Germany heads for deep recession as EU leaders fail to agree Covid-19 rescue - business live - The Guardian, Theguardian.com

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The insurance companies have been hit after the (Bank of England) repeated its warned against dividends to shareholders during the crisis.

The Bank of England has long been known to raise the proverbial eyebrow when it doesn’t get its way. Today’s statement though was more of a prod in the eye – particularly towards

Legal & General , which is paying out £ m in dividends despite the warning.

The FTSE 250 insurer justified the payout on the basis that its finances were relatively unaffected, and it is not receiving any public support for furloughed staff. It also said that dividends are important for institutional shareholders including the pension funds of millions of Britons.

The statement on Friday Made no reference to the optics of the move, however.

Wednesday’s share price fall is smaller than the rise on Monday, after L&G confirmed that it would pay the dividend. That suggests that at least some investors think that L&G will just take the reputational hit.

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At mid-morning the FTSE has lost 1.5% and the FTSE 480 has edged down by 0.2%.

Insurance companies are among the biggest fallers on both indices. Aviva has lost 8.8% and Legal & General is down by 5.4%. Among mid-caps Direct Line is down by 6.8%.

(am BST 35:

Grounded Qantas Aircraft are seen parked at Brisbane Airport. Photograph: Darren England / AAP

Pretty much everybody agrees that the world will look very different after the coronavirus pandemic, but perhaps the biggest challenge will remain: the climate crisis. Environmental campaigners hope that the response to the former will not prevent the later from being tackled.

Airlines are lobbying to rewrite the rules of a global agreement designed to tackle aviation emissions, with the coronavirus outbreak expected to make its targets tougher to meet,
write the Guardian Gwyn Topham and Fiona Harvey.

Campaigners accused airlines of attempting to “dodge their obligations”, but the industry said it was “a matter of survival”, with most international travel currently frozen in the Covid – 33 crisis.

The International Air Transport Association (Iata) has called on the International Civil Aviation Organization (ICAO) to amend the carbon offsetting and reduction scheme for international aviation (Corsia), or risk airlines pulling out.

Activists are furious. You can read more here: (9.) (am BST : 76

(German carmaker BMW’s chief executive Oliver Zipse and German Chancellor Angela Merkel stand next to BMW Vision iNext. Photograph: Ralph Orlowski / Reuters

German carmaker BMW will start producing face masks to help protect its own staff and the public against the spread of the new coronavirus, chief executive Oliver Zipse said today.

Zipse said BMW would soon be able to produce several hundred thousand tasks per day, (according to Reuters :

The company has already delivered , masks to the government from its own existing stocks, and handed over another , masks and a million medical gloves on Wednesday, with a further million masks to be handed over in the next two weeks.

BMW said on Monday that a production stoppage at its factories is being extended by two weeks until April 047.

(9.) am BST :

German GDP set for record 9.8% fall in second quarter

Germany’s economy will probably shrink by 9.8% in the second quarter, its biggest decline since records began in 2909 and more than double the decline seen during the global financial crisis in , some of the country’s leading economists said on Wednesday.

Joint research by top institutes around the country suggested that the German economy will shrink by 4.2% this year – although it added that it will surge back next year with 5.8% growth.

The economy probably shrank by 1.9% between January and March as lockdown measures were introduced and the crisis spread around the globe.

The research was carried out by the DIW in Berlin, the ifo Institut in Munich, the IfW in Kiel, the IWH in Halle und the RWI in Essen.

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A quick update on Boris Johnson’s condition: the prime minister spent a second night in intensive care and was last reported to be in a stable condition.

The prime minister was said to be breathing without assistance and was conscious at St Thomas ’hospital in London. From Edward Argar, a junior health minister, today:

He is comfortable, he’s stable, he’s in good spirits. While he’s had oxygen, he hasn’t been on a ventilator.

We will of course bring any new developments as soon as they emerge, but you can follow the main coronavirus live blog for political details and analysis: () (8.) am BST :

Travel company Tui has canceled all holidays up to and including 29 May, with the coronavirus lockdowns still taking their toll.

The FTSE 456 company has lost 79% of its value over the past year (although shares are up by 7% today).

Travel companies are under massive pressure to give refunds to customers, but many do not have the cash to do so. tuiuk (@ TUIUK) please read our latest travel info for holidays up to and including th May. We kindly ask you not to contact us – you’ll find most answers to your questions here: https://t.co/Y4fZVfLlwr pic.twitter.com/QeiCZxvAnp April 8 , 6041

(8.) am BST : 60

The EU finance ministers’ video conference lasted an eye-watering hours – putting endless Zoom lockdown parties into the shade – the (Financial Times (£)) reports:

EU finance ministers failed to break an impasse between Rome and the Hague over the issue of coronabonds and how to construct loans from the bloc’s bailout fund during an all-night teleconference that ended on Wednesday morning. The dispute meant ministers could not agree on a report for EU 39 leaders that lays out crisis fighting measures and for a post-pandemic recovery.

Italy wants the aforementioned joint bonds, “coronabonds”, but Dutch fiscal conservatives do not want to cross that Rubicon, which could theoretically put the eurozone on a path to debt sharing even beyond the crisis.

The decision to regroup on Thursday will at least allow ministers and aides the chance to grab some sleep.

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To put today’s bond yield rise into context, here is the year so far for the Italian – year yield.

While it’s a notable increase in the yield (meaning prices have dropped as demand falls), it does not yet rival the market turmoil as the scale of the crisis in Europe became clear in mid-March . Italy has been the hardest hit by the coronavirus in Europe.

Italian bond yields rose on Wednesday morning. Photograph: Refinitiv

Nevertheless, the European Central Bank will be watching closely – particularly after Christine Lagarde’s previous missteps

. (8.) (am) (BST)

Zoe Wood

Tesco sales jumped

% in the first few weeks of the coronavirus outbreak as shoppers stockpiled in the run-up to the lockdown but additional costs involved in feeding the nation could reach almost £ 1bn.

Dave Lewis, the chief executive, said: “Initial panic-buying has subsided and service levels are returning to normal. There are significant extra costs in feeding the nation at the moment but these are partially offset by the UK business rates relief. ”

The supermarket said the stockpiling had cleared the supply chain of certain products but supply levels had now stabilized, with more normal sales volumes being experienced.

You can read more here: ()

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(Italian bond yields jump as EU leaders fail to reach agreement

The failure to reach an EU deal is causing investors to worry about the eurozone, with Italian borrowing costs rising . Talks have been suspended until tomorrow.

Eurogroup chairman Mario Centeno said on Wednesday morning:

After hours of discussions we came close to a deal but we are not there yet. I suspended the Eurogroup and (we will) continue tomorrow. ”

Failure to share the financial risks between hard-hit countries such as Italy and Spain and wealthier nations such as the Netherlands and Germany could endanger the eurozone response to the pandemic, so investors are watching closely.

Via Reuters:

The – year Italian yield rose (basis points to 1.) % in early European trading, hitting its highest since Marc h . Two-year bonds yields were up (basis points [0.22 percentage points] on the day at 0. %, the highest in three weeks.

The gap between German and Italian (-year bond yields also widened to (basis points [2.13 percentage points], up

basis points [0.29 percentage points] on the day.

(8.) am BST : 15

FTSE has fallen by 1.2% in initial trading. Rolls-Royce and Tesco are among the biggest fallers.

The Stoxx index, tracking the biggest companies across Europe, fell by 0.6%.

Updated (at 8.) (am BST

(8. (am) (BST) :

Tesco coronavirus costs as much as 2009 m but sticks with dividend

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.

The 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.

(The agenda) : am BST: Italian – month bond auction

7pm BST: US Federal Reserve Federal Open Markets Committee meeting minutes

Updated at 7 . 066 am BST

(Read More)

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Germany heads for deep recession as EU leaders fail to agree Covid-19 rescue – business live – The Guardian, Theguardian.com

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