UK economy, vaccine testing, wage subsidy cuts, ITV, Disney, Virgin Atlantic, Uber, retail, new ‘test, track and trace’ app: your commercial news round-up

With coronavirus updates still dominating the news, this week’s commercial news round-up is designed to summarise the pandemic’s impact on the business and legal world. So, while we await Prime Minister Boris Johnson’s briefing on Sunday, where he is set to reveal the UK’s lockdown exit strategy, take some time to top-up your commercial awareness.

• The European Commission has predicted that the UK economy will shrink by 8.3% in 2020, as a result of coronavirus and the measures implemented to contain it. European Commissioner for Economy Paolo Gentiloni said: “Europe is experiencing an economic shock without precedent since the Great Depression.” According to the commission, business investment is set to recover in 2021, however the uncertainty surrounding Brexit will continue to influence firms’ decisions.

• Multinational pharmaceutical company Pfizer has started testing an experimental coronavirus vaccine in the United States. Working alongside BioNTech, a German drugmaker, Pfizer revealed that the potential vaccine (BNT162) has been tested on human participants in the United States, after human trials began in Germany last month. As there are no Food and Drug Administration-approved therapies, US health officials have predicted that it will take at least 12 to 18 months to produce a vaccine.

• The government is reportedly considering a cut to the wage subsidy from 80% to 60% for furloughed staff. With plans to wind down the government’s job retention scheme over the next few months, Rishi Sunak said he is considering various ways to phase the scheme out and get people back to work, according to City AM. He said: “To anyone who is anxious about this, I want to give them reassurance that there will be no cliff edge to the furlough scheme”.

• Following the cancellation of this year’s Love Island, shares in ITV fell more than 4% earlier in the week – a huge blow to the public service broadcaster. ITV has experienced both a plunge in advertising revenue, alongside a shutdown in filming, with the company’s share prices plunging more than 50% since the start of 2020.

• Disney experienced a loss of $1.4 billion in the last three weeks, following the shutdown of its parks, as well as the suspension of film and TV productions in line with measures to contain the virus. Despite the company’s operating income for the three months ending 28 March plummeting 37% to $2.4 billion, its new streaming service Disney+ had 50 million subscribers in April.

• In ongoing aviation news, Virgin Atlantic is still seeking funding for its survival and is set to axe a third of its workforce, meaning a total of 3,150 jobs are at risk across the group.

• US company Uber announced plans to cut 3,700 jobs, due to a reduction in the number of trips being taken in light of the global pandemic. According to the ride-hailing company, it will pay out $20 million in “severance and other termination benefits” to those who lose their jobs. Airbnb also revealed plans to dismiss 1,900 workers.

• Private equity firm Orion recently pulled out of a £400 million deal to purchase seven shopping parks, according to retail landlord Hammerson, which owns Birmingham’s Bullring. Orion announced in April that it would not be going ahead with the deal – which would have been the biggest sale of UK retail parks in a decade – despite contracts being exchanged in February. This comes as a blow to Hammerson’s plans to exit the struggling retail park sector and instead focus on a portfolio of flagship assets.

• Fifteen of Debenhams’ store chain sites – also owned by property giant Hammerson –  are likely to remain closed after lockdown is lifted. The department store failed to reach an agreement with its landlords over rent, resulting in the closure of five stores and 1,000 job losses.

• Shoe retailer Clarks has drafted in three of the big four accountancy firms, including Deloitte and KPMG, in a bid to survive the coronavirus outbreak and work on the company’s restructuring, according to Sky News.

• Earlier in the week, health secretary Matt Hancock announced that the UK’s coronavirus ‘test, track and trace’ app will be on trial in the Isle of Wight. According to Hancock, using Bluetooth technology the app will log users’ contact with other people. “Islanders will be asked to install the app and once they’ve done that it will log the distance between your phone and other phones with the app nearby,” Hancock said. “Other app users you’ve had significant contact with in the last few days will be sent an alert [if you have covid-19 symptoms] by the NHS along with advice on what to do.

“A test ordering function will then be built in.”

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