As infection rates continued to increase in areas of England, the UK Government decided to implement another series of lockdown measures lasting from 5 November to 2 December.
- Lockdown measures triggered concerns over the economic recovery
- The furlough scheme was extended
- Fears grew over the outlook for the retail, leisure and hospitality sectors
To view the series of market updates through October, click here
As infection rates continued to increase in areas of England, the UK Government decided to implement another series of lockdown measures lasting from 5 November to 2 December. Leisure and hospitality venues and “non-essential” shops will be forced to close, although schools, universities, factories, and construction sites will remain open. The British Retail Consortium (BRC) warned that retailers face “a nightmare before Christmas” that will cause “untold damage to the high street”. Meanwhile, the British Chambers of Commerce (BCC) commented: “Many firms are in a much weaker position now than at the start of the pandemic, making it far more challenging to survive extended closures or demand restrictions”.
“The FTSE 100 Index dropped to its lowest level since April”
The furlough scheme was extended over the period of the second lockdown – although employers will have to pay national insurance contributions and employee pension contributions this time – and mortgage holidays were extended for up to six months. The FTSE 100 Index dropped to its lowest level since April during October, falling by 4.9% over the month, while the FTSE 250 Index declined by 0.6%.
The UK and EU ended October without making any progress in their Brexit negotiations. The EU’s Chief Negotiator Michel Barnier tweeted: “Working hard for an agreement. Much remains to be done”. At the beginning of the month, the EU launched legal proceedings following the UK’s decision to defy elements of the original Withdrawal Agreement. The Confederation of British Industry (CBI) urged the Government to secure a quick agreement, warning: “Businesses are doing what they can to prepare for Brexit. But firms face a hat-trick of unprecedented challenges: rebuilding from the first wave of Covid-19, dealing with the second, and uncertainty over the UK’s trading relationship with the EU … with each day that passes, resilience is chipped away”.
The rate of profit warnings issued by UK listed companies moderated in the third quarter compared with the first six months of the year, according to EY’s quarterly survey. 58 companies issued profit warnings during the period, led by firms in the industrial support services, investment banking & brokerage, and construction & materials sectors. This brought the year-to-date total to 524, exceeding the previous annual record set in 2001. Looking ahead, EY warned that companies face an “exceptionally difficult” autumn and winter, compounded by the impact of Covid-19 and Brexit.