Pound hits $1.40 on vaccine optimism; UK retail sales tumble 8.2% – as it happened | Business

The pound has powered past $1.40 for the first time in almost three years and has clawed most of the losses suffered since the Brexit vote in June 2016. It hit $1.4036, the highest level since 20 April, 2018, and is getting closer to $1.4860, the level it was at a day before the the referendum result was announced.

So far this year, sterling has gained 2.7% against the dollar, and it is the best-performing G10 currency. It has been lifted by the UK’s rapid vaccination drive, which has raised hopes of economic recovery in the months ahead.

The jump in the pound came despite a sharp decline in UK retail sales in January during the lockdown. The UK government borrowed £8.8bn in January, the first January deficit in 10 years, and the biggest borrowing since records began in 1993.

Stock markets are grinding higher in Europe and the US, buoyed by vaccine optimism.

Bitcoin has hit a fresh record high, rising 2.6% to $52,932, putting it on course for a weekly gain of over 8%. It has gained 60% in value so far this month and its market value is approaching $1 trillion.

Today is an exciting day for anyone working in the gig economy. Uber has lost its appeal in the UK’s Supreme Court against a landmark employment tribunal ruling that its drivers should be classed as workers with access to the minimum wage and paid holidays.

The decision has legal consequences for the pensions and benefits entitlements for these workers. Richard Lee, a partner at the law firm Gowling WLG, says:

This decision is the final confirmation that individuals working for Uber (and other businesses using this working model) are to be treated as workers and depending on the level of earnings they will now be entitled to be enrolled into an appropriate pension arrangement with minimum contributions of 3% from their employer.

It is one of a string of cases challenging the self-employed status of gig-economy workers, including action against the minicab firm Addison Lee and the delivery groups CitySprint, Excel and eCourier.

Thank you for reading. Have a great weekend, and stay safe! -JK

Business activity across the US strengthened to the highest level in almost six years in February, according to a closely watched survey from IHS Markit. Its flash purchasing managers index rose to 58.9 from 58.3 in January, and is better than the 58 expected by analysts. The rise in business activity was the strongest for almost six years, as service sector firms noted greater client demand.

• Flash U.S. Composite Output Index at 58.8 (58.7 in January). 71-month high.
• Flash U.S. Services Business Activity Index at 58.9 (58.3 in January). 71-month high. Flash U.S. Manufacturing PMI at 58.5 (59.2 in January). 2-month low.
• Flash U.S. Manufacturing Output Index at 57.7 (60.5 in January). 4-month low.

Chris Williamson, chief business economist at IHS Markit, says

Despite headwinds of Covid-19, extreme weather and record supply chain delays, US businesses reported the fastest output growth for almost six years in February.

The data add to signs that the economy is enjoying a strong opening quarter to 2021, buoyed by additional stimulus and the partial reopening of the economy as virus related restrictions were eased on average across the country.

Business sentiment remains buoyant, boosted by hopes of further stimulus and the vaccine roll out, but it’s disappointing to see this not yet translate into stronger jobs growth. Many service sector firms in particular remain reluctant to hire, cautious about adding to overheads.

Wall Street has opened higher, and European markets are also grinding higher.

• Dow Jones up 67 points, or 0.21%, at 31,560
• S&P 500 up 12 points, or 0.32%, at 3,926
• Nasdaq up 63 points, or 0.46%, at 13,928
• UK’s FTSE 100 up 13 points, or 0.21%, at 6,631
• Germany’s Dax up 11 points, or 0.82%, at 14,001
• France’s CAC up 39 points, or 0.69%, at 5,766
• Italy’s FTSE MiB up 28 points, or 0.27%, at 10,746

The pound has jumped 0.4% against the dollar to $1.4026, the first time it has hit $1.40 since April 2018, as investors are betting on a swift economic recovery on the back of the UK’s successful vaccination drive.

Stock markets are drifting higher after three days of losses, with investors clinging to hopes of economic recovery on the back of Covid-19 vaccination campaigns in the months ahead. The pan-European index is 0.52% ahead.

The FTSE 100 index in London is 0.23% ahead, buoyed by mining and banking shares. NatWest has recovered and is now among the biggest risers even though it swung to a full-year loss. Even so, it resumed dividend payouts, like Barclays yesterday. NatWest shares are up nearly 4% while Barclays is 3.8% ahead.

NatWest also declared its intention to pull out of the Republic of Ireland and to wind down Ulster Bank. This puts 3,000 jobs at risk, according to the Unite union.

Shares in the Parisian luxury house Hermès rose as much as 5.7% after the maker of chic handbags and silk scarves reported a sharp recovery in sales in the fourth quarter, driven by a near-50% jump in sales in Asia.

The Frankfurt stock market rose 0.83%, the Paris bourse added 0.82% and the borsa in Milan rose 0.87%. US stock futures are pointing to a higher open on Wall Street in an hour’s time.

Markets have been buoyed by positive vaccine news. Pfizer/BioNtech’s Covid-19 vaccine greatly reduces virus transmission, two Israeli studies have found. You can read more on our coronavirus live blog.

At the same time, big pharma companies are under growing pressure to provide fairer access to vaccines.

The scramble over Covid vaccines should alert rich countries to the power of profit-driven companies that control production of crucial medicines, said Mustaqeem De Gama, South Africa’s delegate at the World Trade Organization (WTO) on intellectual property rights.

Some good vaccine news from Pfizer/BioNTech on their mRNA vaccine for coronavirus that is commonly stored at -70C. It is actually stable at lower temperatures for two weeks, tweeted Pfizer chief executive Albert Bourla.

Manufacturing activity remains patchy, but has held up better than during the first lockdown, according to the latest CBI industrial trends survey. Factory output fell slightly in the quarter to February, but at a slower rate than in the first Covid-19 lockdown last spring.

The survey of 296 manufacturers found that output increased in 11 of the 17 sub-sectors. However, growth in these sub-sectors was outweighed by sharp falls in others – particularly motor vehicles & transport equipment and food, drink & tobacco. Looking ahead, manufacturers anticipate output to be broadly flat over the next three months, marking a notable improvement on expectations of a significant decline in January.

Total orders books improved, to a similar position as in December 2020, while export order books worsened from January. Both continue to be far weaker than their long-run averages.

Alpesh Paleja, CBI lead economist, says:

Manufacturing activity remains patchy, but so far appears to have taken a smaller hit than in previous lockdowns. However, a stubbornly mixed picture persists among the different manufacturing sub-sectors, pointing to the asymmetric impact of restrictions.

With some much-needed clarity coming down the track in the Government’s roadmap for easing lockdown, it is vital that manufacturers are supported beyond April, in line with the restrictions that will remain.

Immediate steps to extend the Job Retention Scheme and deferring VAT repayments until the end of June are essential, alongside business rates relief to protect jobs.

More reaction to the Uber landmark ruling, our main story today.

Martin Chitty, employment partner at law firm Gowling WLG says:

Uber has lost the argument at every level with the Supreme Court today adopting in clear and unqualified terms the reasoning of the previous decisions. The degree of control Uber has – in terms of price setting, excluding drivers if they decline pick-ups, the inability of drivers to be anything more than single-trip conveyors with no passenger relationship and the warning issued for bad reviews all point to them being workers.

The Supreme Court took a purposive view of the legislation – it is there to protect those who have a limited bargaining power. Uber’s argument that they did what hotel booking sites do was rejected. This ends the argument in the UK courts – Uber 0 Drivers 4.

Bitcoin has hit a fresh record high, rising 2.6% to $52,932, putting it on course for a weekly gain of over 8%. It has gained 60% in value so far this month and its market value is approaching $1 trillion (it’s currently at $981.8bn).

The world’s best-known digital currency is attracting more buyers as it has gained acceptance from a number of mainstream investors and companies, including the electric carmaker Tesla, Mastercard and the US bank BNY Mellon.

However, there are still many critics who point out that bitcoin is highly volatile and question its intrinsic value. Analysts at JPMorgan said bitcoin’s current prices are well above estimates of fair value, and noted that its mainstream adoption increases bitcoin’s correlation with cyclical assets, which rise and fall in line with economic changes, thereby reducing the benefits of diversifying into cryptocurrencies.

Crypto assets continue to rank as the poorest hedge for major drawdowns in equities, with questionable diversification benefits at prices so far above production costs, while correlations with cyclical assets are rising as crypto ownership is mainstreamed.

Yesterday, Tesla boss Elon Musk, whose recent tweets have helped fuel bitcoin’s rally, said owning it was only a little better than holding cash. But he also defended Tesla’s purchase of $1.5bn bitcoin.

Let’s take another look at the purchasing managers surveys from IHS Markit/CIPS for the UK, which indicated that joint services and manufacturing activity was close to stabilising this month.

Howard Archer, chief economic advisor to the forecasting group EY Item Club, says:

The ‘flash’ purchasing managers’ survey for the UK manufacturing and services sectors indicated that overall activity was close to stabilisation in February after contracting at the fastest rate for eight months in January.

While the improvement in activity eases some concern about the potential size of contraction in the UK economy in Q1, it still appears that the UK is being much more affected by lockdown and restrictions now than it was in Q4 2020. The EY Item Club expects the economy will experience a Q1 contraction – possibly around 4% quarter-on-quarter.

After Q1, the EY Item Club expects the economy to benefit progressively through 2021 from the roll-out of COVID-19 vaccines. Consumers look well-placed to play a key role given the recent high savings ratios, although much will depend on how much unemployment ultimately rises. After an extended period of weakness, business investment is expected to gain momentum over the course of the year as companies grow more confident in the economy.

The group is predicting GDP growth of 5.0% in 2021 followed by expansion of 6.5% in 2022, with the economy regaining its peak level of fourth-quarter 2019 GDP in the third quarter of next year.

Back to the Uber landmark ruling.

TUC general secretary Frances O’Grady has called on the government to use the much-delayed employment bill to reform the law around worker status.

No company is above the law. Uber must play by the rules and stop denying its drivers basic rights at work. This ruling is an important win for gig economy workers and for common decency. Sham self-employment exploits people and lets companies dodge paying their fair share of tax.

Unions will continue to expose nasty schemes that try and cheat workers out of the minimum wage and holiday pay.

But we also need the government to step up to the plate… Everyone should qualify for employment rights unless an employer can prove they are genuinely self-employed.

And here is our story on the pound, which rose through $1.40 for the first time since April 2018 earlier today, and is now hovering just below at $1.3996.

Uber has suffered a landmark defeat in the UK’s Supreme Court, which means Uber drivers – who were deemed as self-employed – will now be classed as ‘workers’ in the UK, and qualify for certain employment rights. Seb Maley, chief executive of the consultancy Qdos, says:

This is a landmark victory for Uber drivers. It has the potential to set a precedent for all gig economy workers, many of whom need and deserve employment rights.

The ruling should serve as a stark reminder to businesses that employment status isn’t always clear cut, and that decisions must be made carefully. If a firm engages an individual under the wrong status, the cost – both financially and reputationally – can be massive.

But while many gig economy workers want greater protection and employment benefits, we shouldn’t assume that all self-employed people need them. There are hundreds of thousands, if not millions of people working for themselves who want to remain entirely independent.