- OBR predicts output will decline 12.4pc in baseline scenario
- Projections for 2021 bounceback muted
- Watchdog expects total cost of fiscal measures against Covid-19 to reach £192bn
- UK GDP grew just 1.8pc in May, well short of expectations
- Economy still a quarter smaller than before crisis
- JP Morgan beats revenue estimates as Wall Street earnings season gets underway
- Wells Fargo posts first quarterly loss since 2008, while Citigroup beats estimates
- Richard Branson secures Virgin Atlantic rescue in £1.2bn deal
- European stocks drop
- Ocado boss predicts shoppers won’t go back after switching to online
- Massive debt write-off could be only way to save economy, warns OBR boss
- Matthew Lynn: Letting Bulgaria join the eurozone is hardly the answer to its problems
- Sign up here for our daily business briefing newsletter
Well, that's all from us today, thank you for following along. Be sure to join us again in the morning.
Here's a quick recap of today's events:
Stock markets in Europe came under pressure as fears resurfaced over a spike in coronavirus infections, but a resilient Wall Street helped them off their worst levels, dealers said.
Key eurozone markets Frankfurt and Paris closed around one percent down, well off their lows.
The FTSE 100 inched back into positive territory thanks to a weaker pound following grim British output data.
On Wall Street the Dow Jones index reversed a weaker opening trend to post solid gains by the late New York morning.
Investors felt the market had been oversold in the previous day's late stumble, and upbeat results from JP Morgan lifted sentiment.
The British pound slid on data showing that the virus-plagued UK economy shrank by almost a fifth in the three months to April.
What to look forward to tomorrow:
Interim results: Burberry, Hochschild Mining, McCarthy & Stone
Full-year: Dixons Carphone, Galliford Try
Trading statement: Dunelm, Premier Oil, Severn Trent
Economics: Inflation, Rishi Sunak at Treasury select committee (UK); Bank of Japan monetary policy announcement
Three scary things we learnt from the OBR
My colleague Tim Wallace writes:
Decades of austerity
“The economy has now been subject to two ‘once-in-a-lifetime’ shocks in just over a decade,” the OBR warns.
"It could indicate that economies today are more prone to very large shocks than we have previously assumed."
With public finances on an unsustainable long-term path even pre-covid, the OBR estimates £64bn of spending cuts or tax hikes is needed every decade to keep the debt down.
Financial crisis risk
So far the banking sector has handled the crisis well with its extra capital buffers for protection, plus government support for business and individual customers.
But that is not guaranteed to continue.
"Coming out of the crisis, the public and business sectors will be more highly leveraged than they were going into it, which could trigger the need for further intervention,” says the OBR.
“This in turn could hinder the Government’s ability to shrink its own balance sheet.”
Interest rates could surge
Borrowing costs are at record lows, and seem likely to stay that way.
But there is a risk that all this borrowing could push up interest rates, while huge Government stimulus could stoke inflation.
That would be bad for the Government which has heavy debts, one-third of which are linked to inflation.
Signs of life return to commercial property
The commercial property market is beginning to show signs of stabilising amid the coronavirus crisis, according to the estate agent Savills.
Investors splashed out £1.3bn on commercial property in the UK during June, a 42pc increase on the £755m spent in May - although still down 54pc on the £2.8bn spent in June 2019.
There are also signs yields may harden - reflecting a stronger market - on West End offices as well as industrial and distribution properties.
The commercial property market has been hammered by coronavirus, with retail tenants forced to close their businesses during lockdown and uncertainty over whether office tenants will continue to want as much space.
Lidl to create 1,000 jobs
Via PA: Discount supermarket chain Lidl said it will create up to 1,000 jobs by the end of the year as part of plans to open 25 new stores across the UK.
The German retailer said it also plans to open an additional 100 sites across 2021 and 2022, as part of plans to have 1,000 UK stores by 2023.
The company said it will open stores in areas such as Selhurst, Harrow Weald, Coleford and Llandudno Junction this year.
Lidl GB chief executive officer Christian Hartnagel said: "It is testament to the continued hard work of our colleagues that we are able to continue forging ahead with our expansion plans, despite the challenging circumstances that have been faced over the past months."
When will the UK 'track and trace' app be ready - and how will it work?
With Britain in lockdown, the Government has been racing to find ways to ease restrictions without putting public safety at risk.
One solution is a contact-tracing app that can enable digital contact-tracing on a large scale.
On May 5, the Government revealed its first attempt at a contact-tracing app. But in a major u-turn, on June 18, the Government admitted the app flawed and it would switch to a model being developed by tech giants Apple and Google.
Technical issues with Bluetooth delayed the app, while it was discovered the app was only logging one in 25 contacts between people when it was used on iPhones.
FTSE ekes out gains as Europe slumps into red
European markets have closed in the red today as traders continue to worry about the spread of the virus.
The FTSE 100 rose 0.06pc to 6,179.75 while the FTSE 250 slumped 1.21pc to 17,174.69.
David Madden of CMC Markets said:
The mood has been downbeat all day as continued health concerns and rising tensions in relation to China has weighed on stocks. Dealers are still worried about the rate at which the virus is spreading, and seeing as some restrictions are being reintroduced, that is adding to the bearish move too.
The US government has hit out against the Beijing administration in regards to its territorial claims in the South China Sea. This represents the latest development in the frosty relationship between the two largest economies in the world. China isn’t on great terms with the UK either, as earlier today it was announced the British government basically banned Huawei from its 5G network.
JP Morgan sets aside $10bn for bad loans
JP Morgan, Wall Street's biggest bank, has set aside $10.5bn (£8.4bn) to cover future losses from soured coronavirus loans in a move likely to spook UK rivals as they estimate their own potential hits from the crisis, my colleague Lucy Burton writes.
Big banks have doled out billions in emergency loans to prop up small companies and are now setting aside huge amounts amid fears many borrowers could struggle to make repayments.
Shedding a light on the depths of America's recession, the largest US lender by assets revealed that it had put aside a record provision for loan losses. That almost halved profits for the second quarter compared with a year ago.
Volatile markets left traders busier than ever before and JP Morgan made $9.7bn from trading in the quarter, up 79pc, while investment banking revenues were 91pc higher due to steeper fees.
Sunak orders capital gains tax review
The Chancellor Rishi Sunak has commissioned a review of capital gains tax, sparking fears the duty’s historically low rates will be increased to help plug the £300bn whole in public expenditure caused by coronavirus.
My colleague Harry Brennan reports:
He has asked the Office of Tax Simplification to conduct the review, which will assess whether the current rates are fit for purpose. It will also consider how certain reliefs and exemptions could be simplified or scrapped – including the exemption from the 28pc levy that applies to people selling their homes.
The Chancellor said he was particularly interested in how gains are taxed compared to other types of income and has asked that the review consider how CGT interacts with other taxes including inheritance tax.
It follows last week’s summer budget and the announcement of a number of tax cuts costing £30bn, including a stamp duty holiday for homeowners and a temporary scrapping of VAT for some of the economy’s worst hit sectors.
Third of audits fall short of quality standards
One in three company audits by the UK’s top seven accounting firms failed to meet the expected standards last year as fears grow that reform of the sector is stalling.
My colleague Michael O’Dwyer reports:
The industry watchdog said an “unacceptable” number of audits were not up to scratch.
MPs called on Monday for the accounting watchdog to be replaced urgently with a beefed-up regulator to prevent further high-profile corporate failures like those at Thomas Cook, Carillion and BHS.
The proportion of audits found to require improvement or significant improvement jumped to 33pc from 23pc a year ago, but this may partly reflect the watchdog’s decision to focus on higher risk audits and the wider scope of this year’s inspections.
The regulator also reduced the number of audits it reviewed, which it said was due to resourcing constraints.
Citigroup beats estimates for sales and trading
And more: Citigroup has beaten analysts’ estimates for revenue, bringing in $5.6bn through fixed income, currencies, and commodities trading – a 68pc jump.
A flurry of market activity prompted by the crisis powered the group’s results, helping it reach a profit of $1.3bn. That’s 73pc lower than a year before. It added $5.6bn to its provisions for credit losses.
Michael Corbat, Citi’s chief executive, said:
While credit costs weighed down our net income, our overall business performance was strong. We have been able to navigate the Covid-19 pandemic reasonably well.
Wells Fargo posts first quarterly loss since 2008
More US bank earnings: Wells Fargo has posted a quarterly loss for the first time since 2008, as its provisions for credit losses spurred by the current crisis rose to a record $9.5bn – about $4bn more than has been expected by analysts.
The San Francisco-based lender cut its dividend to 10 cents per share from 51, after posting a $2.4bn loss for the quarter. During the same three months last year, it made a near-record $6.2bn profit.
Charlie Scharf, its chief executive, said:
We are extremely disappointed in both our second quarter results and our intent to reduce our dividend. Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter.
Follow live political reaction
Lord Browne to step down as Huawei chief
Today’s widely-expected decision on Huawei tech follows news that Lord Browne is stepping down as the Chinese group’s UK chairman.
As my colleague James Cook reported this morning:
The former BP chairman handed in his resignation this week, according to Sky News. He will leave in September, six months before his term had been due to end...
Lord Browne, who joined Huawei in 2015, warned last week that a Government decision to ban Huawei kit could seriously harm the UK’s relationship with China.
“The UK has had a very long relationship with China and I hope it’s not one that they simply throw away," he said in an interview with Reuters.
All Huawei tech to be removed by the end of 2027
Bloomberg has more details on the plans:
Under the blueprint agreed by Prime Minister Boris Johnson, operators will not be able to add any new Huawei components to their 5G networks after December 31. All equipment made by the Shenzhen-based company that has already been installed will need to be removed from 5G infrastructure by 2027, the government said, confirming reports by Bloomberg News on Monday.
Johnson, his senior ministers and top security chiefs signed off on the plan at a meeting of the National Security Council on Tuesday before Culture Secretary Oliver Dowden set out the details in a statement to Parliament.
“There is of course no such thing as a perfectly secure network,” Dowden told the House of Commons on Tuesday.
UK to ban Huawei equipment from 5G networks
Breaking: the UK is to ban equipment made by Chinese firm Huawei from its 5G networks from the end of the year.
The decision, announced by Oliver Dowden, secretary of state for Digital, Culture, Media and Sport, comes amid cybersecurity concerns and an extended campaign by US officials.
JP Morgan revenue beats estimates
Wall Street’s earnings season has kicked off with strong results for JP Morgan which reported revenues that beat the highest analyst estimate.
Revenues in the second quarter rose 14pc year-on-year to $33.82bn, with net income halved as the group built up its reserves.
The bank set aside $10.97bn for credit losses in the second quarter, more than had been expected.
Jamie Dimon, its chief executive, said:
Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy. However, we are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm.
We ended the quarter with massive loss-absorbing capacity – over $34 billion of credit reserves and total liquidity resources of $1.5 trillion, on top of $191 billion of CET1 capital, with significant earnings power that would allow us to absorb even more credit reserves if needed. This is why we can continue to serve all of our stakeholders and to pay our dividend - unless the economic situation deteriorates materially and significantly.
Virgin Atlantic rescue deal expected this afternoon
Virgin Atlantic is expected to announce a £1.2bn rescue later today, marking a significant coup for its founder Sir Richard Branson.
My colleague Oliver Gill reports:
Drawing a line under months of uncertainty, Virgin Atlantic has secured investment from US hedge fund Davidson Kempner and support from credit card companies to release hundreds of millions of pounds.
Sir Richard will inject £200m with the Virgin Group and US airline Delta, a minority investor in Virgin Atlantic, deferring £400m of fees owed to them through a joint venture agreement.
The Sunday Telegraph reported over the weekend that a rescue of Virgin Atlantic could be announced as early as today.
Sky News reported this morning that the overhaul of Virgin Atlantic’s finances would use a new court-sanctioned process to fast-track restructurings following the coronavirus pandemic.
German investor expectations fall
German investor are feeling mildly more pessimistic about the future according to the latest surveys by the ZEW research institute – with its expectations gauge falling from 60 to 59.3.
The current assessment score climbed slightly, from –83.1 to –80.9, but that’s quite a bit worse tan the jump to –65 economists had expected.
Oxford Economics’ Tomas Dvorak said:
The assessment of the current situation also improved somewhat but remained at fairly low levels, suggesting investors think the material improvement of the economy is yet to come.
Despite the sustained improvement in sentiment, we caveat that the ZEW index reflects investor confidence rather than developments in the real economy, and the two have shown a marked disconnect in the recent months.
Bank of America: Most fund managers expect U- or W-shaped recovery
Investors remain cautious about the pace of economic recovery from Covid-19, according to the latest global fund manager survey from Bank of America.
BofA said 72pc of those surveyed expected strong global growth, but conviction in the strength and speed of the recovery was muted: just 14pc said they expected a the notorious V-shaped recovery to manifest.
The main tail risk to a recovery is a second wave, respondents said – a reality the US is already grappling with (if you believe they even finished the first). A vaccine would be the biggest catalyst to raise sentiment.
Revealed: The scale of the Covid-19 jobs crisis
Analysis by The Telegraph has revealed the shocking scale of the coronavirus induced jobs crisis, with Covid-19 delivering a crushing blow to the UK’s aviation and consumer sectors as the industry's key players announce more than 85,000 job cuts.
My colleagues Josh Wilson and Alex Clark report:
Across the entire economy, major companies are considering axing the jobs of some 112,964 workers, our analysis found. Nearly half of these layoffs were announced in June, with 26 companies considering cutting up to 55,773 jobs in total – four times higher than the number of announced job cuts in May (13,714).
The findings – from an analysis of corporate layoff announcements made since the beginning of March – show the challenge facing the Government as it tries to avoid mass unemployment while winding down the UK’s furlough scheme.
OBR: Sunak spending spree to cost £192bn
Rishi Sunak’s spending spree to shield the UK economy from coronavirus and fuel a rebound with cost a staggering £192.3bn this financial year, the OBR says.
The updated costs estimate includes the financial measures announced over the past fortnight (which came out too late to make it into the watchdog’s fiscal sustainability report), including an estimated £19.8bn in measures to protect jobs.
That’s a pretty major rise on the £132.6bn predicted at the OBR’s last estimate in mid-June.
Eurozone industrial productions misses estimates
Industrial production across the eurozone rose 12.4pc month-on-month in May, notching up a record rise as factories swung back into operation.
Still, the growth was weaker than the 15pc rise expected by economists – and there’s a long way to go for production to be back at pre-virus levels.
Long-term scarring looks unavoidable
The OBR’s report puts the kibosh on hopes of a V-shaped recovery (in which output rapidly returns to pre-crisis rates). It says such a rebound is only likely in it most optimistic scenario:
Our upside scenario assumes a short-lived rise in unemployment, that the business investment lost during lockdown is recovered afterwards, and that business failures are limited. Consequently, it assumes scarring is negligible and output follows the path assumed in our March forecast beyond the near term. The central and downside scenarios both assume some scarring, with output at the five-year horizon lying 3 and 6 per cent below our March forecast in our central and downside scenarios respectively.
Broadly, this is the result of three factors: a longer-lasting rise in unemployment; permanently forgone business investment, which reduces capital deepening and productivity growth; and business failures that result in capital scrapping and the loss of intangible capital. The size of the scarring effect is highly uncertain given the difficulties in predicting how the economic disruption in any given scenario would feed through these various channels.
Nevertheless, they are in line with external estimates, and it seems reasonable to believe that the longer output remains below its pre-crisis level, the greater such effects are likely to prove.
Unemployment predicted to hit 8.8pc this year
The Office for Budget responsibility predicts unemployment will hit 8.8pc this year – equivalent to 3m unemployed people – as a results of the coronavirus crisis, noting that total hours worked already slumped more than forecast in March due to furloughing.
The watchdog added:
In all scenarios, prospects for employment and unemployment will depend heavily on what happens to furloughed workers once the CJRS is closed. We make broad assumptions about the proportion that subsequently move into unemployment rather than back to work – of 10, 15 and 20 per cent in the upside, central and downside scenarios.
This means that unemployment continues to rise and employment to fall beyond the second quarter, despite output recovering somewhat.
OBR: UK economy will shrink more than 10pc this year
Britain’s economy will shrink more than 10pc this year in any scenario projected by the Office for Budget Responsibility.
In its latest fiscal sustainability report, the watchdog said:
The UK is on track to record the largest decline in annual GDP for 300 years, with output falling by more than 10 per cent in 2020 in all three scenarios. This delivers an unprecedented peacetime rise in borrowing this year to between 13pc and 21pc of GDP, lifting debt above 100pct of GDP in all but the upside scenario. As the economy recovers, the budget deficit falls back. But public debt remains elevated, continuing to rise in the central and downside scenarios.
In its worst-case scenario, the economy would shrink 14.3pc during 2020, while its central scenario posts to a 12.4pc contraction.
The OBR added the Government may need to raise taxes to fund its current spending splurge:
In the short term, the Government understandably remains focused on controlling the virus and reviving the economy. But at some point, given the structural fiscal damage implied by our central and downside scenarios, the longer-term pressures on spending, and the range of fiscal risks we identify, it seems likely that there will be a need to raise tax revenues and/or reduce spending (as a share of national income) to put the public finances on a sustainable path.
Here are some of the day’s top stories from the Telegraph Money team:
- ‘It’s gone bonkers’: buy-to-let inquiries boom as landlords swoop on stamp duty break: Buy-to-let landlords have swooped into the property market to take advantage of the stamp duty tax giveaway.
- Major insurers delaying life cover for those at risk of coronavirus: Four major insurers have added questions about Covid-19 to their life insurance applications which could result in doctors, nurses and people with health conditions being denied cover.
- ‘I was unfairly sacked and forced to sell my home – and I’m still waiting for £16k in compensation’: A British citizen who was forced to sell his home after being unfairly dismissed from his job at the Indian consulate in Birmingham is still waiting for more than £16,000 in compensation from his former employer.
China imposes sanctions on Lockheed Martin
China has announced plans to impose sanctions on American aerospace and defence group Lockheed Martin, after the US approved a possible $620m deal for Taiwan to buy replacement parts for missiles made by the group.
A spokesperson for China’s foreign ministry said the US should cut all military ties with Taiwan to avoid hurting relations further.
There isn’t much more detail available on what the sanction would involve, but it’s potentially worrying news for Lockheed Martin – which has had a UK-based wing for 80 years.
Obviously GDP is the day’s big story, but here are some of the most notable corporate announcements this morning:
- White goods retailer AO World said UK sales jumped more than 20pc as lockdown forced customers online. The group cut its full-year operating losses to £3.8m, from £13m the prior year.
- Sofa seller DFS announced cuts at subsidiaries Sofa Workshop and Dwell as part of restructuring efforts prompted by Covid-19. The retailer warned it is likely to swing to a loss of up to £58m this year.
- Tonic-maker Fever-Tree announced it has bought Global Drinks Partnership, its German sales agent, for about €9.5m. The group said sales over the three months to mid-June were up 34pc year-on-year, with the US driving growth.
- Industrial cleaning group McBride said its expects to beat market consensus with its full-year profits, with Covid-19 driving demand for hygiene products.
Full report: UK economy still a quarter smaller than before virus
My colleague Lizzy Burden has a full report on this morning’s GDP data. She writes:
The strongest recoveries were in manufacturing and construction, partly due to the Government's recommendation on May 13 that employees in those sectors should return to their usual place of work. Nonetheless, output in those sectors remained 21.6pc and 39.9pc below their January levels respectively.
Jonathan Athow, deputy national statistician at the ONS, said: “In the important services sector we saw some pick-up in retail, which saw record online sales. However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines.”
The distribution sector was one bright spot, with output jumping 13pc month-to-month due to a boom in online sales.
UK two-year bonds yield less than Japan’s
With bond prices rising following this morning’s disappointing data, the yield on two-year UK bonds (which moves inversely to prices) has dropped to a new all-time low of –0.126pc.
Remarkably, that puts UK two-year yields below their Japanese equivalent.
As Bloomberg notes:
The moves are the latest sign that European debt markets may be undergoing “Japanification,” a world of low yields, tepid inflation and little volatility. Some bond traders are speculating that the Bank of England could also follow its Japanese equivalent in trying to limit borrowing costs via so called yield-curve control.
GDP reaction: June should show bigger improvement
May’s 1.8pc growth reading was well below even the most bearish forecast – Merrill Lynch’s Robert Wood gets the points with his prediction of 2.9pc growth. Naturally, predictions are extremely difficult during a time of unprecedented economic disruption.
Pantheon Macroeconomics’s Samuel Tombs – who was in the middle of the pack with a 5pc growth predictions – says GDP “likely made a fuller recovery in June”. He added:
A variety of unconventional indicators, such as energy consumption, transport usage and mobility data, suggest that the recovery quickened in June. Nonetheless, the ONS’ latest Business Impact of Covid-19 survey showed that a hefty 34pc of employees remained furloughed in the first half of June, down only a bit from the 38pc peak in the second half of May.
In addition, output in the education sector, which was 46pc below its peak in May, likely barely recovered in June, given that school pupil attendance rose merely to 11pc, from 2pc in May. It will not fully recover until schools reopen to all pupils in September.
Capital Economics was even more upbeat – and wrong – with a 7.5pc growth prediction. Thomas Pugh, of its its economists, said:
The 1.8pc m/m rise in GDP in May is a disappointing first step on the road to recovery and suggests that hopes of a rapid rebound from the lockdown are wide of the mark. Indeed, the path to full economic recovery will probably be much longer than most people anticipate.
Of course, June will almost certainly be better. The opening of many non-essential shops in the middle of the month and pubs and restaurants for takeaway should ensure that services activity jumped. And many factories and constructions sites will have been able to adapt to social distancing measures.
Ocado narrows losses as boss predicts long-term switch to online
The boss of Ocado has predicted that shoppers will not go back to stores after switching to online as the retailer swung to a £40m first half loss.
My colleague Simon Foy reports:
Tim Steiner, chief executive of Ocado, said: "We believe that this channel shift is sustainable, as survey data shows that many consumers who were shopping online during the peak of the pandemic in their respective countries have either continued to do so, or intend to continue online shopping as 'lockdown' measures ease."
It came as the online grocer posted a narrowing pre-tax loss of £40.6m for the six months to the end of May, compared to a loss of £147.4m for the same period last year.
The firm incurred a £39.1m exceptional charge, principally due to insurance income for the fire at its warehouse in Andover, Hampshire in February 2019.
Revenues surged 23pc to £1.09bn for the period, while UK sales rose 27pc due to higher demand during the coronavirus lockdown.
Services: Full breakdown
The services sector is by far the biggest component of the British economy – and May’s figures show many of its sub-sectors are still some way off a recovery – with nearly half actually declining further during the month:
NB: This chart was having rendering issues, so I have replaced it with a static image.
Snap reaction: Recovery won’t be straightforward
Here’s some snap reaction from business groups to today’s growth figures.
Tej Parikh, chief economist at the Institute of Directors, said:
These figures underline that a return to normality won't be straightforward for the UK economy.
There is a big question mark around how fast we can rebound back to pre-pandemic levels. Firms continue to face significant uncertainty around consumer demand and are still adjusting to operating under social distancing. Meanwhile, the debt some businesses have built up during the crisis could weigh down investment and hiring decisions, hurting our performance in the longer term.
While some of the Chancellor’s announcements last week may have gone down well, he may yet need to return to the plate before the Autumn Budget to stimulate the economy. Broader measures to lower employment costs and and support business investment will be vital to help the economy jump out of this crisis.
The BCC’s head of economics, Suren Thiru, echoed the call for further stimulus:
The pick-up in output in May is more likely to reflect the partial release of pent-up demand as restrictions began to loosen, rather than evidence of a genuine recovery. While UK economic output may grow further in the short term as restrictions ease, this may dissipate as the economic scarring caused by the pandemic starts to bite, particularly as government support winds down.
Although some of the individual measures announced in the Summer Statement were welcome, more significant fiscal stimulus is likely to be needed to help kickstart a sustained recovery. This should include new incentives for business investment and reducing the overall cost of employment through a cut in employer national insurance contributions.
All sectors stuck in downturn
Looking at rolling three-month GDP shifts (the ONS’s preferred measure), all the main sector of Britain’s economy remain locked in a three-month slow – one that is unlikely to be shaken off until lockdown is firmly in the rear-view mirror.
Construction took the biggest hit despite loosening restrictions at the start of May – chatter from builders in recent weeks however suggests it picked up in June.
Agenda: Growth figures inbound
Good morning. A rally on Wall Street fizzled yesterday following more signs of coronavirus troubles in the United States after European equities were boosted by progress towards a vaccine.
This morning, we’ll get GDP growth figures for the UK in May. Economists expect month-on-month growth of 5.5pc as output bounces back from the April nadir.
5 things to start your day
1) Massive debt write-off could be only way to save economy, warns OBR boss: Repayments on £45bn of taxpayer-backed loans could be linked to companies' revenue, said Richard Hughes of the Office for Budget Responsibility (OBR) - with any money outstanding after a set timeframe simply cancelled.
2) Shoppers embrace end of lockdown by spending more than last year: Spending last month was almost 3.4pc higher than a year earlier, according to the British Retail Consortium, a sharp turnaround from the fall of almost a fifth during the peak of the pandemic in April.
3) Bad news for savers – the most likely way to cut Britain's debt pile is 'financial repression': A stealth taxes on domestic savers and gilt holders is the least politically-troubled route out of the Covid-19 mess
4) Bank bosses who finance fossil fuel firms are facing a revolt from the world's biggest investor amid mounting pressure over climate change. BlackRock is preparing to take action against banks ahead of next year’s shareholder meetings and has drawn up a global watch list of 191 companies closely linked to global warming.
5) SFO director faces review as judge criticises ‘flattering’ text messages: Lisa Osofsky, a former US FBI lawyer, had exchanged emails and texts with David Tinsley, an American private investigator, who was acting for three members of the Ahsani family, which ran Monaco-based oil consultancy Unaoil.
What happened overnight
Shares fell in Asia on Tuesday as skepticism set in about the recent upward momentum in global markets given rising confirmed coronavirus cases and percolating tensions between the US and China.
The White House's decision to reject nearly all Chinese maritime claims in the South China Sea added to investor jitters. The world's two largest economies have been sparring over everything from the pandemic to human rights.
Japan's benchmark Nikkei 225 sank 0.8pc in early trading to 22,609.57. South Korea's Kospi lost 0.4pc to 2,177.01, while Australia's S&P/ASX 200 dropped 0.8pc to 5,932.70.
Hong Kong's Hang Seng tumbled 1.9pc to 25,277.06 as reports of locally transmitted coronavirus cases prompted authorities to tighten precautions against the pandemic. The Shanghai Composite lost nearly 1.2pc to 3,403.78.
Singapore plunged into recession in the second quarter as the economy contracted more than 40pc, with the trade-dependent city state hammered by the coronavirus in another ominous sign for the global recovery. The economy shrank 41.2pc quarter-on-quarter and 12.6pc on-year between April and June, according to data from the trade ministry, and analysts said it was the worst quarterly figure for gross domestic product ever recorded in Singapore.
Coming up today
Interim results: Ashmore, McColl’s Retail, Ocado
Full-year: AO World, Halma, McBride, Polar Capital Technology Trust
Trading statement: QinetiQ
Economics: May GDP, BRC retail sales, OBR fiscal sustainability report (UK); trade balance (UK and China); industrial production (eurozone); inflation (US)