Today's business and finance round up 7th July 2021
🍞Solid Sainsbury’s and Ocado results despite lockdown lift
7th July 2021
Good morning Could a four day work week be coming soon? The largest ever trial of this working format was conducted in Iceland and it was a huge success - workers were paid the same, worked fewer hours all without productivity suffering.
- Solid Sainsbury’s and Ocado results despite lockdown lift
- The UK’s triple threat
Yesterday's market moves
FTSE 100 -0.9% 7,101
FTSE 250 -0.6% 22,895
Investors were initially fairly positive following BoJo’s announcement that most COVID-19 restrictions are set to be relaxed on 19 July, yet the news failed to stimulate the broader market. Later on the previous day’s gain was erased as fears that rising oil prices could threaten the global economic recovery came to the fore.
Solid Sainsbury’s and Ocado results despite lockdown lift
What’s going on?
Trading updates from two of the UK’s biggest food retailers showed that although out of home consumption is increasing as restrictions lift, they are still performing well compared to the peak of lockdown in 2020.
Why is this important?
Sainsbury’s beat market expectations by posting a 1.6% increase in sales in the 16 weeks to 26 June. Now this might sound like a modest number but it was widely expected that sales would fall as during that period last year we were in the panic buying mode (creating a tough comparator) and this year (thankfully) things have been calmer.
Shopping in Sainsbury’s stores are gradually increasing but 18% of its food is now sold online compared to 8% pre-pandemic.
Britain’s second largest supermarket also gained market share by outperforming rivals when it came to value, innovation and customer service.
It was a similar story at Ocado who reported a 20% increase in sales for the six months to 30 May. As a pure online retailer the company’s strong results shows that consumer habits formed during lockdown last year have continued.
2020 was a great year for food retailers and it was anticipated that once we were all able to eat in pubs and restaurants again, that they would suffer. But Ocado and Sainsbury’s have defied the odds for now.
The UK’s triple threat
The fallout of the coronavirus, rising government debt and climate change are the three potentially catastrophic risks to the UK. That’s according to the Office for Budget Responsibility (OBR), the government’s spending watchdog, that’s published its biannual report on the country’s financial risks.
The UK economy was one of the worst hit but the pandemic with GDP falling 10% in 2020 - twice the advanced economy average. The OBR says that as the country recovers from this the government could face a £10bn funding gap to pay for things like continued track and trace and pupils catching up from missed schooling.
Government debt currently stands at £2tn equivalent to 100% of the economy and a record level in peacetimes. The OBR warns that rising inflation and potential interest rates hikes could add even more to the debt.
The government’s goal is to reduce net greenhouse gas emissions to zero by 2050. The OBR forecasts that acting sooner to do this could be as much as 50% lower than delayed action.
Since the start of this century we have already experienced two ‘once in a century’ shocks – the 2008 financial crisis and the 2020 coronavirus pandemic. The OBR thinks that there could be more of that to come in the form of extreme weather events and cyberattacks. By their nature these sorts of events can be hard to predict nonetheless analysis from the OBR can help quantify their impacts when they do happen.
Stat of the day
Disney is the largest consumer of fireworks in the world and the second largest purchaser of explosive devices, right behind the U.S. Department of Defense
Other stories to keep you in the loop