Europe

The coronavirus pandemic is ravaging the UK high street, with clothing chain Primark on Sunday becoming the latest to announce it was closing all its stores, the Financial Times reported. Associated British Foods, the family-controlled conglomerate that owns the brand, intends to close its 189 Primark stores in the UK for the foreseeable future. It has already shut 187 shops across Europe and the US. Department store John Lewis and sandwich chain Pret A Manger announced the closure of all outlets on Saturday.

The German government is to spend an additional €122.5bn this year to counter the slump caused by the coronavirus as it rips up the fiscal rule-book that has guided Europe’s largest economy for a decade, the Financial Times reported. Angela Merkel’s cabinet is set to pass a €156bn supplementary budget on Monday, which also foresees a dramatic €33.5bn plunge in tax revenues for this year. It will raise a total of €150bn in extra debt.

Carmakers across the UK are dusting off plans drawn up to cope with Brexit to help their businesses during the wave of factory shutdowns because of coronavirus, the Financial Times reported. They are restoring emergency measures, including letting warehouses to stockpile parts, as they prepare for weeks of plant downtime while still accommodating shipments of goods from across the world.

For the eurozone, this is not the 2010-2012 crisis all over again. It is far worse. The coronavirus will prove to be an economic shock, a corporate solvency crisis and a political crisis all folded in to one. The good news is that it will probably not become a sovereign debt crisis, the Financial Times reported in a commentary. The European Central Bank last week did the right thing and has reduced that probability. Its pandemic emergency purchase programme will help governments raise money for healthcare and a first set of economic measures.

German restaurant chain Vapiano SE on Friday said it was insolvent and would apply for government assistance to avoid formally filing for insolvency, blaming the coronavirus crisis for a drop in sales, Reuters reported. “Due to the drastic decline in net sales and revenues, an insolvency reason in the form of cash flow insolvency for Vapiano SE has occurred as of today,” the company said. Vapiano’s 55 German restaurants were closed yesterday evening, and almost all of the chain’s more than 230 outlets are now closed, the restaurant chain said in a regulatory statement.

In a related story, the Financial Times reported that the eurozone’s “whatever it takes” moment has arrived: a €750bn monetary blitz from the European Central Bank, which on Wednesday night promised to hoover up swaths of government and corporate debt to fight the downturn caused by the coronavirus. The shock move to create a “Pandemic Emergency Purchase Programme” was announced minutes before Wednesday midnight (CET) and has been cheered by markets, economists, and Europe’s leaders.

Italy’s prime minister has demanded the EU use “the full firepower” of its €500bn rescue fund to confront the continent’s economic crisis, as he warned against relying on monetary policy to counter a “global shock that has no precedents,” the Financial Times reported. With coronavirus deaths in Italy overtaking those in China for the first time, Giuseppe Conte told the Financial Times it was time for the European Stability Mechanism to offer emergency credit lines to countries reeling from the pandemic.

Singapore’s most high-profile restructuring case has attracted a new offer from a Spanish company, adding more uncertainty to a drawn-out process that’s left many retail investors in the lurch, Bloomberg News reported. Water treatment firm Hyflux Ltd. said in an exchange filing that FCC Aqualia SA, which is also in the water management business, plans a potential transaction involving it or its assets, without giving details. Hyflux investors have already been evaluating two different takeover offers and one debt-purchase plan.

Divisions have again emerged between top European Central Bank officials after they disagreed over how far to take its new “no limits” policy to shield the eurozone from the economic and financial turmoil of the coronavirus pandemic, the Financial Times reported. Following an emergency session of its governing council on Wednesday night, the ECB announced plans to buy €750bn more bonds in a significant expansion of its asset-purchase programme to address rising tensions in government and corporate bond markets.

The Swiss watch industry has survived lickings before, but Rolex, Omega and Cartier now face a combination of economic punches putting them back on their heels, Bloomberg News reported. The industry was just adapting to the downturn from political protests in its largest market, Hong Kong, when the coronavirus outbreak hit. Now as China’s economic slowdown is set to engulf the rest of the world, the strong Swiss franc, surging gold prices, and store closures are set to saddle companies like Swatch Group AG and Richemont with higher costs.