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DAILY BRIEFING

DAILY BRIEFING

Back to the future

Written by Li-Ann Chin, associate 
Edited by Harriet Moll, creative director
2 October 2020

Good morning,

In the early 1950s, Britain was an industrial giant – the birthplace of the industrial revolution. The second half of the 20th century, however, witnessed a relative decline in the importance of manufacturing and the economy of the UK shifted towards services.

Indeed, most mature Western economies have seen their manufacturing employment decline in the post-war period as production shifted to the Far East. And yet, the idea that all it has ‘gone to China’ remains a misguided notion.

In September, it was reported that Britain’s manufacturing sector grew more robustly, as factories reopened and confidence levels climbed higher. Figures from IHS Markit’s manufacturing Purchasing Managers Index came in at 54.1, above the 50 mark that would suggest a contraction. Amid a global pandemic, three fifths of UK manufacturers are forecasting a rise in output over the coming year. Demand is also predicted to remain strong in the fourth quarter.

Meanwhile a surge in demand for bikes and accessories – as commuters shift away from public transport – has helped lift Halfords profits forecasts for the next six months. Sales at its cycling business have risen by 46 per cent as consumers opt for ‘staycations’, shunning holidays abroad.  The company has already confirmed that it will hire hundreds of staff to meet the unprecedented demand. Cyclist numbers in some parts of the UK have increased by 70 per cent. In Scotland, cycle journeys have more than doubled.

And finally, despite the uncertainty created by Covid-19 and the disruption to retailers and supply chains, Hovis – popular for Britain’s favourite ‘the boy on bike’ advert from 1973 – has also confirmed an increase in production following a rise in sales. In May, it announced that it had partnered with Tesco to begin baking Hovis-branded bread in store, in a bid to provide consumers with a wider range of options. Earlier this year, it was reported that the sales for Mr Kipling cakes, Hellmann’s mayonnaise and bread experienced a huge uplift, as consumers swapped niche products for comfort food during lockdown.

Optimism aside, the question remains: is this prompted by a COVID-19-induced temporary shift; a fleeting revisiting of the past or does Britain’s future lie in manufacturing, bicycles and bread? 

News

President Trump and Melania Trump have both tested positive for COVID-19, following the news that senior adviser Hope Hicks had also tested positive on Thursday. It has been confirmed that Trump will be unable to attend rallies in three key states – Wisconsin, Florida and Arizona – as well as the next presidential debate scheduled for 15 October due to the need to self-isolate.

Margaret Ferrier, the MP for Rutherglen and Hamilton West has apologised for travelling to Westminster despite experiencing Covid symptoms and subsequently travelling home after receiving a positive result. Ian Blackford, the party’s Westminster leader, has confirmed a suspension of Ms Ferrier, who has agreed to refer herself to the parliamentary standards commissioner and the police. 

Turkey and Poland have been added to the UK’s coronavirus quarantine list, meaning travellers from arriving from these countries after 4 am on Saturday will be required to self-isolate for two weeks. Transport Secretary Grant Shapps has also confirmed that penalties for people who refuse to self-isolate will be increased to a maximum of £10,000 for repeat offenders. 

Business and economy

EU officials have urged caution on the progress of trade talks with the UK even after some officials in London spoke optimistically of a breakthrough in the discussions. Ursula von Der Leyen, the European Commission president has confirmed that Brussels has sent a ‘letter of formal notice’ to the UK on Thursday morning over the internal market bill tabled by Boris Johnson last month. (£)

IMF managing director Kristalina Georgieva has called for urgent action and ambitious reforms to prevent a much more pronounced debt crisis in some of the world’s poorest countries. She’s urged the G20 group of leading nations to extend its freeze on bilateral government loan repayments for low-income countries until 2021 and warned that a failure to do so could result in widespread economic pain.

Dozens of schools are reportedly turning to private Covid-19 testing to avoid delays in the NHS test and trace system, as it is a cheaper option than funding supply teachers while staff self-isolate. However, most state schools do not have the budget for private tests. A report by the Association of School and College Leaders last week found that day-to-day costs of making schools Covid-safe was leaving little room for spending on catch up measures. (£)

The events industry has warned the government that 90,000 jobs will be lost in the coming weeks without an urgent package of support measures. Signed by 334 companies across the country, an open letter today to the prime minister and chancellor asserts that Rishi Sunak’s new wage subsidy scheme is “of little use to events businesses that are not able to trade”. (£) 

Columns of note

In The Guardian, Carys Roberts criticises the Chancellor’s key plans for the winter economy, arguing that it will result in the creative destruction of Britain’s workforce. Unlike the Kurzarbeit, Rishi Sunak’s newly-unveiled policies aren’t aimed to protect the people, rather to accelerate into whatever the future may bring – never mind the collateral damage.

Despite the very real possibility that Christmas day celebrations will serve as a boon for virus transmission, Boris Johnson has repeatedly stressed that festivities will not be cancelled. In The Times, James Forsyth argues it is because the government fears that the attempt to maintain Covid-related restrictions on December 25 will be met with mass disobedience and public rebellion. 

Cartoon source: Telegraph

Markets

What happened yesterday?

The S&P 500 Index increased 0.5 per cent as of 1:22pm New York time with energy producers among the worst performers. Oil tumbled to about $38 a barrel over concerns on oversupply amid sluggish economic growth. The FTSE 100 closed up 0.2 percent at 5879.45. The pound see-sawed as no-deal Brexit fears returned to stalk the market.

The yield on 10-year Treasuries was little changed at 0.69 percent and Britain’s 10-year yield climbed two basis points to 0.505 percent.

Gold and silver strengthened, by 1.3 and 3.8 percent respectively, to $1,910.28 and $24.12 per ounce. 

In company news:
 
The US Food and Drug Administration has widened its probe into the coronavirus vaccine that AstraZeneca is developing with the University of Oxford, following an adverse reaction from a patient on trial. 

Google has pledged $1bn to news publishers around the world over the next three years, in addition to letting them make more editorial decisions on how their content appears on its products.

Rolls-Royce has announced plans to raise £5 billion from a deeply discounted share sale. The deal is to be priced at a 41.4 per cent discount to the company’s closing share price last night of 130p, which marks a 17-year low. 

What’s happening today?

GMs
Cobra Resource.
Tiziana Life Sc

AGMs
Abbey

Int. economic announcements
(13:30) Unemployment Rate (US)
(13:30) Non-Farm Payrolls (US)
(15:00) Factory Orders (US)
(15:00) U. of Michigen Confidence (US)

Source: Financial Times

did you know

Bread remains one of the UK’s favourite foods, with 99 per cent of households buying bread – or the equivalent of nearly 12 million loaves are sold each day.

Parliamentary highlights

House of Commons

No business scheduled

House of Lords 

No business scheduled

Scottish Parliament 

No business scheduled

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