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The British economy sunk into its deepest recession on record in the second quarter, taking it back to the size it was in 2003. Official statistics showed gross domestic product dropped by 20.4 percent between April and June, compared with the previous quarter.
The pandemic-induced collapse was harsher in Britain than other large economies in Europe and North America. The second-quarter fall in economic output was twice as deep in Britain as in the United States.
Britain has the challenge of getting out of a much deeper hole because of the length of the lockdown imposed to restrict the spread of the coronavirus. The Office for National Statistics said lockdown measures were in place in Britain for a larger part of this three-month period than they were for other economies. Britain was relatively slow in introducing a national lockdown compared with most of its European neighbors. It started in earnest in late March and the government didn’t begin lifting the broadest restrictions until mid-June. Its lockdowns also affected a greater share of the population for a longer period of time than the state-by-state shutdowns in the United States.
A monthly breakdown showed the British economy did pick up in June, climbing 8.7 percent from May as construction activity resumed and consumer spending rebounded. Still, the Bank of England said last week it didn’t expect the recovery to be complete until the end of 2021.
In an effort to keep the recovery from stalling, the government is encouraging people to return to work in offices and it is planning for schools to reopen next month. The Treasury also spent more than 53 million pounds ($69 million) last week as part of a stimulus plan paying for discounts for meals eaten in restaurants and pubs on Mondays, Tuesdays and Wednesdays this month.
Global shares wavered on Wednesday, after reports from Washington suggested little progress toward reaching an agreement on a coronavirus rescue package and the release of fresh economic data in Britain showed the depth of the pandemic’s toll.
European shares edged higher, led by Britain’s FTSE 100, which gained 0.8 percent. Asian indexes also meandered, with Hong Kong’s Hang Seng gaining 1.4 percent while China’s Shanghai Composite losing 0.6 percent at the end of the trading session.
On Wall Street, futures were predicting an upbeat start to trading, a day after the S&P 500’s first drop in eight trading sessions. U.S. 10-year Treasury notes slumped, indicating some appetite for riskier bets among investors, and oil futures were on an upswing. Gold, which has fallen from its recent highs above $2,000 an ounce, now has a spot price of about $1,930.
In Washington on Tuesday, there were little or no negotiations on a new relief package for out-of-work Americans and struggling businesses, five days after talks crumbled between top Democratic lawmakers and the White House. August is typically quiet on Capitol Hill, and there were no evident efforts to find a way back to the bargaining table.
The cost of the pandemic was on display in Britain, where the statistics agency released data showing the economy shrank by more than 20 percent in the April to June quarter, when the economy was in the grips of a lockdown to curb the spread of the virus. That was not only the steepest fall on record in Britain, but the worst collapse for the second quarter among European and North American countries.
There was a glimmer of good news: Economic activity grew more than 8 percent in June, as construction activity resumed and consumer spending rebounded.
In the heart of Manhattan, national chains including J.C. Penney, Kate Spade, Subway and Le Pain Quotidien have shuttered branches for good. Many other large brands, like Victoria’s Secret and the Gap, have kept their high-profile locations closed in Manhattan, while reopening in other states.
Even as the city has contained the virus and slowly reopens, there are ominous signs that some national brands are starting to abandon New York. The city is home to many flagship stores, chains and high-profile restaurants that tolerated astronomical rents and other costs because of New York’s global cachet and the reliable onslaught of tourists and commuters.
For four months, the Victoria’s Secret flagship store at Herald Square in Manhattan has been closed and not paying its $937,000 monthly rent. “It will be years before retail has even a chance of returning to New York City in its pre-Covid form,” the retailer’s parent company recently told its landlord in a legal document.
Some popular chains, like Shake Shack and Chipotle, report that their stores in New York were performing worse than others elsewhere, investment analysts said.
Michael Weinstein, the chief executive of Ark Restaurants, who owns Bryant Park Grill & Cafe and 19 other restaurants, said he will never open another restaurant in New York.
“There’s no reason to do business in New York,” Mr. Weinstein said. “I can do the same volume in Florida in the same square feet as I would have in New York, with my expenses being much less. The idea was that branding and locations were important, but the expense of being in this city has overtaken the marketing group that says you have to be there.”
A venture backed by the owner of Barneys New York has won a bid to buy Brooks Brothers, America’s oldest apparel company, for $325 million.
Sparc Group, a venture including Authentic Brands, the new owner of Barneys, and Simon Property, the biggest mall operator in the United States, will save at least 125 Brooks Brothers stores as part of the agreement. Brooks Brothers, a 200-year-old men’s wear retailer, filed for bankruptcy protection last month. It has struggled with declining sales in recent years as many in the corporate world have opted for a more casual look.
The brand was among several high-profile retailers, including J.C. Penney, Neiman Marcus and J. Crew, whose businesses were unable to weather the sales slump resulting form the coronavirus pandemic.
A court hearing to approve the sale is scheduled for Friday, Brooks Brothers in a statement on Tuesday, and the deal is expected to be completed by the end of this month.
Authentic and Simon initially made a “stalking horse” offer of $305 million, setting a price floor for bids in the bankruptcy auction.
The corporate restructuring at WarnerMedia continued with layoffs in its DC Entertainment division, home of DC Comics and the DC Universe streaming platform, part of an overhaul that will reduce head count by 600. Nearly 50 people at DC Comics were laid off, said two people with knowledge of the decision who spoke on condition of anonymity because it had not been announced publicly. DC Direct, the company’s division devoted to collectibles, will be shuttered in November, these people said. The move comes after the ouster of three top executives on Friday in a shake-up by WarnerMedia’s new chief executive, Jason Kilar, who is realigning the company to put a greater focus on HBO Max, its new streaming service. WarnerMedia, a division of AT&T, began a significant round of layoffs on Monday.
The Russian economy plunged into a deep contraction in the second quarter, shrinking 8.5 percent compared with the same period a year earlier, as the country coped with restrictive coronavirus lockdowns, the state statistics agency reported Tuesday. The Russian statistics agency said the slowdown hit all sectors of the economy other than agriculture. Oil and mining, a backbone of Russia’s economy, suffered in particular, the agency said.