12th Feb 2021 08:09
(Alliance News) - The Bank of England's chief economist has said the UK economy is "poised like a coiled spring" to leave lockdown and predicts annual growth could be in double digits next year.
As European Commission officials expressed cautious optimism that economies on the Continent will rebound later this year and in 2022, Andy Haldane wrote in the Daily Mail that Britain will bounce back due to lockdown savings.
Many UK households have significantly improved their finances after being forced by the pandemic to stay at home, with the household saving ratio soaring to an all-time high of 29% in the second quarter of last year, according to the Office of National Statistics.
Haldane said if recent trends continue, the savings "nest-egg" will be more than GBP250 billion by July.
Last week, the Bank estimated that around 5% of that would leak into the economy, but Haldane said he believes the figure will be much higher.
"While today the economy is shrinking and inflation is well below target, a year from now annual growth could be in double digits and inflation back on target," he said.
Haldane's comments came as the ONS said Friday the UK economy shrank by a record 9.9% in 2020.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 6,512.02
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Hang Seng: Hong Kong market closed for holiday
Nikkei 225: closed down 0.1% at 29,520.07
DJIA: closed down 7.10 points at 31,430.70
S&P 500: closed up 6.50 points, or 0.2%, at 3,916.38
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GBP: down at USD1.3797 (USD1.3815)
EUR: flat at USD1.2126 (USD1.2130)
Gold: down at USD1,820.53 per ounce (USD1,836.55)
Oil (Brent): down at USD60.74 a barrel (USD61.35)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
China Lunar New Year holiday. Financial markets closed in HK and Shanghai.
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The UK's economy grew at a faster pace than expected in the fourth quarter, though the country's gross domestic product for the whole of 2020 fell by a record 9.9%. According to the ONS, UK GDP grew 1.0% on a quarterly basis in the final three months of 2020, topping expectations of a 0.5% rise, according to consensus cited by FXStreet. However, this still was a marked slowdown in the economy's rebound from the Covid-19 health crisis, following a third-quarter when GDP rose by 16%. Annually, the UK's economic decline was less than what was forecast by market consensus. The UK's GDP was 7.8% lower year-on-year in the fourth quarter, compared to an 8.1% fall forecast. "Over the year 2020 as a whole, GDP contracted by 9.9%, marking the largest annual fall in UK GDP on record," the ONS. Figures for just the month of December showed the UK economy grew 1.2% on a monthly basis. In November, GDP had fallen by 2.3%, hurt by a second national lockdown in England. "This means a technical double-dip recession will probably now be avoided. And even though the third Covid-19 lockdown means that the economy will almost certainly take another step down in January, GDP should rebound sharply in the second half of 2021," Capital Economics commented.
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A lack of planning in Whitehall could affect the rollout of the next phase of the coronavirus vaccination programme in the UK, members of Parliament have warned. The Commons Public Accounts Committee praised the "world-beating" effort to get the jab to the most vulnerable, but warned it was essential not to lose momentum. The government has said it is on course to meet its target of offering a vaccine to the estimated 15 million people in its top four priority groups – including frontline health and care workers and the over-70s – by Monday. However the committee said there was still "much to be done" to hit its next target of getting the jab to the 17.7 million in the next five priority groups – including all over-50s – by the end of April.
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BROKER RATING CHANGES
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BERENBERG CUTS CARNIVAL PLC TO 'SELL' ('HOLD') - TARGET 1,000 (800) PENCE
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MORGAN STANLEY INITIATES FERGUSON WITH 'EQUAL-WEIGHT' - TARGET 9,060 PENCE
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RBC REINITIATES LONDON STOCK EXCHANGE WITH 'OUTPERFORM' - PRICE TARGET 11,500 PENCE
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COMPANIES - FTSE 250
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Victrex said revenue in the first quarter ended December 31 grew 1% annually to GBP68.7 million from GBP67.7 million. "Overall, the group saw a positive start to FY 2021. Although Q1 was slightly ahead of our expectations, performance remains variable by end market. Asia is seeing the most incremental improvement on a geographic basis, with a mixed performance in Europe and the US," the company said. Victrex left its annual guidance unchanged, though said the first half will be weaker than a year before. It said business in January was "robust" but lower than a year prior.
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COMPANIES - MAIN MARKET AND AIM
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Jet2 has tapped investors for GBP422 million through a placing and subscription. It comes as the UK government has once again advised against non-essential travel and Health Secretary Matt Hancock on Thursday said the rollout of coronavirus vaccines is "absolutely essential" for summer holidays to take place. "The UK government is continuing to advise against all non-essential travel, with a negative test result required to fly into the UK and 5 day 'test to release' or 10 day quarantine required on return to the UK from foreign travel. Official guidance therefore, remains changeable. As a result, the company continues its cautious approach to Summer 2021, with seat capacity continually being refined as UK and EU travel guidance evolves," Jet2 said late Thursday in announcing the fund raise. It added that it has cancelled all flights until April 15 and it is "subsequently scheduled to operate with a reduced flying programme".
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COMPANIES - OTHER UK
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Online travel agent Lastminute.com has been threatened with court action by the competition watchdog for failing to pay out refunds to some customers. The company vowed to make GBP7 million of payments by the end of January to 9,000 customers who had holidays cancelled due to the pandemic under a formal agreement with the Competition & Markets Authority. But the watchdog said GBP1 million owed to 2,600 customers remains outstanding. Unless the money is paid out within seven days, court action will follow, it said.
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COMPANIES - GLOBAL
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ING Group said profit plummeted in 2020 amid reduced interest income. The Dutch banking company said total income fell by 3.7% year-on-year in 2020 to EUR17.64 billion, including a 6.1% decrease in fourth-quarter total income to EUR4.17 billion. Net interest income in 2020 was 3.4% lower when compared to the prior year, at EUR13.60 billion, including a 7% fall in the final-quarter net interest income to EUR3.34 billion. Net fee and commission income, meanwhile, rose by 5.0% in 2020 to EUR3.01 billion, including a 4.9% increase in the final quarter of 2020 to EUR771 million. Pretax profit dropped by 44% year-on-year in 2020 to EUR3.81 billion, after a 22% fall in the final quarter to EUR1.05 billion.
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Friday's Shareholder Meetings
Applied Graphene Materials PLC - GM re second placing
FBD Holdings PLC - EGM
Irish Continental Group PLC - EGM
Kingspan Group PLC - EGM re replacing Crest with Euroclear Bank
Mincon Group PLC - EGM re replacement of CREST with Euroclear Bank
Permanent TSB Group Holdings PLC - EGM re replacement of CREST
Red Rock Resources PLC - AGM
Remote Monitored Systems PLC - GM re issue of warrants related to placing
Victrex PLC - AGM
Worldwide Healthcare Trust PLC - GM re placing programme
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By Tom Waite; [email protected]
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