Share prices tumbled during February as the extent and severity of coronavirus continued to intensify. By the end of the month, 85,403 cases had been confirmed worldwide, with 23 cases in the UK. Over February as a whole, the FTSE 100 Index fell by 9.7% while the FTSE 250 Index dropped by 8.6%.
- Shares in travel and leisure companies experienced heavy falls
- The UK and EU set out their stalls for negotiation
- The UK is prepared to walk away if there is no “broad outline” by June
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Share prices tumbled during February as the extent and severity of coronavirus continued to intensify. By the end of the month, 85,403 cases had been confirmed worldwide, with 23 cases in the UK.
“The UK says it wants ‘Canada'. But the problem with that is that the UK is not Canada” (Michel Barnier)
Over February as a whole, the FTSE 100 Index fell by 9.7% while the FTSE 250 Index dropped by 8.6%. Travel and leisure companies were particularly hard-hit by the spread of coronavirus: British Airways parent company IAG warned that its profits would be affected by the virus, but was unable to quantify the impact at this stage. While IAG’s share price fell by 17.1% over February as a whole, budget airline easyJet dropped by 21%. The share price of holiday company TUI Travel declined by 22.9%, and cruise company Carnival dropped by 21.9%.
Primark’s owner – Associated British Foods – warned that disruption to production in China could harm the availability of some of its products. ABF’s share price fell by 14.1% over the month. Meanwhile, Standard Chartered - which derives a large proportion of its earnings from Asia, and from China in particular – issued a profit warning, and its share price fell by 10.9% during February.
The Government published its approach to negotiations on its future relationship with the EU during February. The UK is aiming to achieve a trading relationship with the EU along similar lines to the agreements the EU has with Canada, Japan or South Korea. Nevertheless, the UK remains prepared to call off trade discussions if there is no “broad outline” of an agreement by June, in which case it would consider changing its focus to concentrate on domestic preparations on WTO terms.
The UK’s Chief Brexit negotiator David Frost called for a “Canada Free Trade Agreement-type relationship” with the EU. However, the EU’s Chief Brexit Negotiator, Michel Barnier, said: “The UK says it wants ‘Canada'. But the problem with that is that the UK is not Canada ... our relationships with the UK and with Canada are worlds' apart”.
The British Retail Consortium (BRC) called on the UK to reach “pragmatic solutions and agreements” with the EU, warning: “Higher tariffs and extensive checks will harm consumers, retailers, and the UK economy. The BRC believes that “excessive or avoidable” checks would lead to delays, higher costs and increased administration for UK businesses, and higher prices and reduced availability for consumers.
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