As Covid-19 infection rates continued to spread during December and into January, new lockdown measures were imposed across the UK. Schools and non-essential business premises were closed, and social contact was restricted.
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• The UK experienced its worst-ever year for retail sales growth during 2020
• The FCA warned that 4,000 financial services firms were at risk of collapse
• Travellers to the UK will have to quarantine for ten days
As Covid-19 infection rates continued to spread during December and into January, new lockdown measures were imposed across the UK. Schools and non-essential business premises were closed, and social contact was restricted. The Government announced additional measures to support businesses in the retail, hospitality, and leisure sectors, including one-off grants of £9,000 per property. The UK approved a third Covid-19 vaccine, which is manufactured by US firm Moderna.
‘Rishi Sunak warned that the UK’s economy is likely to “get worse before it gets better”‘
The UK equity market dipped following an announcement that passengers arriving in the UK will be obliged to quarantine for ten days in Government-provided accommodation. Shares in airline companies and hotels fell particularly heavily, fuelling fresh concerns the UK economy’s longer-term recovery from the pandemic. Chancellor of the Exchequer Rishi Sunak warned that the UK’s economy is likely to “get worse before it gets better”. The UK death toll from Covid-19 breached 100,000 during January. The FTSE 100 Index fell by 0.8% over the month, while the FTSE 250 Index – whose constituents tend to be more exposed to the domestic economy – fell by 1.3%.
The UK experienced its worst-ever year for retail sales growth during 2020 as retailer suffered the full impact of lockdown and social distancing measures. The British Retail Consortium (BRC) reported a 0.3% decline in total sales growth over the year, with a 24% annualised drop in in-store sales of non-food items. In comparison, online food sales rose by 36.2% during 2020. The BRC commented: “Christmas offered little respite, as many shops were forced to shut during the peak trading period … with shops still closed for the foreseeable future, costing stores billions in lost sales, many retailers are struggling to survive”.
Within the UK retailing sector, high-street retailer Next enjoyed better-than-expected sales over the key Christmas period as a strong annualised increase in online sales offset a decline in store-based trading. Supermarket chains Sainsbury’s and Morrisons reported strong Christmas sales, while Marks & Spencer reported robust trading over the period but highlighted the adverse impact of “on-off” lockdown measures.
The Financial Conduct Authority (FCA) reported that 4,000 UK financial services firms had “low financial resilience and (were) at heightened risk of failure” as a result of the coronavirus pandemic. Most of the companies in question are medium-sized or small firms, and about 30% of these have the potential to “cause harm” in the event of their collapse.
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