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UK remains steady as economy slowly starts to reopen

UK remains steady as economy slowly starts to reopen – European stocks started the week in a subdued fashion, with the FTSE100 only just managing to close above the 7,000 level, while the DAX also slipped back from its record highs of last week.

US markets also finished the day on the back foot, weighed down largely by weakness in tech stocks, which may well have been prompted by a large fall in Bitcoin over the weekend.

Despite yesterday’s modest weakness, sentiment by and large still remains positive, with most discussion/outrage on social media more about the European Super League, than the big falls seen in bitcoin and Ethereum, pointed out Michael Hewson, chief Market Analyst at CMC Markets UK, this morning.

“It is perhaps not surprising that after the gains seen last week, that we might see some modest profit taking as we gear up for further big earnings announcements this week, as well as the latest ECB rate meeting on Thursday,” Hewson told City A.M. this morning.

Markets in Asia have continued the softer theme with the Nikkei 225 falling sharply, although this weakness doesn’t look like it will translate too heavily into today’s European open in a couple of hours’ time, he added.

The US dollar also had a disappointing day, which given the weakness in stocks was a little surprising, losing the most ground against the pound, blowing a rather large hole in the notion that sterling was being weighed down by uncertainty ahead of next month’s Scottish elections, as it pushes back above the 1.4000 level for the first time in over a month.

UK unemployment figures
On the data front its eyes down for the latest unemployment numbers from the UK today.

“With the UK economy slowly embarking on an unlocking process and business optimism showing significant signs of bullishness, hopes are rising that any further increases in unemployment will be limited in nature, and then start falling back. Against that expectation today’s latest ILO unemployment numbers are probably a bit of a distraction, given that we all know that they are very much a lagging indicator,” Hewson said.

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In January the ILO unemployment number fell back to 5 per cent, and it isn’t expected to deviate from that when the February numbers are released this morning.

“Though there is a worry we could see the number nudge back up, given the sharp jump higher in the jobless claims number a month ago,” he noted.

Nonetheless, various forecasters, including the Bank of England, do appear more optimistic about the outlook for unemployment this year revising their forecasts lower once the government starts to withdraw the furlough support that has been in place over the last 12 months.

The monthly jobless claims number showed a big increase in February, rising from 7.2 per cent to 7.5 per cent, and the highest level since August last year.

End of lockdown
With the UK economy slowly starting its reopening process this month, the hope is that this claims number will exhibit a similar fall this time around as businesses restart and take back furloughed employees and start to drift back down towards 7 per cent again, Hewson explained.

“The rise in the claims number was undoubtedly due to the reimposition of lockdown in January, however there was some evidence of a pickup in hiring in some other areas of the economy,” he said.

That still can’t disguise the reality that there are 700k fewer jobs in the UK economy since this time last year, with most of those job losses in the hospitality sector, and in the under 25 age cohort, Hewson continued.

In retail the picture is equally as bleak, as according to the BRC 67,000 jobs have been lost between December 2019 and December 2020.

The outlook does appear to be starting to look a little brighter if the latest economic projections from the OBR are any guide.

They upgraded their economic projections for unemployment down from a peak of 7.5 per cent to 6.5 per cent last month, as the Chancellor set out his various measures to extend the furlough as well as some reductions to key tax and business rates.

“This raises the prospect that companies that are struggling will delay cutting staff, until the reopening path is clearer, while companies that are growing will recruit more quickly, to take advantage of new investment opportunities,” Hewson concluded.

By Michiel Willems

Source: City AM

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Sterling rises to two-week high against the dollar

Sterling rose to hit a two-week high against the dollar on Monday at the start of a data-heavy week that is expected to provide more evidence that Britain’s economy is rebounding from its deepest recession in 300 years.

The pound had a strong first quarter, supported by dwindling expectations of negative interest rates and by a fast roll-out of vaccinations against COVID-19 across Britain.

As England re-opened shops, hairdressers, gyms and pub gardens in April, analysts expect a faster economic recovery in the United Kingdom than in the European Union, which is facing a third wave of infections.

Traders will be watching PMI surveys for the UK, together with data on the labour market, inflation and retail sales this week.

Both ING and UniCredit analysts told clients there was scope for sterling to strengthen to $1.40 this week.

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“GBP continues to find support on dips and it seems like investors are happy enough staying positioned for the 2Q UK re-opening story,” said Chris Turner, Global Head of Markets at ING.

“Today we have already seen some encouraging April Rightmove house price data,” he said.

Advertised prices for homes in Britain hit a record high after finance minister Rishi Sunak stoked the market again by extending a tax cut for home-buyers last month, property website Rightmove said on Monday.

Speculators’ net long position on the pound versus the dollar rebounded in the week to April 13 after slipping to its lowest since February in the previous week, futures data from CFTC showed.

Versus a weakening dollar, the pound rose 0.4% to $1.3900 at 0958 GMT, its highest level since April 6. It was 0.1% lower versus the euro at 86.61 pence, after it hit its highest of 86.30 pence since April 8.

“Current domestic COVID data is encouraging and a further easing of lockdowns will all point in the direction of the UK economy early out of the block on economic recovery expectations,” said Neil Jones, Head of FX Sales at Mizuho Bank.

Source: ZAWYA

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UK Economy Picks Up Steam as Hiring Restarts

The UK Economy is building momentum, with real-time indicators suggesting consumers have started to splurge some of the cash they’ve saved now that the government has loosened lockdown rules.

Restaurant bookings and job postings surged to the highest since the start of the coronavirus pandemic, while road traffic and the number of people traveling to workplaces grew in recent weeks, data from Bloomberg Economics and government statistics show. Shops and bars were allowed to reopen on April 12, and most restrictions are set to lapse by June 21.

With more almost two thirds of adults in the U.K. immunized against the coronavirus, Prime Minister Boris Johnson is starting to relax advice on contaning the virus. Bank of England Governor Andrew Bailey anticipates a strong recovery as households unleash some of the 150 billion pounds ($207 billion) of savings accumulated over the past year.

Here are first indicators showing how last week’s unlocking is playing out:

Job Postings

The number of online job advertisements in the U.K. returned to levels seen before the pandemic for the first time, according to data through April 9 from the Adzuna jobs website published by the Office for National Statistics. That’s a positive sign after a year that saw Britain lag many of its global peers with business lacking the confidence take on new staff. There was a notable jump in catering and hospitality roles.

Postings on jobs website Indeed have recovered to about 16% below those seen at the start of February 2020. They have jumped by a fifth since the U.K. set out a roadmap to easing restrictions. Top gainers include sectors that are reopening such as sports, beauty and food services.

The proportion of furloughed workers that actually return to the labor market will be key to the consumer recovery, according to Fabrice Montagne, chief U.K. economist at Barclays Bank Plc. He’s cautious about predictions for the kind of “rip-roaring recovery” suggested by the BOE’s outgoing Chief Economist Andy Haldane.

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“The third lockdown has actually been much less disruptive than we’d thought,’ Montagne said. “Hence the bounce will be automatically smaller. Sentiment is strong. The recovery will still happen, but in a more civilized way than pictured by Andy ‘Mr. Boom’ Haldane.”

What Our Economists Say…

“We expect the recovery to gain steam as restrictions ease further. There’s pent-up demand to come from many households who have involuntarily built up cash savings given the fewer opportunities to spend. We forecast the UK economy will expand by 5.5% in 2Q and 3% in 3Q after contracting by 2.2% in 1Q. That will leave output on course to reach its pre-virus level by Q1 2022.”

Niraj Shah, Bloomberg Economics

Restaurant Bookings

Last week’s opening of restaurants with a place to serve outdoors prompted a spike in bookings on the OpenTable reservations website. It expects a bigger jump when customers are allowed inside from May 17.

The restrictions on hospitality have been hard on the U.K.’s consumer-driven economy. The service sector is still 8.8% smaller than before the pandemic. More than half of the 693,000 drop in employees on payrolls was due to fewer jobs in food services since February 2020.

Road Traffic

Road traffic is recovering slowly, according to a congestion index for London produced by location technology company TomTom. Morning rush-hours are yet to emerge, suggesting many who would normally commute remain working from home.

ONS data suggest people are becoming increasingly confident about returning to the workplace and mixing with others. In the week to April 11, 53% of working adults reported leaving home to go to a job. Almost six in 10 adults met up with someone outside their household, up from less than half a week earlier.

Power Demand

Demand for electricity is also picking up. It’s another sign that economic activity is gaining traction, putting behind the collapse that came with the first lockdown last year. Subsequent tightening of the rules had far smaller declines, since the manufacturing and construction sectors were able to adapt and remain open.

“You’ve got a more resilient economy under this lockdown, forward-looking indicators that are looking good, the relaxation of social restrictions, excess savings exceeding 120 billion pounds, and a successful, so far, vaccination effort,” said Philip Shaw, chief economist at Investec Bank Plc. “So far, so good.”

By Lucy Meakin and Zoe Schneeweiss

Source: Bloomberg News

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Second Charge lending up 31% in March

Second charge lending totalled £91.4 million in March 2021, a 31.27% increase on the previous month.

The number of completions also topped 2,000 for the first time since the pandemic began, with 2,202 second charge loans funded in March 2021.

The increase in the number of high LTV mortgage products returning to the market in recent months seems to have started to impact the second charge market, with a decrease of 4.18% being recorded for loans over 85% LTV.

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The increase is also significant when you compare year-on-year, with March 2021 just 1.72% below the figures posted in March 2020 – just a 1.5 million difference.

The average completion time shows the industry is well-positioned for growth: despite the monthly second charge lending increasing by 21.8 million, there was just a single day increase in completion time.

Source: Mortgage Finance Gazette

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UK economy back to growth ahead of predicted spending spree

The UK economy grew by 0.4% in February, new data from the Office for National Statistics (ONS) has revealed.

The return to growth followed a sharp drop of 2.2% in January recorded by the ONS, though it’s notable that it was still down by 7.8% from February 2020.

The ONS found that the service sector grew by 0.2% over the month, pointing to a “little” pick up in wholesale and retail trade sales, though this was far lower than the jump of 1.6% seen in the construction sector. This was driven by growth in both new work projects and repair and maintenance.

Meanwhile, output in the production sector increased by 1%, while manufacturing grew by 1.3% over the month.

Learning lessons
Howard Archer, chief economic advisor to the EY Item Club, argued that the figures show the economy is being affected less by lockdown measures than was originally the case, which suggested lessons had been learned and experience gained in how to keep activity going.

He added: “Companies and employees have got used to home working and, significantly, many workplaces, offices, sites and plants have been adjusted to meet Covid-19 social distancing requirements so that employees can continue to work on site.”

Archer said that with confidence on the rise, EY Item Club was revising its GDP forecast for 2021 to a much higher 5%, continuing: “The UK economy is expected to benefit progressively from the second quarter as restrictions on activity are eased, supported by the rapid roll-out of Covid-19 vaccines.”

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Time for a spending spree
Danni Hewson, financial analyst at AJ Bell, said that whole there was still lots of ground to make up, the images of packed pub gardens and lengthy queues on the nation’s highstreets suggested that many people were set to put restrictions behind them and embark on a spending spree.

She added: “There is also small comfort to be had in February’s trade figures. Exports to the EU which dropped so dramatically off a cliff in January have bungeed back up, though they are still £2bn down on pre-Brexit levels. Notably imports from the EU were less resilient and remain more than £5bn down. It’s clear there are still issues but many of those will have been exacerbated by lockdown restrictions, something which will undoubtedly continue further into the spring.”

Robert Alster, CIO at Close Brothers Asset Management, agreed that growth will be driven by spending and corporate investment, but argued the true state of the jobs market remains a big unknown.

He continued: “The furlough scheme will phase out from July to September, and it’s unclear whether businesses will re-hire all their workers. In a worst case scenario, a sustained rise in unemployment could undermine a strong UK recovery.”

Written by: John Fitzsimons

Source: Your Money

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UK economy will be back to its pre-COVID-19 level around the middle of next year

UK economy will be back to its pre-COVID-19 level around the middle of next year, according to economists in a Reuters poll who said unemployment would peak at 6.2% as 2021 draws to a close and the pandemic job support scheme ends.

The UK has suffered the highest coronavirus-related death toll in Europe. But a swift vaccine rollout and plummeting infections has allowed the government to begin easing restrictions and on Monday non-essential retail and outside hospitality reopened.

Last year the economy shrank by the most in more than three centuries, but the April 7-12 poll of around 70 economists said it would expand 5.0% this year and 5.5% in 2022. In a March poll those forecasts were 4.6% and 5.7%, respectively.

With much of the country’s dominant service industry closed, and citizens encouraged to stay at home, the poll suggested the economy contracted 2.3% last quarter. Now that lockdowns are being loosened, it was expected to grow 3.5% this quarter and 3.0% next.

“There are mounting signs that the effects on the UK economy from the third COVID-19 lockdown have started to thaw,” said Paul Dales at Capital Economics.

“We are sticking to our relatively optimistic view that the reopening of the economy and the vaccine programme will allow GDP to regain its pre-pandemic level early next year.”

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But asked when the British economy would be back to its pre-pandemic size the majority of respondents to an additional question thought it would take a bit longer, with 10 expecting it to be a quarter or two later.

Finance Minister Rishi Sunak said last month he expected the UK economy would return to its pre-pandemic size in mid-2022. Six respondents in the poll said it would take longer and five said it would be sooner.

FINAL FURLONG

Britain’s job market has been protected by a huge government furlough scheme which is due to run until end-September, keeping unemployment levels relatively low. It was 5.0% in the three months to January.

The median response to a question asking where it would peak was 6.2%, most likely towards the end of this year when the furlough scheme finishes.

“Some rise in unemployment is probable once furlough ends. But the evidence from around the world is that labour markets can recover quickly and if scarring is contained, jobs growth can recover through 2022,” said Brian Martin at ANZ.

Like many of its global counterparts, during the height of the pandemic the Bank of England slashed borrowing costs to a record low and restarted its asset purchase programme to try and support the economy.

None of the 60 economists polled expected Bank Rate to move from 0.1% when the Monetary Policy Committee meets on May 6 and medians in the survey suggest it won’t increase until 2023. The earliest anyone had a hike pencilled in was for Q3 next year.

Inflation has held well below the Bank’s 2.0% target, allowing it to remain accommodative with policy.

The poll showed inflation would not reach that goal until towards the end of this year although an overwhelming majority of respondents to an additional question, 15 of 17, said the risks to their forecasts were skewed more to the upside.

“Higher inflationary pressures are still evident – with shipping costs, input costs indices and commodity prices still up,” said James Pomeroy at HSBC.

Reporting by Jonathan Cable

Source: UK Reuters

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UK economy improved in February despite lockdown measures

The UK economy rebounded slightly in February amid the third lockdown but was still almost 8% lower than before the pandemic, according to official figures.

The Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.4%, representing an improvement from a 2.2% decline in January, which itself had been revised upwards from a previously predicted 2.9% fall.

Nevertheless, the February reading was slightly below the forecasts of some analysts, with experts at Investec predicting a 0.7% improvement for the month.

The construction sector saw activity jump by 1.6% for the month amid a lift in new work and maintenance.

Production and manufacturing activity also improved, with the two sectors revealing 1% and 1.3% improvements respectively.

Meanwhile, the service sector remained particularly constrained, reporting just 0.2% growth, as hospitality and retail remained constrained by pandemic restrictions.

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The figures also revealed that exports to the EU increased by £3.7 billion – or 46.6% – following a record slump of £5.7 billion in January.

The ONS said the export increases were driven by machinery, transport equipment and chemicals.

It added that the import of goods from the EU also rebounded, increasing by £1.2 billion – or 7.3% – in February.

An ONS spokeswoman said: “The economy showed some improvement in February after the large falls seen at the start of the year but remains around 8% below its pre-pandemic level.

“Wholesalers and retailers both saw sales pick up a little, while manufacturing improved with car producers experiencing a partial recovery from a poor January.

“Construction grew strongly after revised figures showed they had struggled in the last couple of months.

“Exports to the EU recovered significantly from their January fall, though still remain below 2020 levels.

“However, imports from the EU are yet to significantly rebound, with a number of issues hampering trade.”

Suren Thiru, head of economics at the British Chamber of Commerce, said: “The latest data confirms a modest return to growth in February.

“However, coming after a contraction in January, it does little to alter the prospect of a downbeat first quarter for the UK economy.

“The pick-up in output in February reflected a broad-based improvement in activity with all the main sectors recording an increase in growth.

“The clarity provided by February’s announcement of a road map for reopening also helped support output in the month.”

Source: Irvine Times

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Homeowners look to second-charge mortgages to raise money

New research from criteria search specialist Knowledge Bank shows that homeowners are utilising second-charge mortgages to raise money to invest in buy-to-let properties, home improvements, and to consolidate debt. These three contrasting usages highlight the state of the economic situation in the country.

Knowledge Bank holds the largest database of up-to-date mortgage lending criteria in the UK and its monthly criteria index shows the terms that brokers are actually searching for. These may well be reflected in mortgage completions in two-or three-months’ time.

Capital raising featured in three of the top five most searched terms in the second charge market in March. The reasons for this capital raising varied greatly however. The second highest-searched term was ‘Capital raising to purchase a buy-to-let’, which follows the trend of investors looking to purchase rental properties as the stock market remains volatile and demand for rental property soars.

‘Capital raising for home improvements’ was fourth on the most searched terms’ list. This is potentially due to homeowners looking to renovate, add an extension, or build an office in the garden, possibly as a result of an extended period working from home. Brokers were also searching for ‘Capital raising for debt consolidation’, which landed at number five on the most searched for terms. This suggests there are clients looking to secure unsecured debts against their home to bring all their debts into one place and take advantage of the lower interest rate they will pay.

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The variety of searches in the second charge market appear to be a reflection of the wider economic situation in the UK. Since the start of the pandemic there has been a split, with those in stable employment able to save and invest due to the lack of opportunities to go on holiday or take advantage of hospitality venues; whereas those who have been hit hardest, have struggled financially and need to secure debt.

In the residential market, as the Chancellor announced an extension to the job support scheme ‘Furloughed workers’ was the most searched term for the third month in a row.

Throughout 2021, there has also been consistent interest in ‘Income multiple used for affordability assessment’, and this continued in March. This suggests despite the return of 95% loan to value (LTV) mortgages, home-owners are still looking to maximise the amount they can borrow. For the first time this year however, there was a search in the top five for lenders who would offer a mortgage to people with ‘Defaults – satisfied in the last three years’. This highlights that debt held by some of the UK’s population is not a new problem.

Demonstrating the continued interest in the buy-to-let sector, ‘First-time landlords’ was the top criteria searched by intermediaries for the second consecutive month. ‘Lending to limited companies’ featured in the top five terms searched, and has been a constant since July 2018. This is due to changes set out by the government in the 2017 Budget, including a reduction in the amount of tax relief available for interest on buy-to-let mortgages for individuals. This policy is continuing to change the landscape of the buy-to-let market.

In the bridging sector, ‘Heavy refurbishment’ was in the top five most searched for terms for the first time since December 2020. This potentially is as a result of clients turning to bridging loans to undertake major renovations, most likely extensions or remodels on their homes. A hot topic in the industry, ‘Regulated bridging’ was the top searched term by intermediaries. This could be due to homeowners using bridging finance when a property chain has broken or to purchase a property at auction.

Knowledge Bank operations director Matthew Corker said: “The second charge market clearly demonstrates the current economic divide in the UK at the moment. There are those who have increased their savings through lockdown and are now using a larger deposit to either invest in property, or add to their existing home. But there are also those who have been hit hard, either losing their job or being put on furlough.

“With extensions to the stamp duty holiday and job support scheme announced by the Chancellor during the latest Budget, lenders are continuing to adapt criteria to keep up with the evolving market. With criteria changes coming thick and fast, brokers could spend hours every day searching for the latest criteria, so using a comprehensive criteria search system can save them a massive amount of time and ensure they are providing best advice.”

BY PETE CARVILL

Source: Property Wire

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Pound Sterling Heads for Biggest Weekly Drop against the Euro

The British Pound is on course to record its sharpest weekly decline against the Euro since September 2020, a time when the EU and UK faced a logjam in Brexit trade negotiations that lead markets to raise bets a ‘no deal’ outcome was increasingly likely.

The fall in Sterling in April 2021 however has no clear narrative behind it, although some analysts are pointing a tentative finger at the hiccup in the UK’s vaccination rollout stemming from the UK medical regulator’s decision to restrict the distribution of the country’s ‘workhorse’ AstraZeneca vaccine.

The Pound-to-Euro exchange rate declined by a third of a percent on Thursday to record a five-week low at 1.1540, having been as high as 1.1800 at the start of the week.

The weekly decline is now 1.80% at the time of writing.

Marshall Gittler at BDSwiss says blaming the regulator’s change of guidance on the AstraZeneca vaccine is unconvincing given that the most of the Eurozone’s largest countries have applied similar, if not more restrictive, conditions on the same vaccine.

If anything, news out of the UK on the vaccination front remains positive with official data showing the number of vaccinations delivered on Wednesday exceeded 500K once more, suggesting an Easter drop off is now in the rear-view mirror.

The prospects of the UK exiting restrictive lockdown conditions meanwhile looks all the more certain based on modelling from University College London (UCL), that shows Britain will pass the threshold for herd immunity on Monday 11 April.

If the modelling is correct a resurgence of covid-19 infections and hospitalisations is incredibly remote and businesses and consumers alike can continue investing in a post-covid future, thereby driving a strong economic rebound.

“I think one of the main reasons GBP is falling could be just positioning and trend-following,” says Gittler, “I’m skeptical about this setback”.

“The GBP correction is symptomatic of a market that had become overly positioned at bad levels after a long trend move, positioning finally peaked as many cited the past strong April seasonals… GBP will ultimately regain its poise and drift higher,” says Jonathan Pierce, a trader at Credit Suisse.

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While the Pound went lower by a third of a percent against the Euro on Thursday it is notable that the currency was steady against the Dollar, this was reflected in an Euro-to-Dollar exchange rate that was a third of a percent higher at 1.19.

This suggests the most recent decline in GBP/EUR is more a function of Euro strength than a reboot of the mid-week Sterling weakness.

The rally in the Euro exchange rate complex comes as the EU sees a sharp increase in vaccination rates suggesting the area’s woes concerning vaccinations is coming to an end.

Numerous EU countries, including Germany, recorded a fresh daily record on Wednesday, signalling to markets that a strong vaccine-induced rebound lies ahead.

Pound sterling was a beneficiary through January, February and March of the UK’s rapid vaccine rollout, which contrasted most strikingly with a tepid rollout in the EU.

Signs that this differential with Europe is now closing is therefore offering the Euro fresh support at Sterling’s expense.

We reported on Thursday that research from Citi and Goldman Sachs shows that the Euro stands to benefit as the EU vaccination accelerates in April, allowing foreign exchange markets to focus on a strong Eurozone recovery in the second half of the year.

“We think markets priced much negative Covid news, says Ebrahim Rahbari, Chief G10 Currency Strategist at Citi.

Analysts at NatWest Markets tell clients the second quarter should see significantly higher vaccine supplies from existing producers which include AstraZeneca, Moderna and Pfizer who should together deliver almost three times the amount of doses in the second quarter compared to the first quarter.

This is even after accounting for lower than planned AstraZeneca supply in the second quarter.

“Added to this, Johnson & Johnson vaccinations should begin, with supply reportedly being delivered to European countries from mid-April – this adds an additional 55 million doses to the Q2 total,” says Imogen Bachra, European Rates Strategist at NatWest Markets.

The European Commission now looks on target to vaccinate a minimum 70% of the entire adult population by the end of the summer.

“If we look at the Euro area more broadly, the health situation looks better than the public debate might suggest. Despite the further twists and turns in the AstraZeneca saga, the overall pace of vaccinations is finally starting to surge,” says economist Jan Hatzius at Goldman Sachs.

EU countries are nevertheless grappling with a third wave of covid-19 infections that has prompted the extension of lockdowns in Italy, a fresh lockdown in France and calls by Germany’s Chancellor Angela Merkel for Germany to do the same.

But Goldman Sachs tell clients the virus numbers themselves are not as bad as widely believed, with both positivity rates and fatalities fairly stable despite selective reopening and generally stronger-than-expected economic data.

“Our FX strategists think the end of the recent Euro selloff is near and see a significant appreciation over the next year,” he adds.

Goldman Sachs say it is easy to imagine Europe outperforming their baseline forecasts if Germany and other manufacturing-dependent economies continue to benefit from a strong global industrial rebound, while an earlier-than-expected vaccination breakthrough rescues the Southern European tourist season.

Source: PSL

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UK economy ended 2020 better than previously expected

The pandemic-hit UK economy grew quicker than earlier expected in the final three months of 2020, but still shrank by the most in more than three centuries that year, according to official data, which revealed the biggest pile of household savings on record last year. The Bank of England thinks this will fuel a recovery when consumers are freed from lockdown.

Gross domestic product (GDP) increased by 1.3 per cent between October and December from the previous three-month period, UK media reported citing the Office for National Statistics (ONS).

In 2020, GDP fell by 9.8 per cent from 2019, only slightly less sharp than an initial estimate of a 9.9 per cent slump.

The UK economy suffered the biggest drop of all countries in the Organisation for Economic Cooperation and Development (OECD) except for Argentina and Spain last year, OECD data has shown.

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It remained 7.3 per cent smaller than before the pandemic, in inflation-adjusted terms, the second biggest drop among eight major economies listed by the ONS.

Although this partly reflects the way different countries produce the data, some of the weakness shown by Britain’s economy, particularly in household spending, was real.

After a rollercoaster 2020, when GDP careened 19.5 per cent lower in the second quarter, during the first lockdown, and grew by almost 17 per cent in the third, the Bank of England expects growth of 5 per cent in 2021 as a whole, helped by Europe’s fastest vaccination programme.

The savings ratio rose to 16.1 per cent from 14.3 per cent in the third quarter and for 2020 as a whole it hit a record high of 16.3 per cent, compared with 6.8 per cent in 2019, the ONS said.

Source: Fibre2Fashion

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