Rolling coverage of the latest economic and financial news, as the pandemic drags easyJet into its first annual loss ever
- Introduction: easyJet dragged into annual loss
- Revenues halved last year; airline plans to run 20% capacity this quarter
- But bookings picked up after vaccine news
- FTSE 100 dips after Monday’s rally
The pound has gained ground this morning, as traders look for a signs of progress in the Brexit negotiations.
Sterling has gained 0.5% against the US dollar to $1.3262, its highest since last Wednesday, after Bloomberg reported that a deal could come next week – although the negotiations could still collapse.
The U.K. and European Union could strike a deal on their future trading and security relationship early next week as the two sides edge closer to agreement on the biggest sticking points.
As talks continue in Brussels, officials are planning for the possibility of a breakthrough to be announced as soon as Monday, although no precise day has been settled on, people familiar with the discussions said.
Related: EU vote on Brexit deal could be delayed until 28 December
The governor of the Bank of England, Andrew Bailey, is hailing the recent Covid-19 trial results as a ‘ big step forward’ in the crisis.
Economic theory indicates that heightened uncertainty about the future tends to have a negative effect on investment, it increases the attraction of waiting to see how the uncertainty is resolved
Both Covid and the process of setting the future relationship with the EU have increased uncertainty – we see this in surveys – and this has restrained investment. Now, I say this to be clear not in the sense of passing any judgement on Brexit – as a public official I take no position on that, and nor do I pass any judgement on the handling of Covid – that is not the point. Our job at the Bank of England is to call it as we see it. So, yes, uncertainty does reduce investment. As we said in our recent Monetary Policy Report, business expectations for sales next year remain subdued as do measures of investment intentions.
If these changes persist, they could require a reallocation of labour and capital, and this reallocation could be more or less costly. Now, none of us have good answers yet to how much these changes will persist, or even increase. But my best guess is that there will be lasting changes – and we can draw on evidence from history to support this view. I will add two further views, one is that we may see a reversal of the period of low productivity growth. Covid may be the spur – the change agent if you like.
Second, we must now focus and push ahead hard with the changes necessary to support changing the direction of our climate.
It requires major commitment from the financial services industry, to support the economy, businesses and the people of this country as we get back on our feet from the effects of Covid and transform the economy to support climate change.
Couple of footnotes from the Andrew Bailey speech just published:
a) scarring can happen without structural changes to economy
b) new business models resulting from pandemic doesn't necessarily mean better productivity growth pic.twitter.com/JBccPdpK2P