Heathrow CEO warns of jobs ‘cliff edge’, UK GDP rebounds, and stocks cautious

Passengers Charlotte and Frank, arrive at Heathrow Airport as they return from Mykonos in Greece, after the British Government added the island to the coronavirus quarantine list, at Heathrow, London, Tuesday Sept. 8, 2020. From early Wednesday, people arriving from several Greek islands will need to self-isolate for 14-days, but mainland Greece will maintain its quarantine-exemption, according to Britain’s Transport Secretary Grant Shapps, who said that England is to start applying a regional approach to its coronavirus quarantine policy. (Yui Mok/PA via AP)

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Heathrow CEO warns of jobs ‘cliff edge’

The chief executive of Heathrow has warned that thousands of jobs could be lost when the government’s furlough scheme comes to an end next month.

“Furlough is going to be a cliff edge when that comes to an end at the end of October,” John Holland-Kaye told Sky News on Friday.

He said up to a third of Heathrow’s 75,000 jobs could be “at risk if we don’t see the aviation sector recovery”.

The warning came as Heathrow announced that passenger numbers in August were 81.4% lower than the same month in 2019. Just 1.4 million people passed through the airport last month.

Holland-Kaye called on the government to adopt COVID-19 testing as an alternative to the 14-day quarantine measures currently in place.

“Britain’s economic recovery is falling behind,” he said in a statement. “The Government has announced it is looking at the options for reducing quarantine for passengers who test negative for Covid-19 — but Ministers urgently need to turn words into action. Every day of further Government delay costs British jobs and livelihoods.”

Britain’s economy continued to rebound from the deepest recession on record in July, but the pace of recovery slowed more than expected with the coronavirus crisis still hobbling growth.

Official figures show gross domestic product (GDP)—the total value of goods and services produced in Britain—grew by 6.6% in July, the most recent month available.

The Office for National Statistics (ONS) data published on Friday showed a third month in a row of expansion, but momentum appears to have slowed even as firms gradually emerged from national lockdown.

July’s numbers came in slightly lower than the 6.7% expected by analysts, and significantly lower than the 8.7% growth seen in June. Total output remains 11.7% below levels seen in February just as the pandemic first hit.

European equity traders were in a cautious mood on Friday, following a late sell-off on Wall Street overnight.

Stocks tanked in late trade in New York after markets had closed in Europe. Tech stocks led the rout, with the Nasdaq (^IXIC) closing down 2%.

Against this backdrop, European markets suffered a tepid open. The FTSE 100 (^FTSE) fell briefly before trading flat, while the DAX (^GDAXI) and CAC 40 (^FCHI) were both down 0.1%.

Wall Street looked set for a modest rebound when trading resumed in New York later today. S&P 500 futures (ES=F) were trading up 0.7%, Dow Jones futures (YM=F) had gained half a percent, and Nasdaq futures (NQ=F) were 1.1% higher.

Asian markets rallied overnight. Japan’s Nikkei (^N225) gained 0.7%, the Hong Kong Hang Seng (^HSI) rose 0.6%, the Shanghai Composite (000001.SS) added 0.8%, and the Shenzen Component (399001.SZ) climbed 1.5%.

The UK government has announced it has secured a trade deal with Japan, in a breakthrough welcomed by British business leaders.

The UK-Japan comprehensive economic partnership agreement was agreed in principle on a video call between Britain’s international trade secretary Liz Truss and Japan’s foreign minister Motegi Toshimitsu.

The government said in a press release it marked a step towards the UK joining a wider trade bloc in the Asia-Pacific region. The deal agreed with Japan will see tariff-free trade on 99% of UK exports to the country, with officials predicting a £1.5bn ($1.9bn) boost to the UK economy “in the long run.”

A sharp sell-off for the pound paused on Friday, despite continued sky-high tensions between the UK and EU over Brexit.

Sterling was down 0.1% against the euro (GBPEUR=X) to €1.0818 in early trade on Friday and up 0.1% against the dollar (GBPUSD=X) to $1.2818.

Sterling dropped over 1.5% against the euro and dollar on Thursday after the EU threatened to walk away from Brexit trade talks and take legal action against the UK unless it backed down from plans to break part of the Withdrawal Agreement. The price action marked the biggest daily drop for the pound since March when investors were selling amid a panic over the COVID-19 pandemic.

Despite Friday’s slight recovery, the pound remains at its lowest level against the euro since March. The British currency has fallen over 3.5% against the euro since the start of September as Brexit tensions have soared.

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Video: Stock Selloff: S&P Drops 2.8%, Nasdaq Down 4.8% (Bloomberg)