FTSE closes down as economists warn over Sunak jobs plan – live updates
Rishi Sunak’s wage subsidy announcement – the key points at a glance
Russell Lynch: Support scheme may not save jobs market from winter chill
Job Support Scheme will provide wage top-ups for employees on reduced hours
Businesses offered extended loan repayment terms
VAT cut for tourism and hospitality industries extended
Markets largely unmoved by speech
Ambrose Evans-Pritchard: Europe risks languishing as America powers ahead
Rishi Sunak has revealed a new batch of measures to support British businesses in the face of tightening restrictions and rising Covid-19 case numbers.
The Chancellor unveiled new wage support measures ahead of the end of the widely used furlough scheme; extended loans to help businesses recover from the pandemic; and extended a VAT cut for the tourism and hospitality industries.
His announcements received a mixed reception: although business groups welcomed a chance of avoid a cliff edge once the furlough scheme ends, economists have warned the new job support scheme could encourage businesses to fire staff who are currently on reduced hours.
The FTSE closed down 1.3pc after traders were left largely unimpressed by the economic package. Economists at JP Morgan were among those to warn that the latest economic package was comparably "small".
04:41 PMS&P 500 back in the green
S&P 500 back in the green
The S&P 500 has rebounded on a report that Treasury Secretary Steven Mnuchin plans to resume negotiations with House Speaker Nancy Pelosi over a coronavirus aid package.
He told a Senate Banking Committee hearing on Thursday that a targeted pandemic relief package is “still needed”, Bloomberg notes.
Tech companies and retailers led the advance in equities, following an early rout that took the index 10pc below its September high. The S&P was up 0.36pc, and Dow Jones was up 0.22pc.
Shares were bolstered by a strong new homes report in the US. Sales of new homes in August rose by a very strong 4.8pc to a seasonally-adjusted annual rate of 1.01 million units, the US Department of Commerce reported. The jump followed a new home sales spike in July of 13.9pc.
04:32 PMHow much has Sunak spent on business loans so far?
How much has Sunak spent on business loans so far?
It can be hard to keep track of all the various government schemes launched this year to tackle the economic emergency. Here are the various loans schemes and what they've paid out:
04:20 PMOvernight billionaire
Overnight billionaire
There's some good news today – at least for one man.
Mathias Doepfner, chief executive of German media group Axel Springer, has become an overnight billionaire after the company's major shareholder donated him about $1.2bn in shares. Via Bloomberg:
Friede Springer, 78, has sold about 4.1pc of her shares to Doepfner, 57, while also gifting him 15pc of the company’s share capital, the company said in a statement on Thursday. Doepfner will also be responsible for Springer’s voting rights. As a result, Springer and Doepfner will both control around 22pc of the group that owns Germany’s most-read newspaper Bild and Die Welt.
Well that's a nice payday, isn't it?
04:15 PMRetailers and aviation left disappointed
Retailers and aviation left disappointed
Retailers have warned they will struggle after the Chancellor failed to extend the business rates holiday, while airlines pleaded for a cut in passenger duty to prevent further distress, my colleague Laura Onita writes.
A 12-month pause on the business rates was brought in when coronavirus struck, giving many firms some breathing space after they were forced to close their doors.
From April companies will have to start paying rates based on the rental value of properties last assessed five years ago, many of which will be disportionately high.
The Government has already said that the next revaluation will take place in 2023.
Read the full story here.
03:57 PMFTSE closes down
FTSE closes down
The FTSE 100 closed down 1.3pc at 5822.8. The FTSE 250 was 1.12pc lower at 16802.7.
03:53 PMChancellor 'will no longer keep the country’s economy on artificial life support'
Chancellor 'will no longer keep the country’s economy on artificial life support'
There was a lot to unwrap in the Chancellor's statement, says the Telegraph's Head of Personal Finance Lauren Davidson. Some people will feel hard done by, she notes, as Sunak uses a tonal shift to say he "will no longer keep the country’s economy on artificial life support". So who will be happy with this statement?
The Chancellor’s statement should please taxpayers, who will one day foot the bill for all this spending. The jobs programme, for example, should cost £300m a month per million workers – a vast saving on the £39bn already spent on the furlough scheme.It should also be welcomed by those who believe that no news is good news. There was no mention of the five tax grabs that had been expected this autumn – nor is there likely to be for some time now that the Chancellor has cancelled the Budget.
Read Lauren's full comment here.
03:44 PM"Three areas missed out"
"Three areas missed out"
Easy to pick holes in measures that have clearly been designed in a fast-moving situation, but here's two cents from Robert Pullen at tax advisers Blick Rothenberg. He reckons Rishi Sunak missed out on three areas:
- "Supporting the thousands of business owners who operate through a company and draw dividends – they largely missed out in the first round of support, and remain side lined now."
- "Setting out a longer-term vision – what will happen in 6 months?"
- "Although the VAT 'lump sum' payment in March has been recognised as being a massive hurdle (and rightly it is now being spread out), no thought has been given to individuals who face a similar problem in January when both their delayed payment on account from July 2020, the balance due for the 2019/20 tax year, plus the first payment on account towards 2020/21 will be due at the same time."
03:24 PMArts industry left out
Arts industry left out
More reaction to the jobs support scheme, this time from the arts sector, where it's estimated that three times as many people are currently on furlough than the national average. Here's Julian Bird, chief executive of the Society of London Theatre and UK Theatre, via PA:
Our previously viable and world-beating sector is facing decimation as with no income, organisations cannot bring their staff back to work.
And this is a good point from the Music Venue Trust, which represents grassroots music venues: it says the new measures were "built around the premise of returning to work". And yet "the Government has made it clear that it does not believe that the time is right for the live music industry to return to work".
The live music industry faces a crisis which is not of its own making. It is vital that it survives this crisis.
03:13 PMFTSE sinks
FTSE sinks
It's turning into a dispiriting day on the markets. The FTSE 100 is down 1.42pc at 5815.9, having sunk a little more since Sunak spoke.
03:08 PM"How many positions will this new compromise actually save?"
"How many positions will this new compromise actually save?"
The Telegraph's Economics Editor Russell Lynch has given his verdict. The Chancellor has come up with these schemes in response to rising panic and fresh restrictions as he wrestles with the pandemic’s “awful trade-offs” between health and wealth. But how many positions will this new compromise save?
In stepping in to support the wages of staff able to work the minimum of a third of their existing hours, the Chancellor has struck a halfway-house compromise between the demands of the TUC and the CBI. But crunch the numbers and the calculus isn’t too appealing for a boss faced with the problem of what to do with a worker on the minimum hours demanded by the scheme.
If an employer keeps on a member of staff for a third of his or her hours, under Sunak's plan he is still accountable for a third of the pay of the remaining 66pc. Effectively he’s paying 55pc of a worker’s wages for one-third of the hours. How many companies are going to do that?
03:00 PMSpecial help for the capital?
Special help for the capital?
It's fair to say there's been a mixed reaction to the Chancellor's announcements today. One focus is on city centres that have seen footfall plunge – nowhere more so than London. Here's London Chamber of Commerce and Industry chief executive Richard Burge:
Loan repayment and VAT deferral measures, including the lower rate VAT extension of those in hospitality and tourism will be welcomed. But many London businesses will be acutely aware that high business rate payments are soon to be a ball and chain on their recovery. This challenge is particularly acute for those in central London – where footfall is over 50pc lower than normal.The Prime Minister will know better than most that central London is the economic engine of the UK. I hope his government will now be looking at further, specific, measures to help the capital drive the UK recovery faster.
02:53 PMFurlough and jobs support scheme: in numbers
Furlough and jobs support scheme: in numbers
Our graphics wizards have crunched the numbers on how many people the furlough scheme and its successor are likely to help:
02:45 PMHandover
Handover
Time for me to hand over to my colleague Jon Yeomans, who will steer the blog into the evening. Thanks for following along today!
02:42 PMPub bosses say new support measures won’t prevent job cuts
Pub bosses say new support measures won’t prevent job cuts
Restaurant and pub bosses warned they will be forced to shut sites and cut jobs as they said the Chancellor’s latest support would not cover the damage caused by curfew rules.
My colleague Hannah Uttley reports:
As part of measures intended to protect people in work, Rishi Sunak said the jobs support scheme, which will replace the furlough scheme, will see workers get at least 77pc of their salaries over the next six months. The scheme will apply to staff who work at least a third of their usual hours, with the Government and the employer topping up two-thirds of the lost pay from hours that cannot be worked. The Treasury will also extend the temporary cut to VAT from January to March 31 for the hospitality and tourism industries - the only support specific to the sectors announced by the Chancellor on Thursday.However, industry chiefs said the measures fell short of what was needed to protect jobs within the hospitality sector given the latest coronavirus restrictions imposed on businesses this week.
02:35 PMQ&A
Q&A
Final question:
Q: What’s your message to unemployed people? And how many job losses do you expect?
The Chancellor claims that the UK’s support for the self-employed has been better than almost any other country. He notes that this has not covered people who have not previously filed a tax return.
- Read more (from March): How Rishi Sunak’s self-employed bailout excludes hundreds of thousands of workers
On unemployment, he points to forecasts by the Bank of England and Office for Budget Responsibility, which he acknowledges “don’t make for good reading”.
02:30 PMQ&A
Q: Did Eat Out to Help Out spread the virus?
Q&A
Q: Did Eat Out to Help Out spread the virus?
The Chancellor says the UK is following a similar virus resurgence path to other countries in Europe, saying it would be “simplistic” to pin it on any single measure.
Q: Will businesses simply lay people off rather than take part in the Job Support Scheme?
Mr Sunak points out that a company that goes from paying 20pc to 55pc would mean its employee has returned to working a third of their regular hours, rather than being furloughed.
The Chancellor says that companies will want to hold on to their employees in order to retain their “skills” and “talent”. He fails to acknowledge that the support in this instant goes to the employee, but the company ends up paying extra.
Q: Private companies are making cuts. Should the state do the same?
Mr Sunak says it is right that the state steps in to provide support at a time like this, saying that the Government’s actions are also working on suppressing the virus. Going forward, he says he agrees that the state being as “nimble and agile” as possible and says levying lower taxes is a good thing. For now, he says, the actions being taken will help support the economy through the virus and into a recovery.
02:21 PMQ&A
Q: How are you going to pay the bill for these support measures?
Q&A
Q: How are you going to pay the bill for these support measures?
Mr Sunak says the level of support at the start of the pandemic is not sustainable, saying that measures are now more targeted. He says he will have to make “difficult decisions” in the future, but beyond that dodges the question.
Q: How much will today’s announcements cost?
The Chancellor says the Treasury will publish costings later in the autumn. He says the VAT cut extension will cost about £800m. He says the loan delays are complicated and will take longer to work out. For the Job Support Scheme, he says that if figures remain roughly in line with the furlough scheme, he says it should cost about £300m a month per million workers – but says the calculations will be complicated.
02:16 PMQ&A
Q: Are jobs losses in areas such as hospitality ‘the price that has to be paid’?
Q&A
Q: Are jobs losses in areas such as hospitality ‘the price that has to be paid’?
The Chancellor says that hospitality sector companies are already paying no business rates, and refers to the Eat Out to Help Out scheme and sustained VAT cut. He says this offers a “considerable amount of support for that industry”.
Q: Will unemployment go over 4m? Will people who lose their jobs have new ones by Christmas?
Mr Sunak says the unemployment rate will continue to go up, but reiterates that he won’t be able to “save every job”. He says this issue remains his “number one priority”.
Q: Are you prepared to scale up these measures?
The Chancellor says we have to wait for the newly-announced measures to take hold. He says they will make a “real difference” to businesses, but adds “we stand ready to do what’s necessary”.
02:10 PMQ&A
Q&A
The Chancellor is taking press questions.
Q: Is there an incentive for companies to hold on to staff?
Rishi Sunak says that the Job Support Scheme operates in a “fair way”, and notes that it can combine with the Job Retention Bonus. Together, he says they produce a strong cash incentive for keeping staff on board.
Q: What is your message for people who are not help by measures?
Mr Sunak says there are a range of measures in place for the vulnerable, including flagging the £500 payment for low-wage workers who are forced into isolation.
02:03 PMSunak speaks (again)
Sunak speaks (again)
Rishi Sunak has begun a press conference. Watch live:
01:57 PMHow stocks have shifted this year
How stocks have shifted this year
Despite erasing its gains for 2020, the S&P still remains fairly ahead of its European peers.
01:40 PMUS market moves
01:38 PMUS jobless claims reaction: ‘Disappointing and ominous’
US market moves
01:38 PMUS jobless claims reaction: ‘Disappointing and ominous’
US jobless claims reaction: ‘Disappointing and ominous’
Today’s US jobless claims data is “disappointing and ominous” (see 1:36pm update), say Pantheon Macroeconomics’ Ian Shepherdson. He writes:
The weekly initial claims numbers are noisy, but they have been little changed, net, over the past four weeks, since a change in the seasonal adjustment methodology triggered a one-time 127K drop in the final week of August.
Using the old seasonals, it looks as though the trend in claims has been unchanged since mid-August. This is consistent with the daily small business employment data produced by Homebase, pointing to flat payrolls in the sector in August and, more recently, a small outright decline. In short, the momentum in the labor market is stalling.
James Knightley from ING concurs that the US labour market seems to have reached a plateau, adding:
With Covid-19 cases on the rise again, fears of renewed containment measures, similar to what we are seeing in Europe, could constrain job opportunities even more
01:33 PMS&P 500 turns negative for 2020
S&P 500 turns negative for 2020
As expected, Wall Street has dropped at the open, meaning the benchmark S&P 500 is now negative for the year – off about 6pc this month alone.
01:23 PMJPMorgan tells some UK staff to still return to office
JPMorgan tells some UK staff to still return to office
JPMorgan is facing a staff revolt after telling employees who have returned to the office to continue doing so despite the Government’s tightened guidance on working from home.
My colleague Michael O’Dwyer reports:
In a memo sent to its 19,000 UK staff late on Wednesday night, the US bank said that following new government guidance to help prevent the spread of Covid-19, it would halt plans to bring more people back to the office but did not say it would be sending people home.
Staff were told: “Whatever your established working pattern, you should continue to follow the direction you have been given by your management team and listen out for any potential changes.”
The bank’s approach raises questions about whether it is complying with guidance that people should work from home if they can.
12:48 PMWall Street set to fall again
Wall Street set to fall again
US stocks are set to fall again at the open, after Federal Reserve chair Jay Powell’s warning last night that further fiscal firepower is needed to support America’s recovery:
NASDAQ-100 futures down 1.4% https://t.co/9TqSD1xH4H pic.twitter.com/KUn8xOze11
— Joe Weisenthal (@TheStalwart) September 24, 2020
12:46 PMPotentially high costs for employers
Potentially high costs for employers
The BBC’s Simon Jack has done some maths on just how must more this scheme could end up costing employers:
Times that by three to spread the available work over the maximum number of employees means that the employer will pay 165% for the equivalent of one full time employees wages. Some employers may prefer to pay 100% of one persons wages and let two people go....2/
— Simon Jack (@BBCSimonJack) September 24, 2020
Ultimately, the people who will decide which jobs are and which aren’t viable longer term are the employers which is why it is very hard to figure out how much this scheme will cost the taxpayer. End
— Simon Jack (@BBCSimonJack) September 24, 2020
KCL economics professor Jonathan Portes is pretty pessimistic:
One cheer for this.
— Jonathan Portes (@jdportes) September 24, 2020
- shift from furlough (CJRS) to wage subsidy (JSS) is right move
- but JSS not very generous, too complex, relies on employer goodwill
- and *nothing* today to get people into *new* jobs; big mistake. https://t.co/BhI6SqulOn
12:42 PMLabour experts raise concerns
Labour experts raise concerns
As experts get more time to digest the Chancellor’s jobs announcement, concerns are beginning to emerge.
Torsten Bell, chief executive of think tank Resolution Foundation, notes that employers may choose to simply cut hours rather than top up part-time wages:
This is one reason (beyond the end January cliff edge) why it isn't sensible to rely on the interaction of this new scheme with the Job Retention Bonus (because employers will want to try and get the bonus without entering this new scheme)
— Torsten Bell (@TorstenBell) September 24, 2020
Meanwhile, Tony Wilson, director of the Institute for Employment Studies, is surprised there are no new measures to encourage hiring:
Positives first 👍
— Tony Wilson (@tonywilsonIES) September 24, 2020
Most of the time (and if you follow the law) agreeing hours reductions or making redundancies is time consuming and costly, and vast majority of firms want to do the right thing by staff.
So this scheme will make it much easier for good employers to keep ppl on
As I say I think many firms will sign up, esp. larger ones.
— Tony Wilson (@tonywilsonIES) September 24, 2020
But even in JRS we saw that many workers slipped thru the cracks cos their employers wouldn't claim, and those cracks could become gaping holes in this scheme. And the lowest paid and least secure will be most at risk.
Finally - v surprised we didn't get any broader measures to support new hiring.
— Tony Wilson (@tonywilsonIES) September 24, 2020
We haven't shut down the whole economy, but we've added hugely this week to econ uncertainty (plus prospect of ever harder Brexit in a few months).
Hiring is flat, we need to get it moving again.
12:36 PMUS initial jobless claims rise to 870,000
US initial jobless claims rise to 870,000
There were 870,000 initial jobless claims filed by Americans last week – a slight rise on the previous week.
Meanwhile, continuing claims held pretty steady at around 12.6m.
12:24 PMHow the new wage subsidy works
How the new wage subsidy works
Here’s how the new wage subsidy scheme will work.
Employees must work at least a third of their normal hours and be paid as normal for those hours. The Government and the employer will then top up wages for any hours not worked – equivalent to third each of the shortfall from the worker’s full-hours salary – and the employee will have suffer some loss in income.
For example: someone who normally worked 40 hours per week, but now works 14 hours at £10 per hour will get £140 for their work, £78 bonus from their employer and £78 from the government. This means they are just £104 short of their usual salary for that week.
Similarly, if someone who normally worked 40 hours a week on £10 per hour is asked to work 20 hours, they would receive £200 for their work, £60 as a subsidy from their employer and £60 from the Government. This amounts to a total pay of £320. The scheme ensures they would lose only 20pc of their salary in this case.
So the more hours someone works the smaller hit they have to take on their old income (as you might hope). The employer and Government also contribute a smaller share.
The total contribution from the Government will be capped at £697.
12:07 PMEconomists react
Economists react
Here’s some reaction from economists to the Chancellor’s Winter Plan.
Ruth Gregory from Capital Economics said the plan amounts to “cushioning the blow, but not eliminating it”. She added:
This extra fiscal support should help to temper the rise in unemployment at the end of the furlough scheme in October, prevent further corporate insolvencies and boost activity in the hospitality sector at the start of 2021. Even so, the “job support scheme” provides less generous support for the economy than the furlough scheme did.
The government was paying 60pc of salaries under the furlough scheme and the company was paying 20pc. Under the new scheme, the company pays a minimum of 55% and the government pays a maximum of 22pc.
Samuel Tombs from Pantheon Economics notes that, taken alone, the Job Support Scheme might not appear that tempting for some employers:
Will the Job Support Scheme really persuade firms to keep workers on? Say I employ 10 people, and work has fallen 50%. My wage bill would be higher if I employ all 10 part-time—50% wages plus a top-up contribution of 17% (1/3 of remaining 50%)—than if I employ only 5 full-time.
— Samuel Tombs (@samueltombs) September 24, 2020
It’s worth noting the impact the previously-announced Job Retention bonus will have an impact on this decision though: companies are still set for payouts if they keep hold of staff.
Kallum Pickering from Berenberg adds that the plans are contingent on there not being a second lockdown. He writes:
Amid the renewed surge in COVID-19 cases in the UK, the near-term economic outlook has darkened materially. With luck, the modest new restrictions, including closing restaurants and pubs at 10pm, limiting the number of people in social groups, a return to home working for more office workers and stricter adherence to mask wearing will help to bring down the case load while not inhibiting economic activity so badly that the recovery stalls.
However, if the UK is forced to lockdown after 31 October, a mere wage subsidy scheme that requires workers to be on at least 33% of their normal hours will not help those workers in sectors that are forced to shut down.
11:59 AMSunak’s speech: Key points, condensed
Sunak’s speech: Key points, condensed
Our video team has wrapped up the key points from Rishi Sunak’s speech in this two-minute video:
11:54 AMBCC: Plans will give economy a ‘shot in the arm’
BCC: Plans will give economy a ‘shot in the arm’
Adam Marshall, director-general of the British Chambers of Commerce, has welcomed Mr Sunak’s announcement, saying:
The measures announced by the Chancellor will give business and the economy an important shot in the arm. Chambers of Commerce have consistently called for a new generation of support to help protect livelihoods and ease the cash pressures faced by firms as they head into a challenging and uncertain winter.
The Chancellor has responded to our concerns with substantial steps that will help companies preserve jobs and navigate through the coming months. The new Jobs Support Scheme will help many companies hold on to valued, skilled employees. Businesses will be eager to see the detail and consider whether and how they will be able to use the scheme.
He added, however, that the Government must be prepared to take further steps:
The Chancellor must remain open to taking additional action to support parts of the economy facing unprecedented challenges over the months ahead. Chambers of Commerce across the UK will continue to work with government to ensure the benefits of these schemes are delivered to firms on the ground.
11:39 AMTUC welcomes new jobs support
TUC welcomes new jobs support
Welcoming the Chancellor’s announcement, TUC general secretary Frances O’Grady said:
Unions have been pushing hard for continued jobs support for working people. We are pleased the Chancellor has listened and done the right thing. This scheme will provide a lifeline for many firms with a viable future beyond the pandemic.
But there’s still unfinished business. Unworked hours under the scheme must not be wasted. Ministers must work with business and unions to offer high-quality retraining, so workers are prepared for the future economy.
She added unions would be “looking closely at the details to make sure there are strings attached”.
11:37 AMMarkets unmoved
Markets unmoved
The Chancellor’s speech (most of which was broadly expected) has had very little impact on markets. The pound jumped slightly before he began speaking, but has since pulled back:
Bonds are unmoved, while equities have continued to flatten out (as they were doing across Europe before the speech). Investors appear unmoved.
11:28 AMConditions on support for big companies
Conditions on support for big companies
There’s an interesting point of conditionality from the Chancellor today: big businesses are only going to be eligible for the Job Support Scheme if they can demonstrate revenues have fallen as a result of Covid-19. That’s a far cry from the ‘whatever necessary’ approach he took at the start of the pandemic.
11:25 AMIFS director: Many furloughed workers are likely to lose their jobs
IFS director: Many furloughed workers are likely to lose their jobs
Paul Johnson, director of the Institute for Fiscal Studies, says the new Job Support Scheme represents a “[very] big change” from the furlough scheme. He warns jobs losses are likely:
This is a v big change from furlough. Less generous. Only open to those who are working a third of normal hours. Understandable given need to adapt as economy changes. Can't pay all wages forever. But a lot on furlough now likely to lose their job. https://t.co/lFBEgKtlnP
— Paul Johnson (@PJTheEconomist) September 24, 2020
11:21 AMSunak speech: Key points
Sunak speech: Key points
These are the key announcements from the Chancellor’s speech:
- The furlough scheme will end as planned next month
- The Government will introduce a new Job Support Scheme, offering to pay up to two-thirds of reduced-hours employees’ wage shortfalls via contributions from the Government and employers themselves
- Under a scheme called Pay As You Grow, businesses will be given longer-term loans
- A grant scheme for the self-employed will be extended
- A hospitality and tourism tax cut will be extended
Read our full wrap-up here.
11:12 AMFurther measures
Further measures
The Chancellor has also announced a string of further measures. On VAT, the Chancellor says:
- Businesses will be allowed to spread their VAT bill over 11 smaller repayments
- The lowered, 5pc VAT rate for tourism and hospitality business will be extended until the end of March
VAT for tourism and hospitality businesses will remain at 5% until March 31 2021 (the end of the "six month" period flagged by PM)
— Jonathan Eley (@JonathanEley) September 24, 2020
He also announced changes to the terms of CBILS loans – Government-backed lending to companies to help them weather the Covid-19 crisis. CBILS repayment terms have now been extended to 10 years.
The Self-Employment Income Support Scheme will be extended until the end of April.
11:09 AMWhat’s in a name?
What’s in a name?
A new financial support scheme – extending business loan terms from six years to 10 year – has been dubbed ‘Pay As You Grow’.
11:07 AM‘Radical interventions’
‘Radical interventions’
Describe his wage subsidy scheme, Mr Sunak said:
These are radical interventions in the UK labor market. Policies we have never tried in this country before.
11:05 AMWage top-ups announced
Wage top-ups announced
As expected, Mr Sunak has announced a new jobs-support programme, open to all employers in the UK (even if they didn’t use the furlough scheme), which will run for six months from the beginning of November. Big firms will be allowed to apply if they can prove turnover has fallen.
Under the scheme, employers will continue to pay staff wages for the hours they work. But for the hours not worked, the Government and the employer will each pay one third of the salary that would have been owed.
An employee who works a third of their normal hours, for example, would receive pay for those hours, with the employer paying a third of the remaining hours not worked, and the government paying another third.
To qualify, employees must work at least a third of their normal hours – the Chancellor says this is to ensure “viable jobs” are being supported.
Sunak says "fundamentally wrong to sustain jobs that only exist inside the furlough... I cannot save every business, I cannot save every job. No Chancellor could. But what we can and must do is deal with real problems businesses are facing now. Today the problem is different."
— Jessica Elgot (@jessicaelgot) September 24, 2020
Potentially significant implications for policy measures, as a result
— Alpesh Paleja (@AlpeshPaleja) September 24, 2020
11:02 AMSunak: I cannot save all jobs
Sunak: I cannot save all jobs
Rishi Sunak has confirmed the furlough scheme will end as planned at the end of October, saying the UK economy is going through a permanent adjustment and can’t continue those levels of support. The Chancellor says he can’t protect every job.
10:59 AMSunak speaks
Sunak speaks
The Chancellor has begun speaking, slightly earlier than expected:
Today, the Chancellor @RishiSunak will present our #WinterEconomyPlan to @UKParliament. Watch the live stream here. https://t.co/Z4h0MzL7Gm
— HM Treasury (@hmtreasury) September 24, 2020
10:45 AMSunak: CBI and TUC support new jobs plan
Sunak: CBI and TUC support new jobs plan
The Chancellor tweets:
Productive meeting and pleased to have support for our Winter Economy Plan from @cbicarolyn of @CBItweets and @FrancesOGrady of @The_TUC ahead of my statement to the House of Commons shortly. pic.twitter.com/vXZEjhRgeI
— Rishi Sunak (@RishiSunak) September 24, 2020
10:44 AMRolls-Royce closes in on building world’s fastest electric aeroplane
Rolls-Royce closes in on building world’s fastest electric aeroplane
Rolls-Royce is closing on its attempt to build the world’s fastest electric aeroplane, completing ground testing of the powertrain for the aircraft that aims to hit 300mph.
My colleague Alan Tovey reports:
The full-scale replica of the 500 horsepower system has been run up to full speed of 2,400 revolutions per minute driven by a battery pack with enough energy to power 250 homes.
Rolls has continued work on the programme – called project ACCEL – despite its difficult financial position.
Coronavirus has caused demand for passenger flights to collapse, hammering the company which makes half of its £15bn annual revenues from civil aviation.
Shares have sunk 75pc since the start of the year to just 156p and dipped another 2.6pc on Thursday, valuing Rolls at just £3bn.
10:25 AMRetail sales growth fastest in 18 months
Retail sales growth fastest in 18 months
UK retail sales volumes rose at the fastest since April in the year to September, according to the latest survey by the CBI.
Grocers drove the biggest share of the gains, according to the business group’s survey of 123 companies, including 56 retailers.
The CBI said retail sales were 8pc below they would have been in “normal” condition, adding:
But beneath that number, there was a huge diversity of experience. For example, sales of household furniture were 39pc higher than normal, DIY & hardware sales were up 20pc and groceries were up 10pc, while sales of clothing were down 40pc and department store sales were down 23pc.
Ben Jones, its principal economist, said:
The latest results suggest that the recovery in retail spending over the summer months has continued into September, which is welcome news, but retailers appear cautious over the near-term outlook.
The data highlights that there have been clear winners and losers within the retail sector as spending habits have changed. While some sub-sectors are thriving, others are still facing desperately difficult times.
With social distancing measures tightening again, those working in the hardest-hit sectors will be fearing the worst. It’s clear that targeted support measures will be needed to ensure that viable businesses can emerge intact on the other side of this crisis.
CBI lead economist Alpesh Paleja adds more details:
...including "non-store" sales, interestingly, which may reflect substitution of spending away from online channels
— Alpesh Paleja (@AlpeshPaleja) September 24, 2020
10:12 AMShort term working vs subsidy schemes: the difference
Short term working vs subsidy schemes: the difference
A thread of helpful tweets on different job support options from Tony Wilson, director of the Institute for Employment Studies:
So short-time working is likely to be partic. popular with larger and better employers who have people on more secure contracts and who abide by employment law.
— Tony Wilson (@tonywilsonIES) September 24, 2020
But for those with staff on variable hours, or who just force an hours change, big risks they choose not to take it up.
Subsidies would give more direct benefit for firms but with risk that they take the subsidy, still reduce hours and don't pass it on - leaving workers worse off (see above).
— Tony Wilson (@tonywilsonIES) September 24, 2020
So you would likely need more safeguards, which may mean more complexity and so lower take-up (see above)
10:03 AMPound moves limited ahead of Sunak speech
Pound moves limited ahead of Sunak speech
Sterling has been trading in a fairly limited range ahead of Rishi Sunak’s speech at 12:30pm. Its movements, as well as those of travel and hospitality stocks, might make for interesting viewing as the Chancellor lays out his new economic plans.
09:53 AMMarket moves
Market moves
With almost three hours of trading passed, European equities are still in the red – but they’re off the lows reached earlier, which included a two-month low for the pan-continental Stoxx 600.
09:37 AMDFS hails bounce-back after big annual loss
DFS hails bounce-back after big annual loss
Furniture chain DFS swung to a big annual loss but reported a strong bounce back in trading over the last three months.
My colleague Simon Foy reports:
The company posted a £81.2m pre-tax loss for the year to the end of June, compared with a profit of £22.4m for the same period last year.Revenue declined to £935m from £1.17bn a year earlier, driven by the forced closure of its showrooms during the height of the crisis.However, the sofa retailer said it had seen strong online orders since March and in its showrooms since reopening. This robust performance has continued into its current financial year, which has started “very strongly” with all its showrooms now open.
- Read more: DFS cheers sales bounce back
09:15 AMFootfall plateaus
Footfall plateaus
The ONS’s latest data release also shows that footfall across Britain’s retail locations has plateaued somewhat, with figures for the week ending September 20th “similar to the previous week”, despite a pick-up on high streets.
The ONS notes that the spike in late August was caused by a flattering comparison with 2019’s Bank Holiday, which landed a week later.
09:11 AMNearly a quarter of food and accommodation business see substantial risk of insolvency
Nearly a quarter of food and accommodation business see substantial risk of insolvency
More grim reading from the ONS’s latest set of economic surveys: 24pc of business in the accommodation and food services industry say they face a severe or moderate risk of insolvency, compared to just 11pc across all businesses.
The ONS notes:
Bars may not sum to 100pc because of rounding, percentages less than 1pc being removed for disclosure purposes, and businesses that have become insolvent being removed.
08:58 AMONS: 84pc of businesses were trading at start of month
ONS: 84pc of businesses were trading at start of month
Worrying news: figures from the Office for National Statistics show 84pc of UK businesses were trading as of the start of the this month.
It’s the first time the stats body has presented survey results weighted by different variables: in this case, adjusted to align with the proportion of difference industries across British business – which the ONS says “provides a representation of the business population”.
In stark contrast, a count weighted by employment suggests that 97pc of companies were trading during the survey period. The ONS says:
This gives businesses with larger employment a greater emphasis in results but still takes account of all businesses in the population.
08:40 AMSunak’s speech: What to expect
Sunak’s speech: What to expect
Rishi Sunak will today announce a replacement for the furlough scheme as part of a new economic rescue package to get the country through six more months of Covid restrictions.
As my colleagues reported last night:
A wage subsidy scheme will top up the pay of people who work at least half their normal hours in an attempt to avoid mass redundancies when the furlough scheme ends next month.Mr Sunak’s November Budget has been postponed until next year because of the current financial turmoil that saw markets plunge after new nationwide coronavirus restrictions were imposed this week.The Treasury said the new bailout plan would be entirely focused on saving jobs, with an extension of business loans expected to be among the measures unveiled.
Our deputy economics editor Tim Wallace has taken a closer look at what to expect. He writes:
Sunak is studying a model under which employers pay 100 per cent for hours worked, with the Government paying a proportion of the remaining full-time wage.
In one example, the Government and employers would share the cost of paying a worker two thirds of their “missing” wages. Employees would have to work at least half their contracted hours to qualify, and a cap was expected on the maximum top-up available.
- You can read his full explainer here: What time is Rishi Sunak's announcement today, and how might the wage subsidy scheme work?
08:21 AMMoney round-up
Money round-up
Here are some of the day’s top stories from the Telegraph Money team:
- The previously unloved property hotspots where coronavirus has completely reversed fortunes: Coronavirus, lockdown and the rise of working from home has overhauled buyer priorities and completely reversed the fortunes for some of Britain’s previously sluggish property markets.
- Six investment trusts that could be bargains for investors: Investors looking to make a quick profit could look to beaten up investment trusts, but timing when to invest can be difficult.
- How to invest in investment trusts: our guide for beginners and experts: Whether you are looking to buy a trust for the first time, or have done so for years, there are always tips and tricks you can learn to help you decipher which investments to buy.
08:07 AMGerman business confidence rises
German business confidence rises
Sentiment among German businesses has improved slightly, although their assessment of the current situation remains markedly below pre-virus levels.
Research by the Ifo Institute found the country’s businesses are increasingly confident about future prospects, with expectations at their highest level since late 2018.
07:52 AMMitchells & Butlers: Sales have fallen since end of Eat Out to Help Out
Mitchells & Butlers: Sales have fallen since end of Eat Out to Help Out
Pub chain Mitchells & Butlers says it food trading has taken a hit after the end of the Government’s Eat Out to Help Out meal subsidy scheme.
A boost from the popular discount programme lifted the group to 1.4pc like-for-like sales growth in August, compared to a 32.4pc drop in July. In the first three weeks of September, trading settled slightly lower, at -6.4pc on 2019’s figures.
Chief executive Phil Urban said:
The future remains both challenging and uncertain, with only this week a curfew and other additional restrictions being imposed on how and when we can operate. However, we believe we are well placed to meet that challenge and to keep Mitchells & Butlers at the forefront of the eating and drinking-out market.
07:35 AMNational Express says trading head of base case
National Express says trading head of base case
National Express says its performance has been “slightly above our previously guided base case”, with anticipated revenue at 50pc of pre-Covid levels until the end of August.
The FTSE 250 transport operator said it underlying liquidity remains “strong”, with several “notable contract wins” over recent months.
Operations in the UK have seen “good passenger growth” in recent weeks, the company said, with its West Midlands and Dundee bus businesses at 103pc and 92pc of last year’s service respectively – albeit with lower passenger levels (at 58pc and 63pc respectively).
Interim chief executive Chris Davies said:
This robust revenue collection and on-going tight cost control is underpinning positive EBITDA and cash flow projections. We are encouraged to see continued passenger growth across the Group, as our services provide safe and reliable services to those choosing to travel.
Jefferies’ Becky Lane suggested National Express shares look cheap, adding:
We continue to think current trading, slightly above previously guided base, and the size of the market share opportunity, with contract wins already being realised, is at odds with valuation
07:22 AMTimes Radio’s Newton Dunn: Sunak’s wage support scheme won’t be sector specific
Times Radio’s Newton Dunn: Sunak’s wage support scheme won’t be sector specific
Times Radio’s chief political commentator tweets:
Rishi Sunak will unveil a new coronavirus wage support scheme today, but he has ruled out making it sector-specific, I'm told. Too hard/unfair to pick one area of the economy to help over another, and then draw boundaries within it. More on @TimesRadio in a few minutes.
— Tom Newton Dunn (@tnewtondunn) September 24, 2020
07:14 AMFTSE falls
FTSE falls
As expected, European equities have stumbled at the open, following Wall Street downwards.
06:52 AMCineworld warns it may need to raise more cash
Cineworld warns it may need to raise more cash
Cineworld warned that it may need to shore up its finances after plunging to a massive half-year loss.
My colleague Simon Foy reports:
The FTSE 250 company reported a $1.6bn (£1.3bn) pre-tax loss for the six months to June, compared to a profit of $139.7m last year as it was forced to shut the majority of its theatres from mid-March to August due to the pandemic.
Revenues plunged by two-thirds to $712.4m during the period, while admissions came in at just $45m.The company said uncertainties around a second wave of Covid-19, leading to a prolonged recovery for the industry, meant that the future of the company could be at risk.
It said: “The directors recognise the challenges facing the business and the uncertainty around the recovery of the cinema industry following the impact of Covid-19, and the potential risk that remain, which represent uncertainties with respect to the group's ability to continue as a going concern.”
06:49 AMPets at Home says trading momentum has continued
Pets at Home says trading momentum has continued
Pets at Home says returned trading momentum across its operations has cotinued over recent weeks, with shopper habits returning to normal.
It achieved “double-digit” like-for-like sales growth over the eight weeks to September 10th, adding:
This is testament to several factors, not least the inherent resilience in our pet care model and the underlying pet care market.
The FTSE 250 retailer said its underlying pre-tax profit is likely to be ahead of market expectations based on current trading, but warned Covid-19 “continues to create a number of material uncertainties around the trading environment”.
06:11 AMAgenda: Stocks set to slide (again)
Agenda: Stocks set to slide (again)
Good morning. The FTSE 100 is set to slump again as more European countries tighten coronavirus restrictions in an attempt to slow the rise in infections.
In France, bars and restaurants in Marseilles and Aix-en-Provence will shut down while gatherings of more than 10 people in Paris will be banned and pubs will have to close early.
Meanwhile, all eyes will be on Chancellor Rishi Sunak at 12:30pm today as he sets out a new multi-billion pound support package in the Commons, which is expected to include wage subsidies, VAT cuts and new loans.
5 things to start your day
1) City centres are facing further pain as employers reverse plans to bring workers back to the office. PwC, HSBC, Goldman Sachs, Citigroup, Deutsche Bank and Lloyds have changed tack due to the changing Government guidance.
2) The Bank of England dismissed a tip-off that hedge funds had paid for privileged access to press conferences, a year before the issue erupted into public scandal.
3) Ryanair's chief executive Michael O'Leary says winter bookings have collapsed, and criticises the Government's 'incompetent' virus response.
4) Designer Paul Smith says the pandemic is the worst challenge he has faced during 50 years in the industry, and calls on landlords to be understanding.
5) Asda brings back door marshals to fight a second wave, with 1,000 workers to be stationed in and outside stores to remind people to wear facemasks.
What happened overnight
Asian shares fell on Thursday following a slump on Wall Street overnight, as a series of warnings from US Federal Reserve officials underscored investor worries over the resilience of the economic recovery.
US Federal Reserve Vice Chair Richard Clarida said on Wednesday that the US economy remains in a "deep hole" of joblessness and weak demand, and called for more fiscal stimulus, noting that policymakers "are not even going to begin thinking" about raising interest rates until inflation hits 2pc.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 1.35pc in the morning session on broad losses across the region.
Chinese blue-chips dropped 1.09pc, Hong Kong's Hang Seng fell 1.72pc, Seoul's KOSPI sank 1.73pc and Australian shares were 1.18pc lower. Japan's Nikkei fell 0.74pc.
A second wave of coronavirus infections in Europe threatened the economic recovery in the region pushing equities lower and propping up the safe-haven dollar.
On Wednesday, the Dow Jones Industrial Average fell 1.92pc, the S&P 500 lost 2.37pc and the Nasdaq Composite dropped 3.02pc.
Coming up today
Interim results
Cineworld, Funding Circle, Pendragon, SIG
Full-year
DFS Furniture, Go-Ahead, Smiths
Economics
CBI distributive trades survey (UK); Ifo business climate index (Germany); jobless claims (US)