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UK out of recession but growth slows in September

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The UK’s economy rebounded from recession in July to September, but growth showed signs of slowing down at the end of the three months.

Growth of 15.5% in July to September was the biggest on record, said the Office for National Statistics (ONS).

It came after a six-month slump induced by the first coronavirus lockdown.

However, growth was weaker in September than in the preceding months, while the country’s economy is still 8.2% smaller than before the virus struck.

The economy had shrunk in the first three months of the year and then contracted by a record 19.8% in the April-to-June period. Two consecutive three-month periods of contraction are generally defined as a recession.

Despite the rebound in July to September, analysts warned that the economy was likely to shrink again in the final three months of the year because of the impact of renewed lockdowns in different parts of the country.

A second lockdown began in England on 5 November and is due to finish on 2 December.

Thomas Pugh, UK economist at Capital Economics, said that in view of what had happened since, the figures felt “not just like old news, but like ancient news”.

“We already know that GDP will struggle to rise in October as tighter restrictions were imposed and that it will take a hammering in November as the effects of the second Covid-19 lockdown are felt.

“But the recent news of a potentially effective vaccine means that the outlook beyond the next six months could be much rosier than we have previously anticipated.”

What is happening in the economy?

In September, growth was 1.1%, marking the fifth consecutive month of expansion. However, that was weaker than the levels seen in previous months.

“While all main sectors of the economy continued to recover, the rate of growth slowed again, with the economy still remaining well below its pre-pandemic peak,” said Jonathan Athow, deputy national statistician for economic statistics at the ONS.

“The return of children to school boosted activity in the education sector. Housebuilding also continued to recover, while business strengthened for lawyers and accountants after a poor August.

“However, pubs and restaurants saw less business after the Eat Out to Help Out scheme ended and accommodation saw less business after a successful summer.”

In another sign of the impact of the pandemic on the economy, figures released on Tuesday showed the unemployment rate rose to 4.8% in the three months to September, up from 4.5%.

The number of people out of work rose by 243,000 in the three-month period, the largest increase since May 2009.

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Lorenzo Angelucci

How are businesses coping?

Welsh food packaging firm Transcend Packaging saw its sales collapse by half during the depths of the first lockdown.

But boss Lorenzo Angelucci says they have recovered since and are now higher than they were at the start of the year – partly because the firm has started making personal protective equipment which kept sales buoyant.

“We reacted to [the need for PPE] and we managed to rebound pretty fast, but obviously the beginning of the pandemic was pretty tough,” he told the BBC.

“It forced us to be creative and come up with other types of products.”

The firm, which supplies clients such as McDonald’s, expects to benefit in coming months as takeaway services remain open.

“Food packaging is by default safer in this situation, because people still need to eat,” he said. “But the economy itself, I don’t think will be in a very nice position for a long time.”

Should we be cheered or worried?

Today’s record growth for the UK economy in the three months from July to September is obviously a welcome partial reverse from the record fall seen in the spring. It means that lights are going back on in the economy that were switched off in the first lockdown.

The improvement of 15.5% occurred in all sections of the economy – services, manufacturing and construction. It is, though, catch-up not recovery. It is rebound more than it is established bounce-back. The economy is still nearly a tenth smaller than it was before the pandemic struck.

More than that, obviously the data is a rear-view mirror on the economy. It reflects a period of falling infections, the boost to growth and to footfall from the chancellor’s Eat Out to Help Out scheme. It shows the rate of this rebound slowing in September, even as there was a boost from the return of school pupils.

Since then, there has obviously been a further, though less extensive shutdown, but both the Bank of England and the Treasury have boosted the economy. As important to the economy as the government physically shutting down swathes of society is the fact that consumers voluntarily retrench from social activity too, when the virus is spreading intensively.

The great bit of sunlight on the horizon, however, is the vaccine. That will be the biggest economic stimulus imaginable.

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Chancellor Rishi Sunak

What has the government got to say?

In a BBC interview, Chancellor Rishi Sunak said it was going to be “a difficult winter”, but there were “reasons for cautious optimism”.

“Our priority remains to protect as many jobs as possible,” he said, adding that the extension of the furlough scheme and the creation of the Kickstart job scheme for young people would help to do this.

He maintained that England would be able to exit its second lockdown as planned on 2 December.

“I am very confident that the measures we have put in place will do the job that we need them to do,” he said.

What is GDP?

Gross domestic product (GDP) is the sum (measured in pounds) of the value of goods and services produced in the economy.

But the measurement most people focus on is the percentage change – the growth of the country’s economy over a period of time, typically a quarter (three months) or a year. The measure has been used since the 1940s.

If the GDP measure is up on the previous three months, the economy is growing. That generally means more wealth and more new jobs.

If it is negative, the economy is shrinking. And two consecutive three-month periods of shrinking meets the most widely accepted definition of a recession.

Economy
Courtesy-BBC

What more can economists tell us?

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the economy was likely to shrink by about 0.5% in the final three months of the year.

“On a monthly basis, it probably won’t recover to September’s level until the spring, when it should be possible for Covid-19 restrictions to be sustainably relaxed,” he added.

Looking further ahead, Sarah Hewin, chief economist at Standard Chartered bank, told the BBC there was “uncertainty” about the first three months of 2021, “particularly if we have trade disruptions related to Brexit as the transition period comes to an end at the end of the year”.

“Great news about the vaccine, but we know the impact will take time to come through and there will need to be social distancing,” she added.

Bank of England Governor Andrew Bailey
Bank of England Governor Andrew Bailey said news of a potential vaccine “reduced uncertainty” for business

What difference could a vaccine make to the economy?

Bank of England governor Andrew Bailey welcomed news that a possible Covid-19 vaccine had performed well in clinical trials: “It’s encouraging for individuals, it’s encouraging for businesses, and it’s encouraging for the economy.”

“The sooner that way out of Covid comes into effect, the more businesses are likely to survive in financial terms,” he told the Financial Times in a video interview.

Mr Bailey said the news was “broadly consistent” with the latest set of economic forecasts which the Bank published on 5 November, which assumed that the pandemic would start to recede after the winter as better treatments arrived.

But the news “reduces the huge level of uncertainty that we have in the forecasts”, he added.

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Coronavirus: Wetherspoons calls rules ‘baffling and confusing’

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JD Wetherspoon has criticised “baffling and confusing” Covid-related restrictions for the pub industry after revealing a sharp fall in sales.

The firm said like-for-like sales for the 15 weeks to 8 November fell 27.6%.

Chairman Tim Martin said rule changes such as the 22:00 curfew, as well as different areas of the UK “moving from one tier to another”, left the industry and customers perplexed.

“The entire regulatory situation is a complete muddle,” he said.

Wetherspoons said sales in October “were significantly lower than the previous months, following the imposition of a number of new restrictions, including changes in the tier categories [and] a 10pm curfew”.

Mr Martin also said there was a “particular anxiety” in the sector over how long the regulations would last, citing rules that were introduced in World War One which remained in place for more than 70 years.

“Veterans of the industry will recall that the afternoon closing of pubs between about 3pm and 6pm was imposed in the First World War, to encourage munitions workers to return to their factories,” he said. “But the requirement for afternoon closing was only abolished in 1986.”

Under current lockdown rules, Wetherspoons said 756 pubs in England, Northern Ireland and the Republic of Ireland were closed and it expected to burn through £14m in cash during the period.

The company will not be selling takeaway alcohol from any of its premises.

Earlier this month, the government initially banned the sale of alcohol from pubs in England under the new rules for a second lockdown, but soon changed the restriction.

Sales were allowed during the first shutdown between March and July, but a spokesman for Wetherspoons said the company did not offer takeaways then and had no intention of selling them during this period.

It said 51 of its pubs were currently trading in Wales – where a lockdown has just ended, but pubs are subject to a 22:00 curfew – as well as 64 in Scotland.

But the company added: “The Scottish pubs, in particular, are subject to an extremely onerous tier system which, as has been widely reported, is having a serious effect on trade.”

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Business Headlines UK UK

UK unemployment rate continues to surge

UK unemployment rate continues to surge
UK unemployment rate continues to surge

The UK’s unemployment rate rose to 4.8% in the three months to September, up from 4.5%, as coronavirus continued to hit the jobs market.

Redundancies rose to a record high of 314,000 in the same period, the Office for National Statistics (ONS) said.

Firms made more workers redundant in anticipation of the end of the furlough scheme, which was originally supposed to finish at the end of October.

It has now been extended until the end of March.

Analysts said the extension had come “too late in the day” to save some jobs and further big rises in unemployment were likely in the coming months.

Unemployment
Pic Courtesy- BBC

How many are affected and which age group is faring worst?

The number of people out of work rose by 243,000 in the three-month period, the largest increase since May 2009.

The redundancy figure was higher, however, because it included people who may have lost their jobs and then retired or decided to stop looking for work.

The ONS figures also showed there was a big rise in the number of 16 to 24-year-olds out of work.

The unemployment rate among young people is far higher than the overall rate.

Age comparison
Pic Courtesy- BBC

What about the bigger picture?

ONS deputy national statistician for economic statistics Jonathan Athow told the BBC: “We’re seeing a continuation of a weakening of the labour market, fewer people on the payrolls and fewer people employed overall. That is now passing through to increasing unemployment altogether.”

He said the UK was starting to see people fall out of work in quite large numbers. However, there were still about 2.5 million people on furlough, with “quite a lot of uncertainty” about what would happen to them.

“We might see furlough creep up again and that might mean we don’t see any further big increases in redundancies or unemployment, but it’s way too early to tell what will happen,” he added.

Mr Athow said vacancies continued to recover from the very low numbers seen earlier in the year, but those figures predated the reintroduction of lockdown restrictions in many parts of the UK.

What do unemployed people say?

Justin Miller

Justin Miller was made redundant as a lifeguard in July. He is a graduate who has applied for more than 100 jobs, but has not once been invited to an interview.

“I’ve been looking for opportunities, but I just haven’t had any luck with anything I’ve been doing,” he told the BBC.

“There’s a lot of jobs out there locally with local shops, but I’ve been competing against other people that could have been made redundant with 10, 20 years’ experience, so I’ve got no chance of getting those jobs.

“Most of the time I’m not even hearing anything back. It’s just been really difficult,” he says.

“It definitely plays on your mental health. There’s a lot of thoughts that go on in your head because you’ve had so much rejection.

“It’s a question of keeping myself motivated and not letting it get me down too much.”

How do you improve your chances of finding work?

from Claire Valoti, VP International at Snap Inc

If you keep getting rejection emails, ask them why, says Claire Valoti, a boss at social media company Snap.

“Not everyone is going to give you feedback, but some will. The important thing is to figure out what’s not working and how you can better sell yourself.”

“Be bold,” she says. Ask a recruiter or someone in your industry, since job applications and interviews are things at which you can improve, she recommends.

Redundancies chart
Pic Courtesy- BBC

What are economists saying?

Tej Parikh, chief economist at the Institute of Directors, said the pandemic continued to bring “turbulence” to the UK jobs market.

“The extension of the furlough scheme through to March is welcome as it has given directors certainty to plan ahead for their staff. Unfortunately, the change appears to have come too late in the day for some.”

Suren Thiru, head of economics at the British Chambers of Commerce, said: “While there was a rise in the number of job vacancies, this is more likely to reflect a temporary bounce as the economy reopened before recent restrictions were reintroduced, rather than a meaningful upturn in demand for labour.

He said the extension to the furlough scheme would safeguard a significant number of jobs in the short term.

“However, with firms facing another wave of severely diminished cashflow and revenue and with gaps in government support persisting, further substantial rises in unemployment remain likely in the coming months.”

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How bad is this compared with previous downturns?

Given the scale of the economic shock we’ve been through, the impact of the pandemic on the official unemployment rate remains mild. A level of 4.8%, encompassing 1.62 million people, is low by historic standards. And current predictions that unemployment will peak at 7-8% also look modest, given the fact that we’re now in an economic double-dip of unprecedented proportions.

That won’t be any consolation to the record 314,000 people made redundant from July to September. Fully informed by scientists about the risks of a second wave, Chancellor Rishi Sunak spent four months telling the nation he was against extending the furlough scheme beyond October (“I cannot save every business. I cannot save every job”).

Indeed, the chancellor said in his winter economy plan in September it was “fundamentally wrong” to hold people in jobs that only exist inside the furlough and only changed his mind with hours to go. There can be no doubt that a large chunk of those people made redundant would still be in work, had their employers known the government would throw its policy into reverse at the last minute.

But with 2.5 million workers still reliant on furlough (according to the ONS), there are many more who can be glad the government executed that U-turn.

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What has the political reaction been?

Chancellor Rishi Sunak said the figures underlined “the scale of the challenge” that the country was facing.

“I know that this is a tough time for those who have sadly already lost their jobs, and I want to reassure anyone that is worried about the coming winter months that we will continue to support those affected and protect the lives and livelihoods of people across this country,” he added.

The government had extended the furlough scheme to protect jobs and launched the £2bn Kickstart programme to help young people, he said.

Shadow work and pensions secretary Jonathan Reynolds said people had lost their livelihoods because of the government’s “failure to face up to the scale of this jobs crisis in time”.

“We’ve had enough last-minute changes and bluster from this government,” he added.

The chancellor needs to urgently provide support to those who have lost their jobs and get Britain back to work – including through a green recovery to help create hundreds of thousands of low-carbon jobs.”

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Just Park sorry for renting spaces behind owners’ backs

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A parking website has apologised after scammers exploited it by listing spaces on driveways which they do not own.

Just Park is one of several websites which allow people to make money by advertising parking spaces for hire on their own land.

But some homeowners have been surprised to discover their driveways have been listed without their permission.

Just Park says it has stringent checks in place to prevent fraud and cases are “extremely rare”.

Surprise

Simon Gallagher started getting complaints from tenants at the flat he owns at Bexleyheath in Greater London.

Strangers were leaving cars in their dedicated parking bays, leaving them with nowhere to park.

“This was going on for about a month or so”, says Simon, “until one day somebody had left a note in the window of one of the cars that was parked there with a booking reference for Just Park”.

“I looked it up on the website and to my surprise, found a photograph of the flat advertised out for rent”.

Someone was charging £8 a day for the use of his tenants’ parking spaces.

To prevent them from being used by anyone else, he has now had bollards installed.

Bollards in a driveway
image captionSimon Gallagher, a landlord, had to install bollards in the driveway of a flat he owns after scammers rented out his tenants’ driveway to commuters to park in

Adverts removed

In Edinburgh, Barbara Oliver was alerted by a neighbour to a similar problem outside her property.

She was away on holiday when mystery vehicles began parking right in front of her garage door.

“It appeared that these people had used Just Park and had information to say that they could park there, which, as the property’s owner, I knew was not true”, Barbara says.

Just Park removed the unauthorised adverts after Barbara Oliver and Simon Gallagher complained.

Apology

Speaking on Radio 4’s You & Yours programme, the company’s founder and chief executive officer, Anthony Eskinazi, said “I’d like to apologise to Mrs Oliver and Mr Gallagher for their experiences.

‘We do have stringent checks in place to prevent spaces from being listed fraudulently. On rare occasions where they are added, we immediately remove them once notified and ensure that our community is not adversely affected”.

Just Park says its policies and procedures have successfully reduced instances of fraud to “less than two listings per month, which represents less than one out of every 1000 new listings”.

It says that new space owners cannot withdraw funds for at least 48 hours after the first booking.

The company was launched in 2006, matching drivers with spare parking spaces outside people’s homes through its website and app.

It says over 45,000 people have earned a combined total of more than £50m by listing spare parking spaces on its platform.

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Sainsbury’s to cut 3,500 jobs and close 420 Argos stores

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Sainsbury’s is to cut 3,500 jobs with the closure of 420 Argos outlets and all its meat, fish and deli counters.

The 420 standalone Argos stores will close by March 2024, although Sainsbury’s said it would open 150 Argos outlets in its supermarkets.

Boss Simon Roberts said Sainsbury’s was responding to changing consumer habits and the growth of online shopping.

He said the counter closures was a response to lower customer demand and a desire to reduce food waste.

The supermarket also reported half-year results, revealing a £137m loss which it blamed on closures and “market changes”.

It comes on the day England enters a second lockdown, which Sainsbury’s said would continue to accelerate “a number of shifts in our industry” as it expands its online and digital operations.

Sainsbury’s, which bought Argos in 2016, said in its statement that the 120 standalone Argos stores that had not reopened since they were closed in March would now shut permanently.

By the end of the restructuring programme, Sainsbury’s said it expected the total number of standalone Argos outlets to be about 100. The restructuring will save about £600m by 2024, the grocer said.

In addition to the 150 Argos stores it plans to open in its supermarkets by 2024, it also plans a further 150-200 collection points.

Rising jobs toll

“We are talking to colleagues today about where the changes we are announcing in Argos standalone stores and food counters impact their roles,” said Simon Roberts, Sainsbury’s chief executive.

“We will work really hard to find alternative roles for as many of these colleagues as possible and expect to be able to offer alternative roles for the majority of impacted colleagues.”

He said the aim was to make Argos “a simpler, more efficient and more profitable business”. Products from the Habitat brand will also be more widely available in the stores and via Argos.

“Our other brands – Argos, Habitat, Tu, Nectar and Sainsbury’s Bank – must deliver for their customers and for our shareholders in their own right,” he said.

Despite the cutting of the 3,500 roles, the supermarket expects that it will have created about 6,000 net new jobs by the end of the year.

sainsburys delivery van
Sainsbury’s said it was responding to changing consumer demands

However, the redundancies increase the mounting jobs toll announced by companies facing a coronavirus hit to trading.

On Wednesday, John Lewis and Lloyds Banking Group said they were cutting a combined 2,500 jobs.

More than 200,000 potential job losses have been announced across sectors including banking, hospitality, travel and retail since the start of Covid-19 pandemic in March. Thousands more workers remain on furlough.

Despite Sainsbury’s cost-cutting, the company said on Thursday it would pay out a special dividend of 7.3p to shareholders after strong sales in the face of Covid-19.

Sainsbury’s revealed that total like-for-like sales increased by 6.9% for the 28 weeks to 19 September, helped by an 8.2% growth in groceries. The supermarket also said there had been “stronger-than-expected sales, particularly at Argos”.

Online sales more than doubled, jumping 117% to £5.8bn, as demand for online deliveries surged.


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Bank of England injects extra £150bn into economy

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The Bank of England is to pump an extra £150bn into the economy as it warned the resurgence of Covid-19 would lead to a slower, bumpier recovery.

Tighter lockdown rules, including new restrictions in England, are expected to push the UK into another downturn.

While the economy is expected to avoid another recession, the Bank believes unemployment will rise sharply as government support schemes wind down.

Policymakers also kept interest rates on hold at a record low of 0.1%.

The Bank expects the economy to shrink by 2% in the final three months of 2020, before bouncing back at the start of 2021, assuming current restrictions loosen.

It does not expect the UK economy to get back to its pre-virus size until the following year.

Interest rate graphic
Image Courtesy-BBC

The Covid-19 pandemic triggered the sharpest economic contraction on record earlier this year as nationwide restrictions were brought in to try to contain the virus.

Shoppers helped the economy to bounce back over the summer, and the Bank said retail sales remained strong.

Some people had started their Christmas shopping early, while others were buying furniture and household goods to adapt to working from home.

However, it said the hospitality, leisure, and tourism sectors had “suffered from lockdown rules”.

Many diners had stopped going to restaurants after the end of the Eat Out to Help Out scheme. The Bank said more than a third of people still felt uncomfortable dining in.

Fresh restrictions across the UK are expected to drag on growth. The Bank expects the economy to shrink by 11% in 2020.

Unemployment to rise

Thousands of people have already lost their jobs amid the pandemic, despite various support packages, including an extended furlough scheme.

Redundancies have climbed to their highest level since 2009 in recent months.

The Bank expects unemployment to peak at 7.75% in the middle of next year, from 4.5% currently. This would be the highest rate since 2013.

This represents a deeper downturn, and slower recovery than predicted in August.

Chancellor Rishi Sunak is expected to announce fresh measures to support the economy on Thursday.

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How does the Bank inject money into the economy?

The Bank of England is in charge of the UK’s money supply – how much money is in circulation in the economy.

That means it can create new money electronically and the Bank spends most of this money buying government bonds through a process known as quantitative easing (QE).

QE is sometimes described as “printing money” but in fact no new physical bank notes are created.

Government bonds are a type of investment where you lend money to the government. In return, it promises to pay back a certain sum of money in the future, as well as interest in the meantime.

QE graphic
Image Courtesy-BBC

Buying billions of pounds’ worth of bonds pushes the price up: when demand for anything increases, the price usually goes up too.

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Uncertain outlook

The Bank’s Monetary Policy Committee (MPC) that sets interest rates said its forecast reflected “heightened health concerns and uncertainty about the outlook”.

Its nine members voted unanimously to increase its stockpile of asset purchases, known as quantitative easing (QE), and signalled they were ready to unleash more stimulus if the recovery falters.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the Bank’s economic forecasts looked optimistic.

“The MPC’s forecasts have been updated for the new lockdown plans, but assume that the Covid hit to the economy gradually dissipates and that there is an immediate move to a free trade agreement with the EU in January; the risks to the outlook are skewed to the downside,” he said.

The Bank is currently exploring if it can reduce interest rates below the current level of 0.1%.

It wrote to lenders in October to ask them how they would cope with negative rates. Commercial banks have until 12 November to respond.

Karen Ward, chief markets strategist at JP Morgan, said pushing interest rates into negative territory was the “direction of travel” for many central banks.

However, she expects High Street banks to shield savers from being charged.

“It tends to be large corporates that really face those negative interest rates, but this really is about just exercising any tools they still have available, because of course with interest rates already near zero they’re getting more limited in what they can do,” she said.

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John Lewis and Lloyds Bank cut many hundreds of jobs

John Lewis and Lloyds Bank cut many hundreds of jobs
John Lewis and Lloyds Bank cut many hundreds of jobs

John Lewis Partnership (JLP) and Lloyds Banking Group have announced plans to cut many hundreds of jobs.

JLP, which also runs Waitrose supermarkets, says it will axe up to 1,500 jobs at its head office as it makes further cost cuts.

It says the move will help it to save another £50m as it looks to make £300m in annual savings by 2022.

Meanwhile, Lloyds is cutting a further 730 jobs as part of a major restructuring programme.

The cuts will mainly affect staff in its group transformation and retail banking teams, and will result in no further bank closures, it said.

The Unite union said the move was “shameful”, and that the decision was taken despite recent strong results.

It called for the bank to postpone restructuring amid the rising threat of Covid-19.

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M&S suffers first loss in 94 years as clothing slumps

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Marks & Spencer sank to the first loss in its 94 years as a publicly-listed company as the coronavirus crisis hit trading.

In the six months to 26 September, the retailer made a loss of £87.6m, compared with profits of £158.8m in the same period last year.

But chief executive Steve Rowe said the firm’s performance had been “much more robust than at first seemed possible”.

In August M&S announced it was set to cut 7,000 jobs over three months.

Sales for the six-month period across the group slid by 15.8% to £4.09bn – largely impacted by lower clothing and home sales.

Clothing sales in particular were dented by lockdowns and the desire for more casual clothes, the firm said. Between July and September, clothing sales in its city centre stores, for example, were down by 53%.

However, M&S does anticipate that demand for more formal clothes and occasion-wear will return, it said in a statement.

Catherine Shuttleworth, retail analyst and chief executive at retail marketing agency Savvy, told the BBC: “Marks and Spencer is committed to the High Street, but that comes at an enormous cost.

“Its 600 stores were closed [during lockdown], they’ve picked up on online and online sales are stronger than they’ve ever been. But that in no way covers the amount of sales loss they’ve covered this year.”

“You’ve got to change to survive. While Marks was saying it, they weren’t necessarily doing it, but it has now changed the way they work even at a simple level.”

Ocado tie-up

The group also reported strong growth in its Ocado Retail joint venture, which started delivering M&S food as the start of September.

It said the partnership has reported a 47.9% jump in sales, while profitability has also improved.

Ocado delivery driver

M&S created over 750 new lines including in grocery and homecare to broaden its appeal on the Ocado platform, which previously delivered for Waitrose.

M&S was one of the few big food retailers without its own internet-based delivery service, and the tie-up with Ocado had been described as a key moment in the retailer’s shift to online.

Julie Palmer, partner at Begbies Traynor, said that M&S “is already reaping the rewards of an excellent partnership with Ocado.

“Its food business could benefit from the forthcoming national lockdown [in England] as consumers look for high-quality meals as an alternative to going out.

“This could help it counter the effects of fewer people grabbing a sandwich while nipping out of the office for lunch,” she said.

M&S also said its grocery business had performed “strongly” over the half-year, with like-for-like sales rising by 2.7% on the back of substantial growth from its Simply Food stores.

Ms Palmer added: “M&S has an opportunity to step up and sit at the table with the big players in the retail market once more, but to stake its claim, it can’t just bring food to the party, it has to dress better and provide the furniture too.”

Recovery signs

Detractors have often described M&S as the lame duck of UK retail, forever struggling to reinvent itself quickly enough to keep up with changing consumer tastes. Its current management, however, will hope that this set of results will persuade investors that a more apt comparison would be with another bird, the phoenix.

Today’s loss is the ashes from which the management hopes a new, slimmed-down and digital-savvy M&S will emerge.

Steve Rowe talks of the pandemic having forced the company to compress three years’ of changes into a single year – a hint, perhaps that the crisis may have come by chance at a good time in his plan to revive the company’s fortunes.

There are signs that the big bet on a commercial alliance with Ocado is paying off, but the Achilles heel remains weak sales in clothing and general merchandise. M&S shares were up more than 4% in early trading, suggesting that investors may discern the first flaps of the phoenix’s wings.

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The update came as M&S continues to push forward with its transformation strategy. The plans, which saw M&S announce 7,000 job cuts across stores and management in August, will enable the business to emerge from the crisis in a “stronger, leaner and more focused position”, the firm said in a statement.

The half-year results included a £92m exceptional cost reflecting these cuts. The group said it would also see further charges of up to £120m due to store closures over the next seven years.

In a call with journalists, Mr Rowe said: “My goal remains unchanged – that is to deliver the long-term transformation for M&S, building a brand that is more digital in a world that will never be the same again.”

“We know the challenges we’re facing will continue,” he added, citing the upcoming lockdown in England, but said the firm was in a “much better position” as the key Christmas trading period approaches.

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Credit card freeze extended for six months ahead of new lockdown

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Payment holidays on credit cards, car finance, personal loans and pawned goods have been extended ahead of tougher coronavirus restrictions.

The Financial Conduct Authority (FCA) said customers who had not yet deferred a payment could now request one for up to six months.

Those with short-term credit such as payday loans can defer for one month.

“It is important that consumer credit customers who can afford to do so continue to make repayments,” it said.

“Borrowers should only take up this support if they need it.”

It comes after the government announced a nationwide lockdown for England beginning on Thursday, which will force all non-essential retailers to close.

The FCA had already brought in payment holidays for credit customers in April, extending them for three months in July.

But it has now reviewed the rules – which apply across the UK – amid fears tougher restrictions will hit many more people’s finances. The payment holidays will also apply to those with rent to own and buy-now pay-later deals, it said.

In addition, anyone already benefitting from a payment deferral will be able to apply for a second deferral.

However, the FCA would not comment on whether people could still have interest on the first £500 of their overdrafts waived. It said it would make a fuller statement in due course.

“We will work with trade bodies and lenders on how to implement these proposals as quickly as possible, and will make another announcement shortly,” the FCA said of the payment deferrals.

In the meantime, it said customers should not contact lenders who will provide information “soon” on how to apply for the support.

It advised anyone still experiencing payment difficulties to speak to their lender to agree “tailored support”.

On Saturday, the FCA also announced plans to extend payment holidays for mortgage borrowers.

The extension of payment holidays will be a relief to many people already in lockdown and facing a drop in income, and those just about to return to restrictions.

But the theme running through this FCA statement is that a debt problem delayed is not a debt problem solved.

The financial watchdog is stressing that deferrals should not be used unless they are really needed, and that “tailored support” may be a better option for many people.

People who think they will only have a short-term squeeze on their finances will watch developments keenly and hope for an extension to interest-free overdrafts.

Importantly, banks and other lenders have a duty to identify anyone who is vulnerable and make sure they are supported. As this crisis intensifies, the number of people falling into that category is likely to rise.

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Business Coronavirus COVID-19 UK

Covid: Ryanair will not offer refunds for November flights

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Ryanair customers will not be refunded for flights in November, according to its boss, despite the UK government banning all but essential travel.

Michael O’Leary said if a flight was operating, passengers would not get their money back but they could change to a later flight without paying a fee.

From Thursday, all but essential travel will be banned under a second lockdown.

Ryanair said the first lockdown and subsequent restrictions had resulted in an 80% drop in passenger numbers.

It said 17.1 million people travelled on the airline in the six months to September, compared with 85.7 million last year.

The carrier reported a €196.5m (£174m) loss for the period compared with a €1.15bn profit last year.

But it warned the situation was likely to worsen, saying it “will continue to be a hugely challenging year for Ryanair”.

The new lockdown measures for England to stop the spread of the coronavirus were announced on Saturday and are expected to come into force on 5 November following a vote in the House of Commons on Wednesday.

They will remain in place until at least 2 December though Cabinet Office minister Michael Gove said restrictions could extend beyond that date.

From 5 November until 2 December, people living in England are not allowed to travel overseas “unless for work, education or other legally permitted reasons”.

If you’ve booked a flight to go on holiday during that period you are not supposed to travel.

But because people who have a valid reason can travel, airlines will operate a limited number of flights to certain destinations.

In fact, Ryanair says it won’t cancel any of the flights it had scheduled during that period.

However, the law states that you are only entitled to a refund if your flight is actually cancelled.

So the only option for people who are booked to fly with Ryanair on a holiday during that period is to try and reschedule their booking to a Ryanair flight after 2 December. There should be no fee for changing a booking but there is also no guarantee that the new international travel restrictions won’t remain in place beyond that date.

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Commenting on what it means for people who have booked flights, Mr O’Leary told the BBC’s Today programme: “If a flight is operating then no, we will not be offering refunds.

“But what customers can avail of is our change facility and we’ve waived the change fee so if they have booking in November they can change it and move it to December or January if needs be. But there won’t be refunds on flights that are operating and travelling.”

‘No outstanding refunds’

Mr O’Leary also said that Ryanair had paid out all refunds to customers who had requested one following disruption to flights earlier this year.

“We have refunded every single customer who has requested a refund… from March, April, May, June and July.

“Every customer who has requested a cash refund from Ryanair has now received it.”

Ryanair chief executive Michael O'Leary
Ryanair chief executive Michael O’Leary said the airline has paid all Covid-linked refunds in full

He said the airline had “no backlog” in its refunds department, adding: “Even if you apply for a refund today you’ll receive now in the next three to four days.”

Mr O’Leary said the airline had paid out €1.5bn in refunds.

Revenues in the six months to September plunged to €1.1bn from €5.3bn last year.

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If you have a package holiday cancelled by the provider, then a refund should be provided for the whole holiday within 14 days

If your flight is cancelled, you are entitled to a full refund to the original form of payment within seven days, although many airlines are struggling to meet that deadline. You can accept, or refuse, vouchers or a rebooking but a voucher will probably be invalid if the airline later goes bust

If you decide against going on a future flight, which is not yet cancelled, then there is no right to a refund. Different airlines have different rules over what you can do, but many are waiving any charges for changing to a later flight or having a voucher instead. Your travel insurance is unlikely to cover you.

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During the period, air travel ground to a virtual halt as countries introduced measures to stop the spread of the coronavirus.

However, when flights did resume Ryanair said passenger confidence and forward bookings “were negatively impacted by the return of uncoordinated EU government flight restrictions in September and October which heavily curtailed travel to and from much of Central Europe, the UK, Ireland, Austria, Belgium and Portugal”.