Yahoo Finance What to watch: Court blow for insurers, UK GDP, Gym Group burns £5m a month
Here are some of the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world.
Blow to UK insurers in Supreme Court case
The Supreme Court has handed a lifeline to many UK firms in a battle over COVID-19 insurance cover, after dismissing appeals by insurers.
Shares in one leading insurer, Hiscox (HSX.L), slumped 4.5% on the news.
Around 370,000 firms could be affected by a ruling on Friday, part of a test case looking at firms’ entitlements to payouts over the impact of government lockdown restrictions.
Six major insurers, Hiscox , RSA, QBE, Argenta, Arch and MS Amlin, told many policyholders they were not covered under their business interruption insurance policies for substantial losses suffered during the pandemic.
The Financial Conduct Authority (FCA), Britain’s financial watchdog, brought a legal test case on behalf of many firms last year, in a bid to clarify how policies should apply.
The High Court ruled in the case in September, but its mixed verdict failed to hand either side a clear victory and parties on both sides lodged appeals on different points.
The Supreme Court’s verdict on Friday provides much better for many firms, as it dismissed appeals by six insurers but “substantially” upheld ones lodged on behalf of policyholders.
WATCH: Supreme Court backs small firms over COVID insurance claims
UK GDP beats expectations
The UK economy fared much better than expected in November, as businesses successfully adapted to the reintroduction of lockdown restrictions in much of the country.
However, experts warned the UK economy was still on track for its first “double dip” recession since the 1970s. Chancellor Rishi Sunak repeated his warning that things “will get harder before they get better.”
The Office for National Statistics on Friday said UK GDP shrank by an estimated -2.6% in November. Economists had forecast a -5.7% decline.
November’s GDP decline was much smaller than the slump of 20% seen in the second quarter of 2020 when lockdown was first introduced nationwide.
The data highlights how businesses have learned to adapt to lockdown restrictions and reflects the fact the government has nuanced restrictions to support the economy.
Gym Group cuts monthly cash burn to £5m during lockdown
he Gym Group (GYM.L) announced that its monthly cash burn during the current COVID-19 lockdown is £5m ($7m) thanks to government support, while the November closures cost £6m.
In the year to 31 December 2020, Gym Group saw total revenue drop £72.6m from £153.1m to £80.5m, with 45% of trading days lost due to government restrictions.
Gym Group also said that it has started talks with banks over debt covenants. The company said it has “significant” liquidity available under an existing £100m bank facility.
The company, which operates 184 venues across the UK, said that despite the lowered figures it is planning to continue with its expansion, opening three new sites “once there is greater visibility about a reopening date for gyms.”
Lockdown gloom hits European stocks despite $1.9tn US stimulus plan
European stocks fell on Friday as major economies braced for stricter lockdowns, despite plans for a $1.9tn (£1.4m) US government stimulus package.
Leading indices in Europe opened lower as the trading day got underway. Britain’s FTSE 100 (^FTSE) in London and Germany’s DAX (^GDAXI) in Frankfurt opened 0.3% lower, while France’s CAC 40 (^FCHI) lost 0.5%.
Coronavirus restrictions are being tightened in several countries struggling to contain the resurgent virus as they race to roll out vaccines. The French government said late on Thursday a 6pm curfew in parts of France will be extended to the whole country.
France’s prime minister Jean Castex also said the government would have to “decide without delay on a new lockdown” if the pandemic worsened in the coming days.
Watch: Stocks lower as further lockdowns loom in Europe
In Germany, chancellor Angela Merkel is reported to be pushing for tougher measures, including more home working. German schools and ‘non-essential’ stores have been shut since last month.
The dip in stocks comes in spite of plans confirmed by president-elect Joe Biden for a $1.9tn for a COVID-19 relief package.
Stocks looked set to slide in the US later on Friday. The S&P 500 (ES=F) and Dow Jones (YM=F) were both down 0.3% as trading began in Europe, and the Nasdaq (NQ=F) dipped 0.1%.
Asian markets also mostly dipped overnight, after US president Donald Trump announced sanctions for nine Chinese firms over accusations of military ties.
China’s Shenzhen Component (399001.SZ) slid 0.3% amid higher COVID-19 infections in the country, while Japan’s Nikkei 225 (^N225) shed 0.5% and the KOSPI (^KS11) in South Korea shed 2%.
