Road traffic and ‘social’ spending soars as number of furloughed workers hits new low, figures show
Card spending on travel and eating out hit a new post-pandemic high during the half-term holiday while job adverts in the hospitality sector have surged, according to latest data.
The figures were published by the Office for National Statistics (ONS) as part of a regular series of real-time indicators showing the impact of COVID-19 on the economy.
They also showed that the proportion of the UK workforce on furlough in May had hit 7%, or about 1.8 million people – a new low since the data series began in June last year.
The number of workers on furlough hit a new low
Bank of England data, tracking payments by card processors to 100 major retailers, showed “social” spending, which includes travel and eating out, continued recent increases to reach a new high since the start of the pandemic, though still only at about 89% of February 2020 levels.
It was up from 85% a week earlier and just below the level of 91% in March, shortly before the first lockdown.
The level had dipped to as low as 20% in the spring of last year as much of the economy was closed.
Spending classed as “work-related”, including public transport and petrol, was also at its highest since early last year – and nearly a fifth above the February 2020 benchmark.
Overall card purchases in the week ending 3 June were at 102% of the pre-pandemic average in February 2020, up from 95% in the previous week – though it was not the first time spending has topped pre-pandemic levels since lockdowns began to ease in April.
The ONS highlighted that the latest period covered a bank holiday, school half-term and May pay day for many workers.
The figures also provided a snapshot of how the hospitality sector is faring – with data from booking website OpenTable showing the average number of seated diners at restaurants in the week to 7 June at 147% of the same period in 2019, though this was down on the previous week.
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‘Thank goodness’ for recovery – but longer term relatively weak, says BoE governor
At the same time, figures from online jobs search site Adzuna, as of 4 June, showed the recruitment squeeze facing the sector with the volume of adverts for “catering and hospitality” roles at 140% of the February 2020 average, up from 57% in April.
Meanwhile Department for Transport data showed the volume of motor vehicle traffic at the start of this week at 99% of February 2020 levels as the economy gets back into gear.
But footfall data from Springboard showed that, while visits to shopping areas rose last week, it was still at only 85% of pre-lockdown levels.
The figures come as the British Chambers of Commerce predicted a consumer-led rebound for the UK economy this year but warned it would be held back if lockdown restrictions are not eased on 21 June as currently planned.
Business
UBS takeover of Credit Suisse: Embattled bank’s chairman describes ‘historic, sad and very challenging’ day
UBS will take over Credit Suisse in a deal aimed at stemming what was fast becoming a global crisis of confidence.
Credit Suisse, the 167-year-old embattled lender had been brought to the brink of financial calamity last week, despite securing a $54bn (£44bn) credit line from Switzerland’s central bank.
The credit line was agreed upon in a move aimed at reassuring markets and depositors, but it failed to stem a rush of customer withdrawal, prompting a request from the Swiss government for the rival UBS to consider a takeover.
That takeover was announced on Sunday evening – UBS will pay 3bn Swiss francs (£2.6bn) to acquire Credit Suisse, it has agreed to assume up to 5bn francs (£4.4bn) in losses, and 100bn Swiss francs (£88.5bn) in liquidity assistance will be available to both banks.
The deal is expected to be closed by the end of this year.
Colm Kelleher, chairman of UBS Group, said the agreement “represents enormous opportunities”.
He also said that his bank’s long-term aim would be to downsize Credit Suisse’s investment banking business and align it with the “conservative risk culture” of UBS.
Axel Lehmann, chairman of Credit Suisse, described the day as “historic, sad and very challenging” for his bank and the global market.
‘The best available outcome’
Mr Lehmann said: “Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome.
“This has been an extremely challenging time for Credit Suisse and while the team has worked tirelessly to address many significant legacy issues and execute on its new strategy, we are forced to reach a solution today that provides a durable outcome.”
‘Exceptional situation’
In a statement, the Swiss central bank and other officials said that the agreement represented “a solution…to secure financial stability and protect the Swiss economy in this exceptional situation”.
It is also hoped that UBS’s takeover of its old rival will avoid the contagion of the kind seen in the financial crisis of 2008.
Central banks insist systems are resilient
The news was welcomed by central banks in the US, Europe and in the UK.
All three insisted that banking systems within their jurisdiction are strong and resilient.
The Bank of England said: “We have been engaging closely with international counterparts throughout the preparations for today’s announcements and will continue to support their implementation.
“The UK banking system is well capitalised and funded, and remains safe and sound.”
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Credit Suisse rescue: What now for the UK’s banks?
A deal likely to ripple through global markets
Credit Suisse is one of the world’s largest wealth managers and is also one of 30 banks ranked as systemically important, meaning the deal is likely to ripple through global markets on Monday.
It is also one of the largest investment banking employers in the City of London, employing around 5,000 people.
In a memo to employees on Sunday, Credit Suisse said there would be no immediate impact on clients or day-to-day working operations, adding that branches and global offices would remain open.
It comes after a difficult few weeks for the banking sector, with the collapse of US lenders Silicon Valley Bank and Signature Bank.
The UK branch of SVB was rescued by HSBC for £1, but a number of other mid-sized American lenders have also been forced to seek emergency funding.
UBS will take over Credit Suisse in a deal aimed at stemming what was fast becoming a global crisis of confidence.
Credit Suisse, the 167-year-old embattled lender had been brought to the brink of financial calamity last week, despite securing a $54bn (£44bn) credit line from Switzerland’s central bank.
The credit line was agreed in a move aimed at reassuring markets and depositors, but it failed to stem a rush of customer withdrawal, prompting a request from the Swiss government for the rival UBS to consider a takeover.
That takeover was announced on Sunday evening – UBS will pay 3bn Swiss francs (£2.6bn) to acquire Credit Suisse, it has agreed to assume up to 5bn francs (£4.4bn) in losses, and 100bn Swiss francs (£88.5bn) in liquidity assistance will be available to both banks.
The deal is expected to be closed by the end of this year.
Colm Kelleher, chairman of UBS Group, said the agreement “represents enormous opportunities”.
He also said that his bank’s long-term aim would be to downsize Credit Suisse’s investment banking business and align it with the “conservative risk culture” of UBS.
Axel Lehmann, chairman of Credit Suisse, described the day as “historic, sad and very challenging” for his bank and the global market.
‘The best available outcome’
Mr Lehmann said: “Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome.
“This has been an extremely challenging time for Credit Suisse and while the team has worked tirelessly to address many significant legacy issues and execute on its new strategy, we are forced to reach a solution today that provides a durable outcome.”
‘Exceptional situation’
In a statement, the Swiss central bank and other officials said that the agreement represented “a solution…to secure financial stability and protect the Swiss economy in this exceptional situation”.
It is also hoped that UBS’s takeover of its old rival will avoid the contagion of the kind seen in the financial crisis of 2008.
Central banks insist systems are resilient
The news was welcomed by central banks in the US, Europe and in the UK.
All three insisted that banking systems within their jurisdiction are strong and resilient.
The Bank of England said: “We have been engaging closely with international counterparts throughout the preparations for today’s announcements and will continue to support their implementation.
“The UK banking system is well capitalised and funded, and remains safe and sound.”
Please use Chrome browser for a more accessible video player
Credit Suisse rescue: What now for the UK’s banks?
A deal likely to ripple through global markets
Credit Suisse is one of the world’s largest wealth managers and is also one of 30 banks ranked as systemically important, meaning the deal is likely to ripple through global markets on Monday.
It is also one of the largest investment banking employers in the City of London, employing around 5,000 people.
In a memo to employees on Sunday, Credit Suisse said there would be no immediate impact on clients or day-to-day working operations, adding that branches and global offices would remain open.
It comes after a difficult few weeks for the banking sector, with the collapse of US lenders Silicon Valley Bank and Signature Bank.
The UK branch of SVB was rescued by HSBC for £1, but a number of other mid-sized American lenders have also been forced to seek emergency funding.
Business
John Lewis may end 100% staff ownership to raise investment for ‘transformation’ as job losses loom
The retail giant John Lewis may dilute its 100% employee ownership to raise fresh investment.
The change to the partnership model would signal a major departure for the company, which runs the department store chain and Waitrose supermarkets.
The firm warned of job cuts and told staff it will not hand out a bonus for only the second time since 1953 this week after posting an annual loss of £234m as costs soared and sales dipped.
Dame Sharon White, its chairwoman, is in the early stages of exploring a plan to change its mutual structure in an attempt to raise up to £2bn of new investment, according to The Sunday Times.
The group would consider selling only a minority stake and its priority would be to maintain majority employee ownership, the newspaper said.
Any move would have to be voted on by the retailer’s partnership council of about 60 staff.
In the face of tough trading conditions, the firm has been looking to diversify its operations, including a move into the “build to rent” property business.
At the end of last year it signed a £500m deal with Abrdn, a global investment company, that will help it build 1,000 new homes.
The John Lewis Partnership said: “We’ve always said we would seek partnerships to help fund our transformation and exciting growth plans.
“We’ve done this with Ocado in the past and now with Abrdn.
“Our partners, who own the business, will be the first to hear about any developments.”
The business includes 329 Waitrose shops
UK’s largest employee-owned business
The business was founded by John Lewis with a small shop on Oxford Street in 1864.
His son, John Spedan Lewis, created the partnership more than 70 years ago as an experiment into a better way of doing business by including staff in decision-making.
The John Lewis Partnership is the UK’s biggest employee-owned business with around 74,000 staff, known as partners.
The group has 34 John Lewis shops and 329 Waitrose shops, along with its retail websites.
In a letter sent to staff last week, Dame Sharon raised the spectre of job losses as part of efforts “to become more efficient and productive”.
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‘Inflationary pressures’
A loss of £78m was recorded for the financial year which ended in January but when exceptional costs were added this reached £234m.
These included the write-down in value of Waitrose stores.
It represented a slump from a £181m profit in the previous year, with John Lewis blaming “inflationary pressures”.
The update came a day after the group appointed turnaround specialist Nish Kankiwala as its first chief executive, in a shake-up of the leadership structure.
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