Sterling recovered a little against the dollar on Thursday upon news that the British prime minister was recovering from complications due to coronavirus, but remains around four percent down on last month amid continued concerns in the markets that the pandemic is far from over.
Earlier in the week, the pound dropped in response to news of Prime Minister Boris Johnson being admitted to hospital and then moved to intensive care as his conditioned worsened after testing positive for Covid-19.
News from Westminster that the lockdown, which has ground the UK economy to a halt, will continue for weeks added to the sense of unease amongst forex traders as government statistics showed job vacancies in the country declining for the first time in 11 years and hundreds of thousands of people trying to claim for Universal Credit. Newly released statistics that show the British economy was already stagnant and in poor shape before the pandemic hit has added to the sense of gloom.
Despite wide-ranging government support to maintain jobs, companies are struggling to adapt to the new reality. The hospitality sector has been particularly badly affected by the lockdown, with restaurants, pubs, bars, cafes, and markets all forced to close in an effort to slow the spread of the virus, and it remains unclear when they will be able to reopen, and which will manage to survive in the meantime.
The Financial Conduct Authority has set out temporary measures to help companies raise funds quickly and ease their cashflow issues, but only a small fraction of British companies have so far managed to access the financial help available.
Whilst the Treasury has offered to pay businesses 80 per cent of their staff’s salaries to keep them in the workforce and off benefits, the self employed have been offered significantly less support. Around 5 million people in the UK are considered self employed, and whilst the government has announced a package to help those struggling, no funds will be available for another two months and sole directors of small businesses have been left out in the cold.
Businesses are struggling across the globe as the effects of the virus and government efforts to slow its spread within their borders, and the impact is particularly noticeable in countries that depend on tourism. As Covid-19 has ravaged Europe and the US, the global tourism industry has been in freefall, with airlines and hotel groups pushed to their financial limits. In the UK flight numbers are down by more than 90 per cent compared to the same time last year with commercial air travel drastically reduced worldwide. Military flights, air ambulance, police and goods delivered via air freight remain operational as global supply chains remain reliant on air transport for everything from food to personal protective equipment for healthcare workers, but the skies are quieter than they have been in decades.