Jaguar Land Rover and Bentley halt work at UK factories
Jaguar Land Rover and Bentley Motors have become the latest British carmakers to suspend production at their UK factories as the disruption from the coronavirus outbreak spreads.
JLR and Bentley both said that production at their plants will not start again until 20 April at least, with the restart dates under constant review.
Almost every major carmaker around Europe has paused production, in response to an expectation of massively reduced demand in all key markets, and the health implications for their workers all factors.
JLR, which is owned by India’s Tata Motors, is the UK’s largest manufacturer of cars, with 35,500 UK employees. The closure affects its main car assembly sites at Castle Bromwich, Solihull and Halewood, as well as engine manufacturing at Wolverhampton. Non-manufacturing employees will work from home.
Bentley, which is owned by Volkswagen, the world’s largest carmaker, said that some “core operations” will continue in its plant in Crewe, with social distancing measures enforced among its 4,500 employees.
Bank of England cancels bank stress tests due to Covid-19
More action from the Bank of England this morning, this time relating to banks.
It has cancelled this year’s stress tests and said it may be hard to implement new global capital rules at a time when banks are being asked to step up support of businesses and households in response to Covid-19.
Announcing the decision, the Bank said:
The recent 2019 stress test showed that the UK banking system was resilient to deep simultaneous recessions in the UK and global economies that are more severe overall than the global financial crisis, combined with large falls in asset prices and a separate stress of misconduct costs.
Trains services to be reduced from Monday as people are urged not to travel
Train services across Britain will be reduced from Monday as people are urged not to travel in order to slow the spread of coronavirus.
Passenger numbers have already dropped 70% since the outbreak started.
In London, a reduced London Underground service has already come into effect with the closure of 40 stations, and the axing of the night tube.
The transport secretary, Grant Shapps, said:
We are taking decisive action to protect the public, which means reducing travel for the time being, whilst still ensuring key worker heroes can get to their jobs to keep this nation running.
For passengers in crucial roles, including essential workers in our emergency services and NHS, alongside people who need to attend medical appointments or care for loved ones, these changes protect the services they rely on.
Britain’s bus operators have called on the government to provide £1bn in immediate help to maintain critical services as passenger numbers fall away with the coronavirus.
Operators say passenger numbers have already fallen by more than half outside London, with a loss of £50million per week in revenues, even before the closure of schools.
While the government had pledged to deliver £5bn in additional funding over five years to the industry, with the importance of bus services having risen up the political agenda before the coronavirus outbreak, bus firms now say they need a first tranche simply to guarantee income and support staff costs to maintain vital routes.
Graham Vidler, chief executive of the Confederation of Passenger Transport, which represents bus companies, said: “Operators are under extreme pressure and facing impossible choices over which routes they have to cut and how many staff may have to go. Buses are crucial to keeping workers moving – and must remain a vital backbone of public transport once this crisis is over.
“We urgently need the Government to help bus workers and their employers now to secure the future of the industry.”
Firms collectively employ around 100,000 drivers and 120,000 support staff, whose jobs are at risk.
M&S: food business will benefit as people stay at home to eat
More on that warning from Marks & Spencer.
The company said that while it is not a destination for those consumers stockpiling food and other products, it does expect to benefit as people stay at home to eat instead of visiting pubs, cafes and restaurants.
We expect our food business to trade profitably throughout. At this stage we have benefited on a small scale as customers stock up but our heavy bias to chilled and fresh means we are not seeing the forward buying uplift experienced by the major grocers.
The significant shift to eating in home should however continue to benefit sales in the months ahead. Although there will undoubtedly be supply interruptions, we do not expect these to be prolonged or financially material.
The same cannot be said of its home and clothing business:
There will be a substantial impact on Clothing and Home revenue at the very least in the first 3-4 months of the next financial year. Although it is possible that this may ease as we get into summer trading, margins are likely to be severely impacted by the surplus of unsold seasonal stock and probable clearance activity in the marketplace.
We are therefore taking all possible steps to defer supply. However, a very large part of our core business is less seasonal year-round essential product and this should provide some scope for carrying forward stock. At this stage we are not assuming a return to normal trading in the Autumn.
Marks and Spencer warns on profits and temporary store closures
Good morning, and welcome to our live coverage of economics, business and markets in the UK, the eurozone and worldwide.
Marks and Spencer has issued a warning this morning about the impact of Covid-19.
M&S - one of the best known names on the high street - said it has suffered a substantial fall in sales in its clothing and homes business and as a result its forecast for the current quarter are “adversely affected”.
It comes as the chancellor, Rishi Sunak, prepares to announce a package to help protect jobs and wages during the crisis.
M&S said in a statement:
It is too early to make any reasonable forecast for revenues in the next financial year but we are planning on the basis of a prolonged downturn in demand for Clothing and Home.
We are preparing for the contingency that some stores may have to close temporarily. However, our business model of operating parallel Clothing and Food businesses and our strategy to move online including the Ocado joint venture should provide more resilience than some single sector businesses.
Marks & Spencer said that while its food business was expected to remain profitable, its clothing and homes business was likely to take a heavy hit in the current financial year as a result of the coronavirus pandemic:
The final result could be at or below the bottom end of the range of profit before tax of £440-460m, given probable very depressed trading in clothing and home.
M&S are not the only ones warning this morning with pub group Wetherspoons, retail group Frasers (formerly Sports Direct), and estate agent Foxtons among those outlining the impact of Covid-19 on business.
Turning to markets, there was some respite on Thursday from the sharp sell-off that has rocked global markets since the escalation of the pandemic. Wall Street followed Europe higher after central banks moved to provide more support to economies.
Europe is expected to open higher again this morning:
9.30am GMT: UK public sector finances data for February
2pm GMT: US existing home sales figures for February