattered due to the China lockdown a year ago, which shut factories down, the direction of travel still looks impressive,” Hewson pointed out.

Imports also beat expectations, rising over 22 per cent in a sign that domestic demand is also recovering which should bode well for the upcoming retail sales numbers which are due in a week’s time.  

ECB this week

The main focus this week is set to be on the latest meeting of the European Central Bank, and while central bank officials will welcome the recent fall in the value of the euro, “what they won’t welcome is the rise in borrowing costs that has come about as a result of the recent surge higher in global bond yields,” Hewson said.

This has prompted a concern about a tightening of financial conditions which the weaker members of the EU can ill afford. The rise in the US dollar and higher yields could also have consequences for some emerging market countries as well given that some of their liabilities are sensitive to US interest rate fluctuations, he noted.

“What is also troubling some overseas investors is the nature of the EU’s vaccination program, which is well behind its peers, and as such has prompted a net outflow from various European equity funds for three weeks in a row, over concerns that any economic recovery will come too late to rescue the summer season for the likes of the weaker members of the union,” Hewson said.

Losing another summer tourist season is now a real risk for the likes of Italy, Spain and Greece and could see even more vulnerable businesses founder on the back of the pandemic, he concluded.

Read more: Ministers in talks over post-Brexit global services deal

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Categories: City of London

'One man one vote' dubbed 'politically immature' by pro-Beijing lawmaker

Sat, 03/06/2021 - 11:20

Beijing’s proposal for Hong Kong electoral reforms could prevent “dictatorship of the majority,” a pro-Beijing Hong Kong lawmaker said, calling people who want one man one vote “politically immature.”

China’s rubber-stamp parliament is deliberating plans to overhaul Hong Kong’s electoral system to ensure Beijing loyalists are in charge.

Read more: Vote of confidence for London as Deloitte office sold to Hong Kong real estate business for £255m

Hong Kong representatives to China’s parliament, in Beijing this week for an annual session, say the changes are necessary and desirable.

“Many people in Hong Kong are politically immature,” Martin Liao, who sits on both Hong Kong’s and China’s legislature, told Reuters by phone on Saturday.

“They think ‘one man one vote’ is the best thing, and they take advice from countries that don’t even have ‘one man one vote’,” he said, referring to how neither the U.S. President nor the British Prime Minister is elected by a popular vote.

The proposed changes, which include expanding the city’s Election Committee from 1,200 to 1,500 people, and expanding the city’s Legislative Council from 70 to 90 seats, will make Hong Kong’s electoral system more “representative,” and less prone to “dictatorship of the majority,” Liao argued.

Read more: China sets new growth target above six per cent

Critics however worry that the expansion means that Beijing would be able to stack the two bodies with even more pro-establishment members, to gain the numerical superiority needed to influence important decisions such as the election of the city’s chief executive, leaving Hong Kong voters with less direct say in who they want to lead them.

“If you are not a patriot, it’s going to be hard for you to get in,” Tam Yiu-chung, the only Hong Kong representative in China’s top lawmaking body, the National People’s Congress Standing Committee, told Reuters by phone on Saturday.

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Categories: City of London

Review: How socialism became the failed idea that never dies

Sat, 03/06/2021 - 08:00

German writer and economist Rainer Zettleman looks at a new book on the enduring – and illogical – appeal of socialism

Why have socialist ideas once again developed such a strong appeal, even though every single socialist experiment over the past 100 years has failed? 

British economist Kristian Niemietz provides an answer in his book Socialism: The Failed Idea That Never Dies. He cites over two dozen socialist experiments, all of which, without exception, ended in failure. 

But whenever socialists are confronted with specific examples from history, they always counter that these examples prove nothing, because in reality not one of them were truly socialist models.  

Read more: Corporation tax hike: Rishi Sunak is on the way to creating a tax environment to stifle innovation

The most recent failed experiment: Venezuela  

The most recent case in point is Venezuela. 

In 1970, it was still the richest country in Latin America and one of the twenty richest countries in the world. Many people in Venezuela hoped that the charismatic socialist Hugo Chávez, who came to power in 1999, would solve the country’s many problems. 

Chávez, however, was not only a beacon of hope for many poor people in Venezuela, he also inspired the utopian yearnings of leftists in Europe and North America with his aim of creating a “Socialism of the 21st Century.”  

After the collapse of socialism in the Soviet Union and the Eastern bloc in the late 1980s, coupled with China taking its first steps along the path from socialism to capitalism, the left was left without a utopia of which it could dream. 

North Korea and Cuba, the only remaining communist states, were not exactly a source of inspiration. Hugo Chávez filled the gap. 

But, after this experiment also failed – with masses of people left starving or victims of soaring inflation and one-in-ten having fled the country – anti-capitalist intellectuals once again explain that “this wasn’t socialism at all.” 

Idolising Stalin and Mao 

Even mass murderers such as Josef Stalin and Mao Zedong were initially celebrated in the same way by leading intellectuals of their time. 

They even turned a blind eye to the concentration camps in the Soviet Union, downplaying and, sometime, even admiring what Russia was doing with its Gulags. 

In the 1970s, many Western intellectuals were enthusiastic about Mao Zedong and his Cultural Revolution, despite the fact that 45 million lives were lost during the greatest socialist experiment in history – the “Great Leap Forward” – in the late 1950s. 

After Mao’s death, hundreds of millions of Chinese were freed from abject poverty as a result of Deng Xiaoping’s reform policies, and these same intellectuals were no longer as enthusiastic about China as they had been in Mao’s time. 

Yet the recent history of the “Middle Kingdom” provides a great example of the benefits of capitalism. In 1980, 88 per cent of the Chinese population was living in extreme poverty; today, this figure has fallen to less than 1 per cent. A remarkable rise, even if progress in other areas – like basic human rights – has not been forthcoming.

Read more: Exclusive: Hong Kong refugee activists on the UK’s new visa scheme

Every socialist experiment goes through three phases 

In his historical analysis, Niemietz shows that every socialist experiment to date has gone through three distinct phases. 

During the first phase, intellectuals around the world are enthusiastic and praise the system to the heavens. 

This honeymoon phase is always followed by a second phase of disillusionment: intellectuals still endorse the system and its “achievements,” but their tone becomes angrier and more defensive. They grudgingly admit that the system has shortcomings, but try to blame these on capitalist saboteurs, foreign forces, or boycotts by U.S. imperialists. 

Finally, in the third phase, intellectuals seek to deny that the system was ever truly a form of socialism at all. This is the stage at which intellectuals claim that the country in question – for example, the Soviet Union, China or Venezuela – was never really a socialist country. While this argument is rarely put forward during the first phase of a new socialist system, it becomes the dominant view once the experiment has failed. 

In his Lectures on the Philosophy of History, the German philosopher Hegel opined: “But what experience and history teach is this – that peoples and governments never have learned anything from history, or acted on principles deduced from it.” Perhaps this judgment is too severe. 

Nevertheless, most people are incapable of generalising about historical experiences.

 In one of their greatest PR achievements, socialists have succeeded in denouncing the system that has done more to fight hunger and poverty than any other economic system in history as “inhuman predatory capitalism,” while also once again loading “socialism” with positive associations in the minds of so many people around the world.  

Read more: The Budget didn’t deliver a silver bullet for youth unemployment, but it’s a start

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Categories: City of London

'Missing' sixth case of Brazil Covid mutation found in Croydon

Sat, 03/06/2021 - 05:18

A mystery sixth person infected with a new Brazil coronavirus “variant of concern” has been found in Croydon, the health secretary has announced.

Six cases of the new mutation, also known as the P1 variant or Manaus variant, had been identified across the UK.

Read more: Covid: UK R rate rises despite lockdown measures

Three cases were linked to Scotland, while two out of three cases identified in England were traced to South Gloucestershire. However, public health officials said they were unable to identify the individual behind a third case found in England.

The missing person has now been traced back to Croydon after a week-long search, Matt Hancock announced. The individual had recently travelled back to the UK from Brazil, and had been quarantining at home in London.

It comes after Hancock last week launched a nationwide public appeal for anyone who took a home Covid test on 12 or 13 February to come forward. It is thought the person in question failed to fill out their contact details on their test registration card.

The health secretary insisted the missing case was “rare and only occur in around 0.1 per cent of tests.”

The search was narrowed down to 379 households in the South East of England on Tuesday, with the case finally resolved this afternoon.

Scientists are concerned that the new strain could be more transmissible and prove more resistant to available vaccines than other coronavirus variants.

Preliminary studies of the new strain in Brazil showed that it may be between 1.4 to 2.2 times more transmissible than previous versions of coronavirus circulating in Manaus, the Amazon city where it originated.

It is also able to evade between 25 per cent and 61 per cent of protective immunity from previous infection, according researchers at Imperial College London and the University of Sao Paulo.

The Brazil variant has similar mutations found in the South Africa strain of coronavirus, which has sparked surge testing in regions across the UK. 

Read more: Brits must prove flights are essential as government cracks down on illegal travel

“These and other mutations are associated with reduced impact of antibodies against the virus in laboratory experiments,” said Public Health England’s Dr Susan Hopkins.

“The current vaccines have not yet been studied against this variant and we will need to wait further clinical and trial data to understand the vaccine effectiveness against this variant. In the meantime, it is important to retract cases of this new variant as closely as possible in order to limit a spread in the UK,” she added.

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Hancock firm on NHS one per cent pay rise despite nurse and union pressure

Fri, 03/05/2021 - 22:25

The Health Secretary tonight pushed back against the growing dissent over the one per cent pay rise for NHS staff, despite unions threatening strike action over the ‘pitiful’ figures.

Matt Hancock argued at the Downing Street briefing the pay rise reflected the current poor state of the UK’s finances.

“One of the challenges we’ve faced as a country is in terms of the financial consequences of the pandemic.

“We’ve proposed what we think is affordable to make sure in the NHS people do get a pay rise,” Hancock added.

Read more: Test and Trace to receive extra £15bn, bringing total funding to £37bn

The Royal College of Nursing called the figure ‘pitiful’ and has suggested its members deserve a 12.5 per cent rise instead.

The union Unite has said it is preparing for strike action in response to the plans.

Read more: Matt Hancock: Vaccines are breaking the ‘unbreakable link’ between Covid cases and deaths

In a battle which could see the nurses who worked throughout the Covid-19 pandemic becoming piggy in the middle, the government has been warned that if inflation rises, workers could actually see a pay cut in real terms.

A government spokesperson disputed this, arguing that the one percent was a “real-terms increase”, as the latest official inflation figure was 0.9 per cent.

Under Budget plans, staff in the NHS will be the only public sector workers to receive a pay rise as others will have their salaries frozen.

Read more: France could block vaccine shipments over shortages, health minister says

Close to 1.3m public sector workers will see a pay freeze next year, with those earning less than £24,000 guaranteed a pay rise of at least £250.

Currently, the average starting salary for a Nurse is £24,907.

However, Len Shackleton at The Institute for Economic Affairs disputed the Royal College of Nursing’s 12.5 per cent demand, calling it extraordinary and not feasible.

“They can’t all be paid 12.5 per cent increases unless we want to go back to a world of double-digit inflation, which took us far too long to exit the last time round.

“What we need is an end to this sort of across-the-board increase to NHS pay, and more targeted pay increases for those who have contributed most in the last year,” he added.

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Categories: City of London

Matt Hancock: Vaccines are breaking the 'unbreakable link' between Covid cases and deaths

Fri, 03/05/2021 - 18:03

The “unbreakable link” from Covid cases to hospitalisations and deaths is now being broken as Britain begins to emerge from the grips of the pandemic, the health secretary has said.

Latest official data showed infections have fallen 34 per cent over the past week, as the UK makes rapid progress with the vaccine rollout.

Read more: Covid: UK R rate rises despite lockdown measures

Speaking at a Downing Street press conference, Matt Hancock said hospital admissions plunged dramatically over the past seven days, and are falling around 30 per cent every week.

The most recent seven-day drop marked the fastest decline in coronavirus-related hospitalisations at any point in the pandemic.

Meanwhile, deaths within 28 days of a positive coronavirus test fell 41 per cent in the past week, which the heath secretary said “really [showed] the effects of the vaccine”.

“The link from cases to hospitalisations and to deaths, that had been unbreakable before the vaccine — that link is now breaking. The vaccine is protecting the NHS and saving lives right across the country,” he added.

It comes as more than 21.3m people across the country have now received their first dose of a Covid vaccine — equivalent to around two two-fifths of the entire adult population.

The government has set a fresh target to offer an injection to all over-50s by 15 April, and all adults in the UK by 31 July.

However, Hancock urged cautious optimism over the decline in cases, adding that regular testing will be key to lifting lockdown measures.

Read more: Brits must prove flights are essential as government cracks down on illegal travel

“One of the most dangerous things about this virus is that around one third of those who get it will have no symptoms and yet they can still pass it on to others,” he said this evening.

“Rapid regular testing is a critical part of our response and we can do more because of the huge capacity built up by Test and Trace,” Hancock added.

The contact tracing scheme, which has so far received £22bn from the taxpayer, is set to receive an extra £15bn over the net financial year — bringing its total funding to £37bn.

Hancock said he was “delighted” at Test and Trace’s success in locating a sixth person infected with a new Brazil variant of coronavirus, after a week-long hunt.

Read more: ‘Missing’ sixth case of Brazil Covid mutation found in Croydon

The missing individual, who had failed to fill in their contact details on their test registration form, was located in the London borough of Croydon.

Further precautionary testing will take place in Croydon in light of the discovery, alongside sample sequencing to ensure that there are no further cases in the community.

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Categories: City of London

Boris Johnson challenges EU after Italy blocks Astrazeneca vaccine shipment

Fri, 03/05/2021 - 15:42

Boris Johnson has challenged the EU’s decision to approve the blockade of 250,000 doses of the Astrazeneca vaccine from being shipped to Australia.

Italy yesterday announced it had blocked the shipment of vaccines made at its Anagni plant near Rome after the British-Swedish drug manufacturer failed to meet its EU contract commitments.

Read more: EU to launch legal action against UK ‘very soon’ over Brexit grace period extension

The European Commission gave newly-appointed Italian Prime Minister Mario Draghi the green light over the decision, after agreeding that there was a risk of breach of the EU’s advance purchase agreements.

But in a stern warning to the EU, Johnson’s official spokesman noted that Ursula von der Leyen, the European Commission president, had previously assured the Prime Minister that fresh restriction laws would not be used to block vaccine shipments.

Speaking at this afternoon’s Number 10 lobby briefing, the spokesman added: “We’re not privy to the specific agreements between other countries and vaccine manufacturers. 

“However, the PM spoke to president von der Leyen earlier this year, and she confirmed that the focus of their mechanism was on transparency and not intended to restrict exports by companies where they are fulfilling contractual responsibilities.”

The European Commission implemented border controls at the end of January after Astrazeneca fell 75m doses short of the planned orders for the EU in the first quarter of 2021.

Italy is the first EU country to use the bloc’s new regulations allowing exports to be stopped due to supply shortages.

The World Health Organisation (WHO) has previously warned that the EU export controls marked a “worrying trend” that risked compromising global supply chains.

The PM’s spokesman added: “We would expect the EU to continue to stand by its commitments. The global recovery from Covid relies on international collaboration. We are all dependent on global supply chains, and putting in place restrictions endangers global efforts to fight the virus.”

It marks the latest episode in a growing row over the sluggish vaccine rollout across the EU, with Astrazeneca claiming it has become a scapegoat for the bloc’s low immunisation numbers.

Read more: EU hosts virtual summit on vaccine supply as scepticism blights Astrazeneca uptake

France, Italy and Germany have all recorded low uptake of the Astrazeneca vaccine amid growing scepticism over its efficacy among older groups.

Germany has used around 200,000 out of 1.4m doses of the Astrazeneca jab delivered so far — equivalent to around 15 per cent of its current supply.

Meanwhile, France had issued just 16 per cent of the Astrazeneca jab as of 25 Feburary, after President Emmanuel Macron falsely claimed it was “quasi-ineffective” among over-65s. WHO last month declared the jab safe and effective among all age groups.

Read more: Why have almost half EU countries restricted use of the Astrazeneca vaccine?

By contrast, uptake of the Pfizer jab is around 80 per cent across Europe, according to data from the European Centre for Disease Prevention and Control.

Italian health officials said yesterday the country will administer just a single vaccine dose to those who have recently recovered from a Covid-19 infection, in a move aimed at saving shots amid low supplies.

The recommendation applies to both people who have fallen ill and those who were diagnosed but had no symptoms between three and six months ago.

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Categories: City of London

Brits must prove flights are essential as government cracks down on illegal travel

Fri, 03/05/2021 - 15:07

People wishing to leave the UK from Monday will have to prove their travel is essential, as the government attempts to crack down on illegal holidays in the run-up to leaving lockdown.

Passengers will now be required to fill out a mandatory form listing their reasons for travel before leaving the country. Non-essential travel is banned under current stay at home orders, apart from in exceptional circumstances.

Read more: Italy blocks Astrazeneca shipment to Australia as vaccine shortage row escalates

Airlines will be legally obliged to notify passengers booking trips that the form must be completed before travelling, and people without a valid form may be denied access to their booked service. 

Forty days after the measures were first announced, spot checks will be rolled out across airports and transport hubs, and those that fail to complete the form will faces between £200 and £6,400.

Checks on international travel were first announced in January, after home secretary Priti Patel said it was “clear that there are still too many people coming in and out of our country each day”.

Patel added that other border measures would be toughened up to “reduce passenger flow” and protect the UK’s “world-leading” vaccination programme.

Foreign travel will not resume until 17 May at the earliest under the Prime Minister’s roadmap for leaving lockdown.

Airlines and travel companies reported a surge in bookings last week after Boris Johnson announced the provisional date, with shares in Easyjet, Tui and Rynaiar rebounding after months of grounded flights.

However, Patel last week warned that it was still “far too early” to be booking overseas summer holidays, and that ministers will need to assess the data “at every single stage”.

The PM has appointed Michael Gove to oversee a Global Travel Taskforce, which will report on 12 April “with recommendations aimed at facilitating a return to international travel as soon as is possible”.

Ministers are in discussions over whether to roll out international “vaccine passports” that would allow the resumption of foreign travel for those who have been immunised.

Read more: UK rolls out ‘vaccination status’ requirement for some international arrivals as ministers mull vaccine passports

The European Commission has already said it will propose legislation for an EU-wide digital vaccine passport in March, in a move that is being discussed with UK leaders.

Some companies have decided to take matters in their own hands in the meantime. Ryanair chief executive Michael O’Leary said earlier this week that the budget carrier is adding a tool to its app to allow passengers to upload vaccine certificates and negative coronavirus tests to speed up the return of international flights.

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Categories: City of London

Covid: UK R rate rises despite lockdown measures

Fri, 03/05/2021 - 13:58

The UK’s R rate has crept up slightly, despite Covid cases falling to their lowest level since September amid nationwide lockdown measures, according to the latest official figures.

The rate of reproduction of coronavirus now stands at 0.7 to 0.9, meaning every 10 people infected will likely infect between 7 and 9 other people.

Read more: Hotel giant Marriott will pay staff a bonus to get Covid-19 vaccine

The figure marks a slight increase from last week, when the R rate stood between 0.6 and 0.9. However, the reproduction rate crucially still remains below 1, meaning the virus is not growing exponentially.

The Scientific Advisory Group for Emergencies (Sage) estimates that the number of new infections is shrinking by between three and five per cent every day.

It added that R is a lagging indicator, and that current estimates “cannot account for the most recent policy changes, nor changes in transmission that have not yet been reflected in epidemiological data”.

Test and Trace data released yesterday showed a total 68,738 people tested positive for Covid-19 in England at least once in the week to 24 February — a significant drop from 84,546 the previous week and the lowest number since the week to 30 September.

London continues to hold the lowest rate of reproduction of the virus in the country, alongside the East, South East and South West of England, which all recorded an R rate of 0.6 to 0.8.

However, separate figures released earlier this week from Imperial College London’s latest React study suggested that the decline in coronavirus cases may be slowing across the country, and in some regions reversing.

There was no apparent change in infection rates in Yorkshire and the Humber in the second half of February, according to Imperial. Meanwhile London, the South East, East Midlands and West Midlands all recorded a slight increase in case rates.

Health secretary Matt Hancock noted there was “some cause for concern that our hard-won progress may be slowing down, and even reversing in some regions”, as he urged the nation to “remain vigilant”

‘This is on all of us,” he added. “We have set out a cautious but irreversible approach to easing restrictions, but until we reach each milestone we must all remember the virus is still here, and still dangerous.”

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Categories: City of London

Germany to pay nuclear firms €2.4bn for plant closures

Fri, 03/05/2021 - 11:03

The German government has agreed to pay nuclear operators €2.4bn in compensation for forcing them to shut their plants early in response to the Fukushima disaster.

The sum will be made available from the general budget, ministries said on Friday.

The four affected companies include German-listed firms RWE and E.ON, as well as Vattenfall and EnBW.

RWE will collect €880m, while E.ON will take home €42.5m.

Read more: UK-Kenya trade deal in jeopardy as mood in Nairobi turns outright hostile

Swedish state-owned Vattenfall and German firm EnBW will be awarded €1.4bn and €80m respectively.

A Constitutional Court ruling in November had backed the companies in their complaint that the government’s previous offer was not enough.

The court called for a speedy settlement of the dispute, which was mainly pursued by Vattenfall.

In 2016, the court had ruled that while the nuclear phase-out was legal, the operators needed to be better compensated for lost production.

Read more: LSE unshaken by Brexit-driven securities shift to Amsterdam

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Categories: City of London

UK-Kenya trade deal in jeopardy as mood in Nairobi turns outright hostile

Fri, 03/05/2021 - 10:32
A cartoon that appeared in Nairobi-based newspaper The EastAfrican earlier this week (source: The EastAfrican)

The future of the recently signed trade agreement between the UK and Kenya seems increasingly uncertain as MPs and a group of farmers in Nairobi are threatening to shoot down the pact.

Yesterday, multiple Kenyan lawmakers came out against the trade deal, saying the agreement is ‘illegal’ under Kenyan law, while a collective of farmers have gone to court, demanding that quotes and tariffs are not lifted for British exporters into Kenya as it would lead to unfair competition and market disruption.

The UK-Kenyan Economic Partnership Agreement (EPA) was signed in London in December of last year. The deal provides Kenyan businesses duty-free access to the UK market, while Kenya will start phasing out duty and quota barriers on a set number of UK products 12 years after the EPA has come into force.

Also, tariffs on some UK goods would be reduced seven years after the deal has been ratified.

Ultimately, the deal will be extended to Burundi, Uganda, Rwanda, South Sudan and Tanzania, as City A.M. reported earlier this week.

Read more: New UK-Kenya trade deal to be extended to all of East Africa after threats not to ratify

However, a growing number of Kenyan MPs have no intention to ratify the EPA.

Lawmaker Cate Waruguru, who is vice-chair of Kenya’s influential agriculture commission, told Nairobi newspaper Daily Nation yesterday that “the mood of the house is very hostile, we don’t trust the UK. We need a number of negotiations to clarify a lot of issues.”

Another parliamentarian, Jude Njomo, called the EPA “illegal”, because pagraph 16.1 of the trade agreement bars lawmakers from either amending or scrapping parts of the agreement.

By not being allowed to change the EPA, MPs argue the document violates the country’s 2012 Treaty Making Act, which gives Kenya’s parliament the final say over any trade deal with another country.

Meanwhile, John Kiarie MP, a relatively well-known politician in Kenya, told multiple media outlets yesterday that his country would “slide back to the colonial period if the treaty were to be ratified. I mean, who really benefits in this agreement?”

In London, however, the House of Lords gave its approval to the agreement yesterday, removing the final hurdle for ratification on the side of the UK.

Only two weeks ago, the upper house said it needed more time to approve the agreement amid concerns the UK government had not addressed the potential impact of the pact on regional cohesion in the East Africa region.

Read more: Exclusive: Deloitte diversity chief dumped from role after bullying accusations

Legal challenge

Despite the ratification process having been completed on the UK side, the agreement faces another obstacle south of the Sahara, as a group of farmers and lobby group Econews launched a petition at the Nairobi High Court earlier this week, which legal observers have said has the potential to drag on for months.

The farmers claim that opening up the Kenyan market to UK products – without quotas and tariffs – is a violation of their rights and freedoms under articles 35 and 43 of the Kenyan constitution.

The UK is a major market for British and Kenyan exporters of tea, coffee, flowers and fresh vegetables.

Both the UK and Kenyan governments stressed in December that the trade deal provides Kenyan businesses duty-free access to the UK market, aimed at supporting jobs and economic development in Kenya, as well as to avoid disruption to UK businesses as they maintain tariff-free supply routes for Kenya’s high-quality flowers.

They also said that the Cabinet secretary responsible for the deal, Betty Maina, who signed the trade pact in London in December with Britain’s international trade minister Ranil Jayawardena, is breaking the law by trying to rush through the EPA without proper scrutiny and any public consultation.

Read more: A new WTO boss who understands Africa is a good thing for the global economy

UK-Kenya trade

According to UK government data, the biggest import to the UK from Kenya in 2019 were, coffee and spices, with a market value of around £121m, vegetables at £79m as well as live trees and plants, mostly flowers, for around £54m.

The UK market accounts for 43 per cent of total exports of vegetables from Kenya as well as at least 9 per cent of its cut flowers. In 2019, UK-Kenya trade was worth an estimated £1.4bn.

When approached by City A.M. this morning, the office of Cabinet Secretary Betty Maina declined to comment. It’s unclear at this stage when the trade pact will be discussed or voted on in the Kenyan parliament, nor when the Nairobi High Court will process the filed petition.

Read more: Watchdog bans City of London trader for ‘wash trading’

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Categories: City of London

Cyprus to allow vaccinated Brits in from May

Fri, 03/05/2021 - 10:16

Cyprus said vaccinated British tourists will be allowed into the country from the start of May.

However, international travel from the UK is currently banned until 17 May.

The Cypriot government said yesterday they had told officials in Westminster that from May 1 tourists who have had two doses of a Covid-19 vaccine would not need to quarantine or be tested when arriving into the country.

Deputy tourism minister Savvas Perdios said: “We believe it’s another step in the right direction so we can ensure stability and a sense of safety to allow travellers to start planning their holidays for this summer.”

“It’s a green light for travellers, saying that Cyprus is ready to welcome them this summer,” he added.

Read more: Five charts that show the impact of Covid-19 on the tourism industry

According to the ONS, in 2019 more than one million Britons travelled to Cyprus, and the UK accounts for more international tourism in Cyprus than any other country.

It is not yet clear how tourists will be required to prove they have had the vaccine, and the country will only allow Britons who have had vaccines approved by the European Medicines Agency (EMA) to enter.

Read more: Overnight stays back on from 12 April, but PM bans holidays abroad until 17 May

Currently the Pfizer-BioNTech, Oxford AstraZeneca and Moderna jabs have been approved.

Tourists would need to have had their second dose at least seven days before travelling.

Cyprus has already made a similar deal allowing Israeli tourists to enter from 1 April.

The post Cyprus to allow vaccinated Brits in from May appeared first on CityAM.

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