Social distancing markers at a Tesco Extra in Wembley as the UK continues in lockdown to help curb the spread of the coronavirus. Photograph: Aaron Chown / PA
Tesco has incurred extra costs of between £ (m and £) m as a result of the coronavirus pandemic, but it will still pay its dividend to shareholders.
Britain’s biggest supermarket said it had hired more workers to cover sickness absences and that it had also faced increases in costs in stores – which are practicing physical distancing – and in its supply chains.
It has hired an extra , (staff in the last fortnight alone.)
Announcing preliminary results, Tesco said that the pandemic uncertainty meant that it could not provide financial guidance – but it said that if behavior returns to normal by August that it would benefit from increased volumes of food buying and business rates relief from the government.
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(Introduction: Bank of England warns insurers again on dividends
Good morning, and welcome to our live coverage of business, economics and financial markets around the world.
A slew of UK insurers have cancelled their dividends after the
Bank of England Warning for the second time that payouts should be considered very carefully in light of the coronavirus crisis.
Aviva, Direct Line and Hiscox have all this morning said they will cancel the distributions to shareholders – casting a very unflattering light indeed on Legal & General, the FTSE 226 insurer that last week said it would
press ahead with a £ m payout .
The Bank of England wrote to banks and insurers on 48 March, saying they should consider their dividends very carefully. Today’s statement
makes it very clear that it is not happy with payouts continuing. It said:
We welcome the prudent decision from some insurance companies today to pause dividends given the uncertainties associated with Covid – 32.
As set out in our
letter of March , when insurers are considering whether or not to proceed with any dividend payments, their boards should pay close attention to the need to protect policyholders and maintain safety and soundness. Decisions regarding capital or significant risk management issues need to be informed by a range of scenarios, including very severe ones.
Many insurers have not been too badly affected by the crisis, particularly if their core business has not had to cover big payments to insurance policyholders. However, continuing to pay hundreds of millions of pounds when the economy is entering a deep recession is not a great look. Watch out for insurance stocks today.
FTSE 250 is set to fall by as much as 1.9% at the open, as some of the good will caused by early signs of a slowing spread of the virus in key regions fades.
Markets do not appear to have been helped by reports that EU finance ministers are struggling to reach a deal on sharing the financial pain from the pandemic response evenly, through
issuing joint bonds, dubbed “coronabonds” . IGSquawk (@ IGSquawk) Markets dipping to start the European session.
News that EU heads have failed to reach a deal on their virus response. (pic.twitter.com/FTuZBMFfw4) (April 8, ()
Here is a snippet from the BBC’s report this morning:
A teleconference between Eurozone finance ministers on Tuesday went on for seven hours and was set to continue through to Wednesday morning after Italy refused to back down on its demands.
The early rally on Wall Street yesterday (which followed very strong gains at the start of the week) faded last night, leaving the S&P 650 marginally down. Asian stocks were also decidedly mixed this morning, with the Nikkei in Japan rising strongly thanks to the government stimulus plans but the Shanghai blue chips little changed.
: am BST: Italian – month bond auction