Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Heathrow has fallen deeper into the red as the Covid-19 pandemic continues to hit the travel sector.
UK’s largest airport has also slashed its forecast for passenger numbers, warning that uncertainty over government policy risks jeopardising a recovery in international travel this year.
Heathrow reported an adjusted loss of £329m for the first quarter of the year, down from a £41m loss a year ago, in the early stages of the crisis.
This takes Heathrow’s total losses since the start of the pandemic to nearly £2.4bn, after over a year of disruption caused by lockdowns and travel restrictions.
Heathrow reports that only 1.7 million passengers travelled through the airport in January-March, a drop of 91% compared to Q1 2019. Cargo volumes are also weaker, around 23% lower than two year ago.
Heathrow has also cut its forecast for passenger numbers this year — in a worst-case scenario, it might only handle 13 million customers. That’s over 80% less than in 2019.
It blames ‘continuing uncertainty’ over how the goverment will allow travel to resume this summer.
While underlying demand for travel remains strong, continuing uncertainty over Government policy means we have reduced our passenger forecast for the year to a range between 13 and 36 million, compared to 81 million in 2019.
As vaccinations are rolled-out and COVID levels fall, restarting travel to markets like the US will be critical to the UK’s economic recovery and we will be prepared to scale-up our operations as demand returns.
Foreign holidays are currently banned, but those restrictions could lift on 17th May under the government’s timetable to ease the lockdown
Yesterday, transport secretary Grant Shapps said international travellers will be asked to demonstrate their Covid vaccination and testing status using the NHS smartphone app…. but he didn’t say when people would be able to start travelling abroad to popular holiday destinations such as Spain.
Shapps told Times Radio:
“Spain specifically, I’m afraid I just don’t have the answer to that because the joint biosecurity centre will need to come up with their assessment and we can’t do that until a bit nearer the time,”
Heathrow also warned the government that they must ensure that arrivals at the border are processed quickly:
Border Force’s ability to provide an acceptable service for arriving passengers remains primary concern surrounding the restart and Ministers will need to ensure every desk is staffed to avoid unacceptable queues.
There’s also a flurry of corporate news this morning, with NatWest bank returning to profit, energy giant Royal Dutch Shell growing its earnings, and betting giant Flutter posting a 33% jump in revenues last quarter due to the surge in online gambling
Unilever has also beaten forecasts, with underlying sales up 5.7% in the last quarter, thanks to demand from home cooks and a recovery in China (more on all that shortly).
Also coming up today
The US dollar is weaker, and stock markets are pushing higher, after America’s centrla bank left interest rates near zero last night, and said it was too early to shrink its stimulus support package.
The Federal Reserve did acknowledged that the US economy has picked up, but insisted the recovery was uneven and far from complete…and pushed back suggestions it could slow its asset purchase programme soon.
Powell pointed to rising optimism among Americans, as they look to a post-pandemic world.
“It has a tremendous amount to do with vaccination and re-opening of the economy — that’s really what has been moving markets a lot in the last few months.”
He also said that while some asset valuations seem “frothy,” he doesn’t see risks to the financial system.
“The overall financial stability picture is mixed, but on balance it’s manageable.
So with the dollar dipping, precious metal prices are higher, and commodity are continuing their strong rally.
European markest are set for a higher open too.
It’s a busy docket for economic news today, led by the first estimate of US economic growth for the first quarter of 2021.
Economists predict a sttrong quarter, with GDP tipped to rise by an annualised rate of 6.1%, up from 4.3% in Q4, lifted by stimulus packages, and the reopening of the economy.
- 8am BST: Spanish unemployment rate for Q1 2021
- 8.30am BST: Swedish GDP for Q1 2021
- 8.55am BST: German unemployment data for April
- 10am BST: Eurozone economic and business confidence report for April
- 1pm BST: German inflation report for April
- 1.30pm BST: US GDP report for Q1 2021
- 1.30pm BST: US weekly jobless report