UK ECONOMY SHRANK BY 2.6 PER CENT IN NOVEMBER

The UK faces a double-dip recession as the second wave of Covid-19 and tighter restrictions that were introduced in November meant that GDP fell 2.6 per cent in the month, according to the Office for National Statistics (ONS) (The Telegraph, online only). The decline followed a six-month long growth spell, undoing some of the recovery in the economy. It means GDP is 8.5 per cent below its pre-Covid-19 level from February.

Chancellor Rishi Sunak said the figures showed "it's clear things will get harder before they get better and today's figures highlight the scale of the challenge we face" (BBC News). However, he said the vaccine roll-out and economic support measures meant there were reasons to be hopeful. "With this support, and the resilience and enterprise of the British people, we will get through this," he said.

The FTSE 100 opened down 0.3 per cent this morning following the ONS statistics, and the FTSE 250 fell 0.26 per cent (City AM).

Separately, the British Chambers of Commerce (BCC) is calling for the government to extend the furlough scheme to July and to provide a new package of business grants worth £25,000 each (The Guardian, p31). Calling for immediate action, the business lobby group said firms could not afford to wait until the budget on 3 March, which the chancellor has indicated will be the next date he refreshes the government's pandemic response.

The Telegraph (B5, print only) reports separately that businesses are suffering severe consequences from the new wave of Covid-19 as the number closing their doors reaches levels not seen since last June, with just 71 per cent of companies trading into the final week of December, according to ONS figures. One third of accommodation and food services companies have little or no confidence that they can survive the next three months, as cash reserves run low.

THOUSANDS OF HOUSES DUE TO COMPLETE AFTER THE END OF THE STAMP DUTY HOLIDAY

Thousands of people are reserving homes that are not expected to exchange before the end of the stamp duty cut, according to Taylor Wimpey (The Times, p43, £). The housebuilder said that its sales rate had continued to rise at the end of last year and remained strong this month. With home sales taking about six months to complete, the paper says, these buyers will not benefit from the stamp duty cut, which ends on March 31 and can saves buyers up to £15,000.

The housing market has seen a remarkable recovery after an initial shutdown as the pandemic took hold in March last year. House prices rose by 7.5 per cent in 2020, the highest annual growth rate for six years, according to Nationwide.

Separately, a group of 50 Conservative MPs is calling on the chancellor to extend the stamp duty holiday. The Northern Research Group urged Rishi Sunak to continue the stamp duty holiday on properties worth less than £500,000 for a further 12 months (The Telegraph, B1, £). Industry analysts predicted that an extension of stamp duty relief would unlock 25,000 home sales in the North and save the region's homeowners an average of almost £2,000.

Additionally, ministers face calls to extend the deadline for purchasing a house in England using the help-to-buy loan scheme, as buyers face losing thousands of pounds because of Covid-19-related delays in construction (The Guardian, online only). Delays on building sites will mean that many developers are unable to build homes on time to meet the deadline at the end of March, leaving prospective buyers unable to take advantage of the loan scheme despite having paid out for legal and broker fees.

NEWS IN BRIEF

Workers? rights enshrined in EU law could be changed under plans being drawn up by the government as part of a post-Brexit overhaul of UK labour markets (Financial Times, p1, £).

President-elect Joe Biden has unveiled a $1.9 trillion (£1.4 trillion) stimulus plan for the US economy before he takes office next week (BBC News).

The City of London may remain largely cut off from the European Union's financial markets, industry officials have warned, saying a future co-operation agreement won't automatically unlock access (Reuters).

A Supreme Court ruling this morning looks set to force insurers to pay out on disputed coronavirus business interruption claims potentially worth £1.2 billion (Sky News).