Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
FirstGroup issues warning about viability
Transport giant FirstGroup (FGP.L) issued a warning on Tuesday about its ability to continue as a going concern due to a stark fall-off in passenger numbers during the coronavirus pandemic.
The bus and rail company, which swung to a full-year operating loss in the year to 31 March, said that there was “material uncertainty” about its ability to continue as a going concern due to pandemic-related risks.
Shares fell by 17% in the firm, even as it noted that it had “adequate” resources to continue operating for at least the next 12 months.
The company currently operates transport services in the UK, Ireland, Canada, and the US.
FirstGroup pointed to uncertainty with respect to the duration of the financial and contractual support that it is receiving to help it survive the current crisis, noting that it was not clear whether passenger volumes would recover to sustain its business without such support.
The firm reported an operating loss of £152.7m ($191.3m) for the year, compared to a profit of £9.8m in its prior financial year.
Statutory pre-tax losses climbed to £299.6m, up significantly from losses of £97.9m in the previous year.
Losses were extended by a £21.5m charge in its accounts related to the potential financial impact of the coronavirus pandemic.
UK chancellor Rishi Sunak will unveil a raft of measures designed to lift the UK economy out of its coronavirus-induced slump as part of his summer statement on Wednesday.
Many of the moves — such as a new green jobs initiative and a cash bonus scheme for firms that hire trainees — have been flagged in advance by the Treasury.
The chancellor has reportedly been attempting to temper expectations about the economic package, warning MPs not to expect wide-ranging tax cuts and sweeping initiatives ahead of his Autumn budget.
But a six-month stamp duty cut, potential adjustments to business rates, and the possibility of a temporary value-added-tax (VAT) reduction are among several extensive measures that could boost the country as it emerges from lockdown.
Firms and unions, meanwhile, have welcomed a UK government pledge to create “hundreds of thousands” of high-quality jobs for young people to stave off a sharp rise in youth unemployment.
Fast fashion retailer Boohoo (BOO.L) has announced an independent investigation into its supply chain, following allegations of illegal and unsafe working conditions at UK factories that make its clothes.
Boohoo said on Wednesday it had hired top lawyer Alison Levitt QC to lead an investigation. Levitt and a team including Boohoo deputy chairman Brian Small will investigate working hours, compliance with COVID-19 regulations, and minimum wage payments at factories that supply Boohoo.
The company also pledged to invest an “incremental” £10m ($12.5m) into its supply chain to eradicate malpractice and said it would accelerate a separate third party review into conditions in its supply chain. New independent board members are also being recruited.
The commitments come after a series of allegations about working conditions at factories supplying the company.
Thousands of small and medium-sized businesses (SMEs) face an uncertain future after business account provider Tide was forced to suspend Bounce Back loans.
Fintech Tide said in a blog post late on Tuesday it would “pause” lending under the Bounce Back loan scheme, a government-backed loan programme aimed at supporting businesses through the COVID-19 pandemic.
Tide is an app-only business account provider with 200,000 customers in the UK. The startup, founded in 2015, was approved to issue Bounce Back loans in mid-May and lent over £50m ($62.8m) by mid-June.
However, Tide is not a bank — a third-party provides its bank account — and so cannot lend customer deposits. Instead, it raises money from investors to then lend.
Tide was surprised by the level of demand among its customers for Bounce Back loans and said last month it needed to raise hundreds of millions of pounds to meet all the demand on its waiting list.
European stocks mixed as pessimism about recovery takes hold
Stocks in Europe were mixed on Wednesday as pessimism about the pace of the economic recovery from the coronavirus crisis dented financial markets.
Investors were looking specifically at the potential for further lockdown measures across the world, especially after the imposition of a hard border between two Australian states.
“It’s not the case that numbers and a return to stricter measures in and of themselves that are bothering investors, but rather the dampening effect they will have on the chances of a swift and sturdy global economic recovery,” said Connor Campbell, a financial analyst at trading platform Spreadex.
What to expect in the US
Futures were pointing to a higher open for US stocks on Wednesday.