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Latest news

  • Santander is planning to close one-third of bank branches and cut 4,000 Spanish jobs as the pandemic accelerates an online shift

  • UK gig economy workers have won a court battle over PPE

  • US producer prices have risen but inflation remains muted

‘We’re recovering, but to a different economy’

Central bank chiefs have joined in with the optimism fuelled by this week’s announcement of a potential vaccine for coronavirus and its potential to lift the world economy out of its pandemic-induced funk — but have made it clear that now is not the time for policymakers to relax their guard. 

Jay Powell, chair of the US Federal Reserve, speaking at a European Central Bank event, cautioned that “significant challenges and uncertainties” remained, especially in the detail of how the vaccine might be distributed and how effective it might be. 

Christine Lagarde, president of the ECB, also welcomed news of the breakthrough but with a reminder that unforeseen events such as the Danish mink crisis could derail the policy response. 

Andrew Bailey, Bank of England governor, was also cautiously optimistic, telling economics editor Chris Giles in a video interview that any post-pandemic restructurings would probably be less severe than those of the 1980s or 1990s. The vaccine news was not, however, enough for the bank to change its forecast that the UK economy would return to pre-pandemic levels only in 2022.

All three were pleased that post-financial crisis reforms had helped banks remain resilient, but emphasised the need for continuing short-term support for stricken economies as evidence mounted that some of the changes created by the pandemic could be permanent.

“We’re recovering, but to a different economy,” Mr Powell said. “There’s going to be a substantial number of workers who are going to need support as they find their way in the post-pandemic economy, because it’s going to be different in fundamental ways.”

Watch: This week’s FT Global Boardroom event featured top policymakers discussing the global response to the pandemic. Chief economics commentator Martin Wolf in this clip talks to OECD chief economist Laurence Boone; former NY Fed president Bill Dudley; World Bank chief economist Carmen Reinhart; and Markus Schomer, chief economist at PineBridge Investments.

Markets

Zambia is on the brink of default after investors rejected its request for debt relief. The attempts by the country — already plagued with debt before the pandemic — to restructure its borrowings is viewed as a test case for poorer countries seeking help.

The International Energy Agency said the oil market was unlikely to recover before late 2021 despite hopes of a coronavirus vaccine. Opec, too, was downbeat, cutting its outlook for demand next year. Producers are still to decide whether to continue with their plan to increase output in light of this week’s price bump. Energy editor David Sheppard is sceptical that the development could be the magic bullet for the stricken industry.

Investors piled into the opportunity of higher payouts offered by US junk bonds as corporate optimism stemming from the Pfizer vaccine news spread. Amid the euphoria, US markets reporter Colby Smith warned that the trajectory for bond markets was far from certain.

Business

Developing drugs for infectious diseases has traditionally been seen as a largely unprofitable business, but the sheer size of the pandemic and copious public funding have encouraged pharma companies to get on board. Some 202 are developing vaccines and 47 products are in clinical trials, writes science and environment reporter Anna Gross. There are, however, some pressures on the US to switch its Covid-19 focus from vaccines to testing. Read Inside the hunt for a Covid-19 vaccine: how BioNTech made the breakthrough.

Pharma groups nearing a vaccine
CompanyMarket value (£bn)RD as % of sales, 2019Price change ytd (%)Price per vaccine treatmentTotal funding, excluding purchase agreements (£m)
AstraZeneca1152215$3-$42208
Novavax46101793n.a.1568
Sinovac Biotechn.a.10n.a.$601138
Sanofi9817-3Less than $10.50 per dose874.3*
GlaxoSmithKline7313-18Less than $10.50 per dose837*
Moderna25773329$50 to $60, smaller dose $32-$37793
Pfizer16217-2$19.50 per dose544
BioNTech19.8183.2184.3$19.50 per dose544
Johnson & Johnson295141$10361
Merck15519-12n.a.53.9*
Source: FactSet, Airfinity, FT research *Includes funding for more than one treatment Sanofi/GSK and Pfizer/BioNTech are working together Prices as at 3pm GMT

Chief UK business correspondent Daniel Thomas revealed that British companies had given back almost £400m to the government, deciding to cover the costs of furloughed workers during the pandemic themselves. Others, however, have kept the money while making payouts to investors.

Column chart of Total value of claims made (£bn) showing UK's coronavirus job retention scheme

The traditional shopping centre, hit by online retail and now the pandemic, is not a lost cause, writes business columnist John Gapper. Smaller, quirkier outlets, with a return to the classic elegant design besmirched by “philistine property developers”, could tempt shoppers back, he says. Traditional high streets have also been buffeted by the crisis: watch our new film featuring retail correspondent Jonathan Eley visiting his home town of Doncaster in northern England.

Global economy

There was encouraging news from the US labour market, with new jobless claims dropping to their lowest levels since the start of the pandemic. The plight of temporary workers during the pandemic, meanwhile, was highlighted by European data showing they accounted for 80 per cent of lay-offs in the second quarter.

Economics editor Chris Giles bemoaned the use of “build back better” in the UK and the US as a fundamentally flawed slogan. “The pandemic is unlikely to make it easier for countries to adopt green technology, raise productivity, boost growth and make citizens happier,” he writes. “Everything that was difficult before the crisis is now even harder.”

The pandemic may have wreaked havoc on schools and universities but it offers a “tragic, yet precious” chance to rethink education for a digital age, writes innovation editor John Thornhill. “If 20th-century education was all about standardisation, 21st-century education should focus on personalisation,” he says. “It can and must do so.”

Get in touch

How is your workplace dealing with the pandemic? How are you dealing with it as a professional or a manager? And what do you think business and markets — and our daily lives — will look like after we eventually emerge? Also — tell us what you think about this newsletter and how we can make it more useful to you. Email us at covid@ft.com. We may publish your contribution in an upcoming newsletter. Thanks.

The Botanist comments on Health leaders urge Sunak to increase NHS spending

The NHS didn’t shut down . . . If you or I or indeed anyone in the UK caught Covid and needed care in hospital, they were there, ready to care for us, at no charge, with ventilators, steroids and plasma. Yes, non-urgent treatment had to be delayed in the early days of the pandemic but that was because nobody could tell what we were dealing with or how it would play out. Now we know better and can begin to clear any backlog of patients needing other care. 

The essentials

Wearing perfume and smart shoes may seem superfluous in a Zoom job interview, but anything that makes you feel more confident will help you project better, writes consumer editor Claer Barrett.

Final thought

Gardening helped many people cope with the stresses of the spring lockdown, but could it do the same this time around as winter takes hold? “It’s about planting hope,” says Jane Perrone, as she outlines tips for inside and outside, explains how to make your plot a haven for wildlife, and recommends five pieces of kit that every newcomer should have.

Jane Perrone in her garden © Jack Orton/FT


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