Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The UK economy grew faster than expected in the second half of last year, as it struggled back from its worst slump in centuries.
Updated data from the Office for National Statistics show that UK GDP rose by 1.3% in October-December, a sharper recovery than the 1% first estimated for the final quarter of 2020.
It means the level of GDP in the UK is now 7.3% below its Quarter 4 2019 level, revised from the previous estimate of 7.8%
The ONS has also revised up its estimate for the recovery in the third quarter. It now believes GDP surged by 16.9% in July-September when restrictions were lifted, an upwards revision of 0.8 percentage points.
But… the slump during the first wave of Covid-19 caused even more economic pain than thought. GDP in April to June 2020 is estimated to have fallen 19.5%, a downwards revision of 0.5 percentage points, with the lockdown wiping out almost a fifth of economic activity.
That means in 2020 overall, the economy is now thought to have contracted by 9.8% — marginally better than the 9.9% first estimated, but still the worst year on record.
So the annual picture is largely the same — the UK has just suffered its worst annual contraction since Britain was gripped by the Great Frost over 300 years ago.
Jonathan Athow, ONS’s deputy national statistician for economic statistics, explains:
“Our revised quarterly figures show the economy shrank a little more than previously estimated in the initial stages of the pandemic, before recovering slightly more strongly in the second half of last year,”
Also coming up today
Shares in meal delivery group Deliveroo will start trading among investors today, in London’s biggest stock market float in a decade.
But amid concerns over its treatment of riders, and choppy stock markets, Deliveroo will be valued somewhat less than it had hoped.
Shares are being sold at £3.90 each, giving a valuation of £7.6bn. That’s a meaty valuation, but around £1bn less than the top-end of expectations set by Deliveroo during the IPO process.
Deliveroo insists it has seen very significant demand from institutional investors – but several major City names are ducking out of the IPO.
My colleague Zoe Wood explains:
Although the listing is still expected to be biggest initial public offering in London for a decade, a number of leading fund managers are avoiding the shares owing to concerns about Deliveroo’s labour practices, which do not guarantee minimum pay rates for its couriers.
Along with other operators in the gig economy, Deliveroo, which is backed by Amazon, has faced legal challenges around the world from couriers and drivers seeking access to basic rights, such as minimum wages and holiday pay.
The listing will raise £1bn for the company and £500m for selling shareholders, including Amazon and Will Shu, the former investment banker who launched the service from his London flat in 2013.
The fallout from the collapse of Archegos Capital Management continues, with UK and US regulators reportedly examining whether global investment banks breached rules by holding group discussions shortly before launching a fire sale of nearly $20bn worth of assets.
The Securities Exchange Commission is said to have requested further information from major US banks Goldman Sachs, Wells Fargo and Morgan Stanley, as well as Japan’s Nomura and Swiss lender Credit Suisse about a meeting with Archegos founder Bill Hwang on Thursday. Those talks were followed by a flurry of heavy sales of stock, in which Nomura and Credit Suisse ended up taking highly significant losses while other brokers escaped more unscathed. Analysts at JPMorgan Chase have estimated that these losses could reach $5bn to $10bn, much more severe than a typical fund unwinding.
The latest eurozone inflation data, due at 10am UK time, is likely to show that the cost of living rose at a faster rate this month, partly due to increased energy prices. Yesterday, German inflation picked up, hitting 2% on a harmonised annual basis.
Investors are also keen to see the monthly US private sector payroll report from ADP, which may give insight into Friday’s non-farm payroll (the main US unemployment report). A strong reading will bolster hopes for a rapid US recovery, which could put further pressure on bond yields.
- 7am BST: Nationwide house price index for March
- 8.55am BST: German unemployment data for March
- 10am BST: Eurozone inflation data for March
- Noon BST: US weekly mortgage applications
- 1.35pm BST: ADP payroll survey of US private sector employment in March
- 3.30pm BST: EIA weekly oil inventory figures