Garden centres will open on Wednesday, according to the latest information from government. Boris Johnson will make the critical announcement on Sunday evening. Over the borders in Wales, gardeners will have a two day start. The tills will be ringing from Monday on.
Manufacturers will be urged to get back to business. Toyota will open the engines factory following a two month shutdown. Bentley will be back in business on Monday. Jaguar will be back in action mid month.
The government has formally extended the lock down for another three weeks. Cracks are appearing. The Prime Minister will announce the road map, to ease restrictions in the weeks ahead. The kids could be back in school by June. Fish and Chip shops could be back in business. At the Downing Street press conference on Friday, environment secretary George Eustace revealed it was now safe for take away shops to reopen. "Drive thru restaurants like McDonalds are made for social distancing" he explained.
McDonalds and KFC are trialing store openings, Greggs pulled back on plans over fears of crowds in pursuit of vegan sausage rolls. The "Stay at Home" message may be abandoned. The "One Exercise Per Day" message may be ditched. Picnics, trips to the park and outings in the countryside may be permitted. Scientific advisers may be allowed visits, from special friends, that sort of thing.
The family bubble plan has been popped. The idea that extended kinship groupings could be allowed to meet for Sunday lunch and special occasions has been dropped. Ministers feared family feuds over who would be in whose bubble, could augment social tensions at an already difficult time.
Matt Hancock added to the confusion speaking to Kay Burley on Sky News. "There is strong evidence that outdoors, the spread is much lower. So there may be some workaround that some businesses, for instance cafes, especially over the summer, may be able to put in place." Tim Martin, take note.
Sajid Javid, the former chancellor, urged the Prime Minister to "run the economy hot". Older people should be asked to stay inside, allowing younger people to get on with their lives" he explained. "They could help the rest of us by rebuilding the economy."
Mixed messages add to the confusion about just what happens next. Too many ministers taking turns at the daily briefing add to greater confusion. Reliance on the R(0), fiddling the testing targets and now an over reliance on a socially intrusive tracking app will not help.
The Prime Minister has a difficult task to explain the way out of lock down, tip toeing over the stepping stones to recovery. The economic argument is becoming imperative ... the time line is running short ...
Car sales drop by 97% ...
Car sales slumped by 97% in April. Just 4,000 cars were registered in the month, compared to 160,000 last year. 6.3 million workers have now been furloughed, a further 2 million are now on benefit. The Chancellor has made it clear the burden on state is unsustainable. The furlough scheme may be tailored in terms of sector and quantum, into the third quarter.
This week the Bank of England added to the gloom. The Bank scenario forecasts assumed a drop in output of over 30% in the second quarter. GDP for the year as a whole would fall by around 14%, with unemployment increasing to over 7% in the final quarter of the year. Household consumption is expected to fall by 14%. Business investment is expected to fall by 26%. Economists are involved in a series of "how low can it go" forecasts. This week the bank has scooped the pool, as new Governor Andrew Bailey set the tone.
Some good news this week. Ocado reported a sales surge of over 40% over the past two months. Online deliveries had soared. The company is struggling to meet customer demand. Warehouse capacity had been increased to 110,000 orders per week from 80,000 at start of year.
Halfords reported an increase in cycling activity as a result of the lock down. Profits were predicted to be at the upper end of forecasts, following stronger than expected sales towards the end of the financial year. Most of the chain's shops and auto-centres remain open, with recommended social distancing measures in place.
The Card Factory reported an increase in online sales of over 250%. Sales of personalized gifts has increased by over 50%. The company is scrapping the dividend to preserve cash and slowing the scheduled plans for new store openings. All store staff have been furloughed, reduced rents are in negotiation and purchases from suppliers have been cut. The reshaping may well be the model for recovery for many, in the way out of lock down ...
That's all for this week. Have a great, safe, week-end, wash your hands and don't talk to strangers, J
The Saturday Economist
John Ashcroft publishes the Saturday Economist. Join the mailing list for FREE weekly updates on the UK and World Economy.
|The Saturday Economist|
The material is based upon information which we consider to be reliable but we do not represent that it is accurate or complete and it should not be relied upon as such. We accept no liability for errors, or omissions of opinion or fact. In particular, no reliance should be placed on the comments on trends in financial markets. The presentation should not be construed as the giving of investment advice.