ALEX BRUMMER: Britain looks into the financial abyss under the blockade


The damage done to Britain’s prosperity by the severity of the foreclosure is terrifying.

This has not been made easier by the deliberate destruction of the country’s small businesses, which are the backbone of the economy, by the pathetically slow efforts of the banks to obtain emergency loans and support production.

The speed at which the UK has moved from stability to recession, from full employment to mass unemployment, is illustrated by the latest data.

One of the reasons why the UK has been hit so badly is that its prosperity rests on services many of which have been crushed by social distancing.

One of the reasons the UK has been hit so badly is that its prosperity rests on services, many of which have been crushed by social distancing.

This in turn puts enormous pressure on public finances, with the Institute for Budget Studies planning to borrow £ 260 billion this year and the government revealing that it will have to issue £ 180 billion to finance operations. in 2020-2021.

The weakness is evident in the latest purchasing manager index, which looks to the future. It fell to just 12.9 in April.

Anything below 50 is considered recessionary territory, so the numbers illustrate the extent of the Covid-19 depression. The number of the United Kingdom is half that of China at the height of its pandemic and worse than the euro zone.

One of the reasons the UK has been hit so badly is that its prosperity is based on services – from hairdressing to the creative sector and consultancy – many of which have been crushed by social distancing.

The great buyout feature of the UK economy since the financial crisis and during the Brexit era has been the miracle of job creation.

It disappears. The NIESR forecaster warns that the outlook for British workers is “horrible” and that he expects unemployment to increase by 5 to 6 million by the end of May, raising the unemployment rate more than five times to 20 percent of the workforce.

In the United States, job losses have increased from 4.4 million to 26 million more since the virus struck.

The only comfort from the NIESR forecast is that it is in part the work of the British economist David Blanchflower, who was desperately wrong about job losses in Britain after the banking crisis.

Unless the business lock is quickly lifted, he might be right this time. Tragic.

Magnum melt

In the midst of the wasteland of dividends, Unilever kept the confidence of investors.

It was not quite enough to support the stock price in a context of stable results. Alan Jope, CEO, has found the phrase “new normal” to describe headwinds as the Dove-to-Ben & Jerry group adapts to life with pandemics.

Unilever does not expect an idealized V-shaped recovery. It will vary from country to country and Jope expects the “South” – from Latin America to Africa – to be among the most affected regions of the world.

China offers some indications of the future. Personal care products have suffered, demand for hygiene has increased, and digital has evolved in the supply chain. Unilever’s less glamorous brand, like Domestos, has established itself.

Indeed, at a time of uncertainty, Unilever notes that established and proven brands are in demand.

Among the great successes of the first quarter was ice. This is not surprising in an era of leisure closings, from Disneyland to the local Odeon. The new standard in this category will be the home delivery of Magnum and Ben & Jerry’s, particularly in the United States.

The market was disappointed that Unilever had not yet benefited from the rise of P&G coronaviruses. This reflects greater exposure in developing markets.

But as China, and later India, returns, sales should also increase. Unilever says it focuses on staff security, protecting supply and finding something to give back to society.

The medical emergency shows the value of companies working to stay on the ethical, social and green path.

Adapted and started

MINIMUM for mergers and acquisitions. Just Eat, a lockout winner, was allowed to be bought by the Dutch company Takeaway for £ 6.2 billion – unless someone changes their mind.

This is precisely what happens to Moss Bros which, after having agreed to be bought by the owner of Crew Clothing Menoshi Shina, finds the buyer seeking to evade the agreement.

The crew invoked the “material adverse change” (MAC) rule. A similar approach is taken by Sycamore Partners in the United States, which no longer appreciates the appeal of Victoria’s Secret.

With the closure of Moss Bros and the moribund wedding rental business, Crew believes the business is good.

The precedent suggests that he is pushing his luck.

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