The European Central Bank has taken further dramatic measures try to boost the eurozone economies, amid their biggest recession since World War Two.
Just months after emergency measures, the central bank said it would increase the size of its bond buying programme by €600bn (£546bn) to €1.35tn.
The programme will run until June 2021, six months longer than planned.
The move will keep borrowing costs low for countries and firms as they face huge budget deficits and recessions.
The purchases support “funding conditions in the real economy, especially for businesses and households,” the ECB said.
How are we going to pay for the coronavirus damage?
The central bank also decided to hold its interest rates at record lows.
The extra bond buying “is likely to push European government bond yields even further into negative territory, and investors in search of positive returns will be forced to take more risk,” said Rachel Winter, associate investment director at investment firm Killik & Co.
The bond purchases are often referred to as Quantitative Easing (QE). When central banks buy bonds with printed money, the value of the bonds rise and borrowing costs drop.
Some market commentators wonder how much money can safely be printed without causing the value of money to decrease.
‘Fiscal box’
“Although inflation is currently very low, these levels of asset purchases are causing some concern about inflation further down the line,” said Ms Winter.
“Economic theory tells us that that inflation is linked to the supply of money in the economy, and if the money supply is being drastically increased to fund quantitative easing then long-term inflation ought to rise too. These fears of long-term inflation have stoked demand for gold recently.”
Gold is trading at about $1,717 (£1,368) an ounce, down from highs of $1,766 earlier in the month, but up compared to a price of $1,324 one year ago.
In many ways, the ECB is playing catch-up with other central banks, said Neil Williams, senior economic adviser at US-based money manager Federated Hermes.
“After lagging the US and UK, the fiscal box is now opening, he said. The planned spending works out at about €100bn a month, higher than the €80bn spent in the wake of the European sovereign debt crisis, he points out.
Image caption
The 1961 film Breakfast at Tiffany’s film, starring Audrey Hepburn, made the store famous
The world’s biggest luxury goods firm, LVMH, has cast doubt over its planned $16bn (£12.5bn) takeover of US-based jeweller Tiffany.
LVMH agreed to acquire Tiffany last November, but coronavirus-induced turmoil on financial markets has overshadowed the deal.
After days of speculation, LVMH said on Thursday that it would not buy Tiffany shares on the open market.
It could be a sign that LVMH wants to renegotiate a cheaper price.
Tiffany’s share price tumbled in March on the back of expectation that sales of its luxury jewellery would fall. Although the stock recovered, it has fallen again this week on speculation LVMH’s bid was in doubt.
LVMH’s billionaire chief executive Bernard Arnault has long coveted buying Tiffany, a brand that hit global fame in the Audrey Hepburn romance Breakfast at Tiffany’s.
He agreed to pay $135 a share, but the price has sunk to about $114 a share. LVMH’s statement on Thursday comes ahead of Tiffany’s quarterly results, due out next week.
Image copyright Getty Images
Image caption
Tiffany is known for its signature robin’s-egg blue packaging
LVMH said that during its board meeting on Tuesday, the firm “notably focused its attention on the development of the pandemic and its potential impact on the results and perspectives of Tiffany & Co with respect to the agreement that links the two groups”.
It added: “Considering the recent market rumours, LVMH confirms, on this occasion, that it is not considering buying Tiffany shares on the market.”
It gave no further details.
Tiffany is something of a New York institution and its flagship store is next to Trump Tower on 5th Avenue.
Founded in 1837, it employs more than 14,000 people and operates about 300 stores – 12 of them in the UK.
LVMH has 75 brands, 156,000 employees and a network of more than 4,590 stores. Its brands include Louis Vuitton, Kenzo, Tag Heuer, Dom Pérignon, Moet & Chandon and Christian Dior.
The boss of the UK’s biggest airport services company Swissport has warned quarantine rules will put ground staff jobs at risk.
From 8 June all passengers arriving in the UK will need to self-isolate for 14 days.
Swissport chief executive Jason Holt said the plan could deliver a “killer blow” to the sector because people will be deterred from travelling.
He questioned why the rules were being put in place now.
Speaking to the BBC’s Today programme, he said: “If it’s so important and it’s so relevant to the virus, and we all want the country to be safe, why wasn’t this done in March? That’s why everybody’s quite confused on this.”
More than 200 travel companies have written to the government asking for the new rules to be scrapped, while some MPs have also raised concerns.
But the government says the quarantine period is a “proportionate and time-limited approach” to protect public health.
On Wednesday, Home Secretary Priti Patel told Parliament imported coronavirus cases now ”pose a more significant threat”.
“We are past the peak but we are now more vulnerable to infections being brought in from abroad,” she said.
Swissport which earned more than €3bn in revenue in 2019 (£2.8bn) has furloughed most of its 6000 UK staff. Mr Holt said they will remain on the Job Retention Scheme until the government’s future travel policies became clear.
He said Swissport had lobbied the government to avoid introducing quarantine, but the company is now hoping the rules will only be in place for short time.
“We’re really hoping no more than three weeks,” he said. If it goes beyond that it could do “irredeemable damage to the sector”.
From Sunday, all passengers arriving in the UK by plane, ferry or train will have to provide an address where they will remain for 14 days.
Surprise visits will be used to check they are following the quarantine rules. Those in England could be fined up to £1,000 if they are not at home.
Japan’s SoftBank is the latest major company to respond to the protests over the death of George Floyd.
The technology giant has launched a $100m (£80m) fund that will invest in companies led by “people of colour”.
It comes as executives of firms including Twitter, Bank of America and General Motors have spoken out over racial inequality.
George Floyd’s death has sparked huge protests against racism and police brutality across the US and globally.
Announcing the “Opportunity Growth Fund” on Twitter, SoftBank’s founder and chief executive Masayoshi Son wrote “Racism is a lamentable thing,” ending his post with “#BlackLivesMatter”.
In a letter to employees the company’s chief operating officer Marcelo Claure said the fund, which he will lead, aims to invest in entrepreneurs “from communities that face systemic disadvantages in building and scaling their businesses.”
SoftBank also runs the $100bn Vision Fund which invests in startups around the world.
Meanwhile, Twitter’s Jack Dorsey has become the latest chief executive of a major US technology company to give financial support to an anti-racism organisation.
He tweeted that he was making a $3m donation to former NFL player Colin Kaepernick’s Know Your Rights Camp to “advance the liberation and well-being” of minority communities.
Mr Kaepernick is best known for kneeling during the US national anthem when he was a player for the San Francisco 49ers to protest against police killings of African-Americans.
His protests were heavily criticised by conservative figures including President Donald Trump.
In recent days some of the biggest corporations in the US have pledged to take action in support of racial equality.
On Tuesday Bank of America said it would donate $1bn over the next four years to community programmes and small businesses to help address economic and racial inequality.
In a media release chief executive Brian Moynihan said that “underlying economic and social disparities” had been made worse by the coronavirus pandemic and the “events of the past week have created a sense of true urgency”.
Driving change
Car making giants General Motors and Ford has also condemned racial inequality
In a letter to employees, dealers and suppliers, General Motors’ chief executive Mary Barra wrote that she was “impatient and disgusted” and emphasised the need to “individually and collectively” drive change.
Ford’s executive chairman, Bill Ford, and chief executive Jim Hackett also wrote a joint letter to their workers addressing the “tragic killing of George Floyd” and America’s “systemic racism.”
Many other US companies, including Intel, Netflix, Nike and Facebook, have also spoken out about discrimination against African-Americans.
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As a small business owner, Layla Barnes is not entitled to government support
Layla Barnes is one among many thousands of small business owners left financially and emotionally devastated by more than ten weeks of government-imposed lockdown.
She was forced to close her Doncaster-based beauty therapy and training business which was profitable in February before lockdown began.
Yet the government’s excluded Layla, 30, and her limited company from any form of crisis-related support, forcing her onto benefits of £408 per month.
She’s moved out of her rented home, unable to meet her rent and bills, running up thousands of pounds in credit card debt to try and preserve her business.
“If I lose my business, I’ve lost everything. I’d spent all my life’s savings – about £60,000 – on equipment and machines.
“I would rather lose my home than lose my business. So I moved in with mum and dad and me and my husband are now in the same box-room I moved out from aged 17.”
Image copyright Layla Barnes
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Ms Barnes spent her life savings building her business
As a result, she is under a huge amount of stress which has rekindled a previously diagnosed mental health disorder and made her feel this is “the worst time I’ve been through in my life – worse than anything from before.”
And she is not alone. Research published on Thursday of accountants serving 61,000 small businesses across the country supports concerns that the shutdown is taking its toll on their clients’ mental health.
‘We could end up with no business or savings’
‘I lost my job, now we’re on the bare minimum’
Nearly three quarters – 73% – report that clients are struggling to sleep. 67% reported worsened mental health and 50% that their clients had shared feelings of not being able to cope, according to the SME Health Tracker published by the Association of Chartered Certified Accountants.
In earlier research on 21 May, 11% of accountants reported that clients had discussed thoughts of taking their own lives.
‘The money isn’t there’
Before the shutdown in September 2019, Layla did what successive governments have created tax arrangements to encourage – branching out on her own and setting up her own business as a limited company.
“I left a highly paid full-time employed job in Harley Street, training doctors and nurses in aesthetics and botox, to pursue my dream and open my own training academy. I starting doing well in February and moved into profit,” Layla told the BBC.
“I had paid myself £500 since September in wages as everything I earned I put back into my business.”
But she had to suspend her business when the lockdown happened.
“I had £20,000 of courses booked for March that I’ve had to refund. I’ve had others that I can’t refund simply because the money isn’t there. “
Image copyright Getty Images
Image caption
Chancellor Rishi Sunak excluded company owners from support during shutdown.
Like an estimated 710,000 other owner-managers of small businesses, Layla was excluded from financial support in a deliberate decision by the government.
She is not eligible for the Self-Employed Income Support Scheme because, after taking an accountant’s advice, she had set up a limited company, paying herself a basic salary of £500 per month and any further income in the form of dividends paid to her by the Limited Company.
Neither the Coronavirus Job Retention Scheme (the “furlough scheme”) nor the Self-Employed Income Support Scheme, covers her.
‘I’m not sure the company will survive’
Her business occupied shared office space – so it was the owner of the building, rather than her firm, that was on the business rates register and therefore received the grants meant to help companies hit by the lockdown. Neither could she receive payment holidays because her landlord was commercial not residential.
“I was rejected for the Bounce Back Loan so I’m now on universal credit at £408.99 per month. It’s impossible to pay rent and bills.
“I’ve put most of the last 10 weeks on credit cards which are now almost maxed out and I have sold some business and personal belongings including my car and my engagement ring,” Layla told the BBC.
“I’ve been told there’s a possibility of going back in July. However, I’m not sure the company will survive till then and the credit I have borrowed is personal credit… therefore if the company goes bust I’m still thousands in debt for something that isn’t my fault.”
She added: “I’m not saying corona is anyone’s fault. But I feel really bitter than I’ve been told I can’t work – yet no one will support me. Even if I manage to survive until July it will be a long time before I can clear the vast debts I have accumulated.”
Image copyright Rachel Flower
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Rachel Flower runs Excluded, which campaigns for people excluded from government support schemes
Layla told me her mental health disorder had been diagnosed in 2010 but she had recovered and was “really doing well”. But in recent weeks she has had to have crisis meetings with a community psychiatric nurse.
“People don’t understand; it’s so frustrating. For people on furlough, it’s almost like everyone’s had a three months holiday. No-one will listen.
“I’ve emailed [the Chancellor] Rishi Sunak seven or eight times. I don’t even get an automated reply. I emailed the council – no-one’s got back to me.”
Mr Sunak excluded company owners paying themselves in dividends from support during shutdown. The Treasury said the reason was that it couldn’t distinguish on self-assessment forms between dividends paid to owner-managers such as Layla, and dividends paid to investors.
However, the Association of Chartered Certified Accountants disputes this, saying accountants could certify that dividends were being paid in lieu of salary and this could be verified by accountants and cross-checked with real-time information submitted by accountants to HMRC.
Owner-managers can furlough themselves for the PAYE portion of their salaries, but for many paying themselves the typical minimum of £500 per month this would be little more than benefits.
It would also make it illegal for them to do any work to conserve their business. Many small business owners have furloughed employees but have little or no income for themselves.
Layla turned for support to the online campaign group Excluded, a non-profit organisation whose mission is to campaign for three million UK taxpayers excluded from the government support schemes.
Rachel Flower, director of the group, said: “There are a lot of women and men within our group who have been broken by what’s happened.
“They can’t understand why they’ve been told they can’t have any support when others doing the same job have been fully supported – just because they were set up as a limited company.
“Most of them say ‘I just thought I was self-employed and did what I was told to do’. And after being told that no-one would be forgotten and everyone would be helped it’s a real kick in the teeth.”
The US is to ban passenger flights from China from 16 June, in the latest sign of tensions between the two economic giants.
The Department of Transportation said it is punishing Beijing for refusing to let US airlines resume flights to China as its pandemic subsides.
In recent weeks the countries have sparred over coronavirus and China’s policies in Hong Kong.
But Washington said it would continue to “engage” on the air travel issue.
The Department of Transportation order applies to four airlines – Air China, China Eastern Airlines, China Southern Airlines and Hainan Airlines – which have continued to fly between the two countries during the pandemic, although at reduced levels.
It needs final approval from US President Donald Trump, who has repeatedly accused China of engaging in unfair trade, and in recent weeks criticised its handling of coronavirus and protests in Hong Kong.
The Chinese embassy in Washington did not immediately comment. Officials have previously said its restrictions, which were introduced to control coronavirus, were fair since they apply to all airlines.
‘Fair and equal opportunity’
Beijing in March said domestic and foreign airlines could operate no more than one weekly flight between China and any given country, adding that carriers could not exceed the level of service they were offering on 12 March.
Trump accuses WHO of being a ‘puppet of China’
Trump targets China over Hong Kong security law
The Department of Transportation said the March order had effectively banned US airlines, which had voluntarily suspended service between the two countries in February due to the pandemic and Mr Trump’s order barring entry to the US for most Chinese travellers.
It said the refusal to grant requests by US airlines to resume service this month violated the agreement governing air travel between the two countries, which dates back to 1980.
“We conclude that these circumstances require the Department’s action to restore a competitive balance and fair and equal opportunity among US and Chinese air carriers,” the Department of Transportation said.
“Our overriding goal is not the perpetuation of this situation but rather an improved environment.”
‘Accelerating trend’
If the order goes forward, it will hurt travel, trade and other exchange between the two countries, said Daniel Kliman, director of the Asia-Pacific Security Program at the Center for a New American Security.
But that breakdown was already under way, he added.
“We’re already seeing de-coupling of the United States and China,” he said, pointing to US efforts to restrict technology sales and the US-China trade war. “It’s an acceleration of a trend that has really been building up.”
In recent weeks, China has moved to loosen restrictions on charter flights from some countries but not the US, according to a report last month in the Community Party’s Global Times.
Officials told the newspaper the government would also consider increasing general flights, pending better control of the outbreak.
Mr Kliman said there is some chance the two countries could resolve the matter before 16 June – but once the US ban goes into effect it will be hard to undo.
In January, there were about 325 round-trip flights weekly between the US and China. Those have numbered around 34 since the end of March, the US said.
Delta Airlines, one of the companies that had sought to resume flights this month, said it welcomed the US order.
“We support and appreciate the US government’s actions to enforce our rights and ensure fairness,” it said.
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Up to 3,000 jobs are at risk after one of the country’s biggest restaurant operators decided as many as 120 outlets will not reopen after lockdown, the BBC has learned.
The Restaurant Group, which owns Frankie & Benny’s and Garfunkels, has about 600 outlets across the UK, with about 22,000 workers on furlough.
It is understood that Frankie & Benny’s will bear the brunt of the closures.
The company, which declined to comment, was due to inform staff on Wednesday,
In an email to managers seen by the BBC on Tuesday, the company said: “Many sites are no longer viable to trade and will remain closed permanently.
“The Covid-19 crisis has significantly impacted our ability to trade profitably, so we’ve taken the tough decision to close these restaurants now.”
The group appears to be speeding up previous plans to shut restaurants as trade suffers due to the pandemic.
The email was sent to managers in the group’s Leisure Division, which includes more than 200 Frankie & Benny’s outlets.
It is not clear which outlets will be shut, or exactly how many, but BBC was told on Wednesday that up to 120 are at risk.
‘Why couldn’t they keep us furloughed?’
When will shops open and what will the rules be?
The group also owns the Wagamama chain and some pub units. Wagamama is not part of the division which received the email and the vast majority of its restaurants are expected to reopen.
The Restaurant Group said in March that 61 out of 80 branches of its Tex-Mex dining chain Chiquito’s would remain closed permanently as it fell into administration.
It cited the Covid-19 outbreak as having had “an immediate and significant impact on trading”.
However, the group had already announced in February, prior to the introduction of lockdown measures, that it would speed up existing plans to close restaurants.
Initially it had planned to make 150 closures – which were first signalled in 2019 – over a six-year period. It then said it would close 90 restaurants by the end of 2021.
‘Staff are disposable’
“I feel completely overwhelmed and upset,” says Georgia. She has been working as a part-time waitress at one Frankie & Benny’s outlet since last April.
“I’m angry, as they feel as though staff are disposable,” she says, adding that the lack of certainty around work amid lockdown has created mental stress.
“I just can’t believe that they would send that kind of message to managers without any warning,” she adds.
The group had already seen sales falling across many outlets. That came despite stronger revenues across the wider group in its Wagamamas and pub units.
It said in February that like-for-like sales – which strip out new restaurant openings – in the division that includes Frankie & Benny’s and Chiquito, fell by 2.8% in 2019.
Lockdown losses
Many casual dining chains had already been struggling in the face of rising overheads and falling consumer spending.
But those in the hospitality sector have seen their problems worsen due to the coronavirus pandemic, as customers have been forced to stay at home amid lockdown.
Carluccio’s, for example, was bought out of administration by the owner of Giraffe restaurants.
Despite its rescue, more than 1,000 jobs will be lost at the Italian restaurant chain, more than half of its total workforce. The administrators said the lockdown meant difficult decisions had to be taken.
Restrictions aimed at curbing the spread of Covid-19 forced most cafes and restaurants to close in March, but some have since reopened as takeaways only.
When lockdown was initially announced in March, trade association UK Hospitality said it was “catastrophic for businesses and jobs”.
Its chief executive Kate Nicholls warned at the time that the measures could “lead to thousands of businesses closing their doors for good, and hundreds of thousands of job losses”.
Pubs, restaurants, hairdressers, hotels, cinemas and places of worship will be allowed to open from 4 July at the earliest in England, if they can meet social distancing measures.
Image caption
Rachel Edwards is now on a debt management plan
Rachel Edwards has faced mental health difficulties for decades. Bouts of depression have also brought financial problems for the 43-year-old grandmother.
She believes that letters, warning about falling behind on debt and which lenders are compelled to send by law, are often counter-productive.
“You get these letters and they make you bury your head even further – and that makes both your mental health and your debt problems worse,” said Mrs Edwards, from Bridgend.
“You know what they are, you open them to look at what you owe, then put them on the side and leave them there.”
She is supporting a campaign by the Money and Mental Health Policy Institute calling for a change in the law to end the requirement to send the “thuggish” letters which it is claimed served no purpose to lender or borrower.
The situation could become more acute as many more people may find themselves in problem debt in the coming months as a result of income collapse during the coronavirus outbreak, the institute said.
Legal demand
Letters are sent to people who are falling seriously behind on repayments. They introduce the fact that court action may be needed.
Under the rules of the Consumer Credit Act from 1974, these warnings should be written in capitals or in bold.
For example, the letter states: “IF YOU DO NOT TAKE THE ACTION REQUIRED BY THIS NOTICE BEFORE THE DATE SHOWN THEN THE FURTHER ACTION SET OUT BELOW MAY BE TAKEN AGAINST YOU.”
The institute said that “complex and intimidating” language used risked adding further distress to those already facing mental health difficulties.
According to estimates produced by the institute, about 100,000 people in problem debt in England attempted suicide last year.
Martin Lewis, founder of MoneySavingExpert, who set up the institute, said that the effects of the coronavirus outbreak would lead to more people facing such debt letters, so a change in the rules was vital.
“At such a sensitive stressful time, [the government] needs to change the rules on debt letters. It is a simple change to get rid of a rule that benefits neither lender, borrower, nor the economy — and at this time, without exaggeration it could save lives,” he said.
The separate, independent Money and Pensions Service has warned that anyone taking breaks from debt repayments must be aware of the implications, most importantly that future payments would almost certainly be higher. It urged people to seek free guidance on these money issues.
“At a time of considerable stress, problems with money are another significant threat to people’s overall wellbeing,” said Claire Herbert, mental health policy lead at the service.
Meanwhile Mrs Edwards, who is registered disabled, said she was working off her debts through a debt management plan.
She still receives these letters, as lenders are duty-bound to send them, but she said the language could be more understanding.
She saws debts spiral, after finding herself maxing out credit cards and gambling on slot machines when she came off medication. At the time she built up debt of £8,000.
Now she is trying to get back on top of things, but understands the stress that others suffer.
“There are so many people dealing with mental illness or even killing themselves because they can’t take the pressure,” she said.
A spokesman for UK Finance, which represents UK lenders, said: “The industry recognises that the current requirements can be confusing and off-putting, especially when customers and lenders have agreed changes to contractual payments, which is why we support changes to the legislation in this area.
“Whilst the legal documentation might be challenging, we would always encourage customers to speak to their lender or an authorised debt charity if they are worried about their money.”
Committees of MPs have supported a change in the law on these letters in the past.
