What’s Going On Here?Data out on Friday showed the UK economy shrank by the most ever in April. Oh well, no use crying over spilled tea. What Does This Mean?If you’re a cup-half-empty kind of person, you might say the UK economy contracted by 20.4% in April from March’s 6% drop. If you’re a someone-stole-my-cup kind of person, you might say the UK economy was 24.5% smaller this April than the last. Either way, the UK’s all-important services sector – which covers the hard-hit hospitality, leisure, and travel industries, and contributes most of the UK’s economic output – was all but immobilized by the whole lockdown thing. And manufacturing didn’t have it easy either: the sector declined by more than 24%, while construction halved.
May’s data will probably be just as damning, but June will finally see non-essential businesses start to reopen. Economists, then, are hoping things will pick back up again from here on out. Why Should I Care?The bigger picture: The “Boooooo!” normal.
Global businesses are trying to get back to business as usual, but for UK airlines, it’s anything but. The government’s new rules of two weeks' self-isolation for the UK’s new arrivals threatens to deter jetsetters, potentially costing airlines millions in lost airfares and increasing the risk of job cuts. British Airways, Ryanair, and EasyJet aren't okay with it: they've all taken legal action to stop the plan from coming into effect.
For markets: That was so yesterday.
Economic data for April that’s released in June isn’t particularly useful for investors, especially when the writing – and the economic damage – has been on the wall for months. So most of them probably won’t have done much to their portfolios in response to Friday’s release. They’re more likely to pay attention to, say, up-to-the-minute survey data, which gives a good idea of where economic growth will end up landing – however depressing it might be. | 