Good morning and welcome to our continued coverage of the world economy, financial markets, the eurozone and business.
The UK economy grew faster than expected in the second half of last year, as it recovered from its worst slump in centuries.
Updated data from the Office for National Statistics shows that UK GDP increased by 1.3% in October-December, a steeper recovery than the 1% initially estimated for the last quarter of 2020.
It means that the level of GDP in the UK is now 7.3% below its level in the fourth quarter of 2019, revised from the previous estimate of 7.8%.
The ONS has also revised up its recovery estimate in the third quarter. Now you think GDP increased 16.9% in July-September when restrictions were lifted, an upward revision of 0.8 percentage points.
But … the crash during the first wave of Covid-19 caused even more economic pain than previously thought. GDP from April to June 2020 is estimated to have fallen 19.5%, a downward revision of 0.5 percentage points, and the lockdown wiped out almost a fifth of economic activity.
That means that in 2020 overall, the economy is now believed to have contracted. 9.8% – marginally better than the 9.9% originally estimated, but still the worst year on record.
So the annual picture is largely the same: the UK has just suffered its worst annual contraction since Britain seized the Great Freeze more than 300 years ago.
Jonathan Athow, ONS deputy national statistician for economic statistics, explains:
“Our revised quarterly figures show that the economy contracted a little more than previously estimated in the early stages of the pandemic, before recovering a little more strongly in the second half of last year,”
Also comes today
Shares of the food delivery group Deliveroo will begin trading among investors today, at the highest London stock price in a decade.
But amid concerns about its handling of passengers and choppy stock markets, Deliveroo will value slightly less than it bargained for.
The shares are selling at £ 3.90 each, giving a valuation of £ 7.6 billion. That’s a substantial valuation, but around £ 1 billion less than the maximum expectations set by Deliveroo during the IPO process.
Deliveroo insists it has seen very significant demand from institutional investors, but several big names in the city are pulling out of the IPO.
My colleague Zoe Wood explains:
Although the listing is still expected to be the largest initial public offering in London for a decade, several leading fund managers are shunning the shares due to concerns about Deliveroo’s labor practices, which do not guarantee minimum payment rates for its couriers.
Along with other operators in the gig economy, Deliveroo, which is backed by Amazon, has faced legal challenges around the world from couriers and drivers seeking access to basic rights such as minimum wage and payment of Vacations.
The listing will raise £ 1 billion for the company and £ 500 million for selling shareholders, including Amazon and Will Shu, the ex-investment banker who launched the service from his London flat in 2013.
The consequences of the collapse of Archegos Capital Management continues, and UK and US regulators reportedly examined whether global investment banks broke the rules by holding group discussions shortly before launching an immediate sale of assets worth nearly $ 20 billion.
The Securities and Exchange Commission is said to have requested more information from major US banks Goldman Sachs, Wells Fargo and Morgan Stanley, as well as Nomura of Japan and Swiss lender Credit Suisse about a meeting with Archegos founder Bill Hwang, Thursday. Those talks were followed by a flurry of strong equity sales, in which Nomura and Credit Suisse ended up taking very significant losses while other brokers emerged more unscathed. Analysts at JPMorgan Chase have estimated that these losses could reach $ 5 billion to $ 10 billion, much more severe than a typical fund liquidation.
The latest eurozone inflation data, to be released at 10am UK time, likely shows that the cost of living rose at a faster rate this month, in part due to rising energy prices. Yesterday, German inflation rebounded, reaching 2% on a harmonized annual basis.
Investors are also interested in seeing ADP’s monthly US private sector payroll report, which can give a glimpse of Friday’s non-farm payroll (the leading US unemployment report). A strong reading will bolster hopes for a quick US recovery, which could put further pressure on bond yields.
- 7am BST: Nationwide House Price Index for March
- 8.55am BST: German unemployment data for March
- 10 a. M. BST: Eurozone inflation data for March
- Noon BST – Weekly US Mortgage Applications
- 1.35pm BST: ADP Payroll Survey of US Private Sector Employment in March
- 3.30pm BST: Weekly EIA Oil Inventory Figures
George is Digismak’s reported cum editor with 13 years of experience in Journalism