It comes as a slump on Wall Street overnight caused Asian shares to fall once again, as a series of warnings from US Federal Reserve officials underscored investor worries over the resilience of the economic recovery. US Federal Reserve Vice Chair Richard Clarida said on Wednesday that the US economy remains in a “deep hole” of joblessness and weak demand.
Mr. Clarida called for more fiscal stimulus, noting that policymakers “are not even going to begin thinking” about raising interest rates until inflation hits 2 percent.
Cleveland Federal Reserve Bank President Loretta Mester echoed Clarida, saying that the US remains in a “deep hole, regardless of the comeback we’ve seen.”
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS tumbled 1.35 percent in the morning session on broad losses across the region.
Chinese blue-chips .CSI300 dropped 1.09 percent, Hong Kong’s Hang Seng .HSI fell 1.72 percent, Seoul’s KOSPI .KS11 sank 1.73 percent and Australian shares .AXJO were 1.18 percent lower.
Japan’s Nikkei .N225 fell 0.74 percent.
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FTSE 100 LIVE: Asian shares tumble as global recovery hopes reach new low
1.00pm update: Sunak favourite to be next PM
The bookies were impressed by Mr Sunak’s address, making him the new favourite in the next prime minister market.
Jessica O’Reilly of Ladbrokes said: “As Rishi dishes out the cash once again, punters are seemingly doing the same and backing him to become the next PM.”
He is priced at 5/2, above Sir Keir Starmer at 3/1, Michael Gove at 6/1, Jeremy Hunt at 16/1 and Dominic Raab at 20/1.
12.45pm update: More from Labour
More from Ms Dodds, who asked the Chancellor how far his new schemes would go.
She said: “Will this scheme of wage support actually keep more people in work? For that to happen, the scheme must make it more attractive to employers to retain more staff, on reduced hours, than to retain some full-time and make others redundant. So does his scheme actually incentivise short-hours working?
“What conditions – if any- will be applied to ensure value for public money? Will the scheme require commitments for continuing employment – unlike the existing furlough scheme where there have been abuses? And will it require those participating to provide decent, sustainable work?”
12.30pm update: Labour hits out at Chancellor’s statement
Anneliese Dodds MP, Labour’s Shadow Chancellor, said: “Before the summer recess, Labour called for a Back to Work Budget focused on jobs, jobs, jobs. We didn’t get one.
“We expected a Budget this autumn to address the major challenges our country faces. It appears – again – we’re not getting one.
“And the Chancellor only announced he would make a statement to Parliament today, after I’d hauled him here with an Urgent Question – which I’m very grateful to Mr Speaker for granting.
“We lagged behind on wage support; we lagged behind on support for those having to self-isolate; we’re lagging behind on green investment; and for these and other reasons it looks like our recovery will be lagging behind. So finally when will the Chancellor provide the Back to Work Budget this country needs?”
Rishi Sunak addressing the House of Commons this lunchtime
12.15pm update: More info on new scheme
Rishi Sunak said the new Jobs Support Scheme would allow businesses to keep employees in a job on shorter hours.
He said: “The Government will directly support the wages of people in work, giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant.
“The Jobs Support Scheme is built on three principles.
“First, it will support viable jobs. To make sure of that employees must work at least a third of their normal hours and be paid for that work as normal by their employer. The Government, together with employers, will then increase those people’s wages covering two-thirds of the pay they have lost by reducing their working hours, and the employee will keep their job.
“Second, we will target support at firms who need it the most. All small and medium-sized businesses are eligible but larger businesses only when their turnover has fallen through the crisis.
“Third, it will be open to employers across the United Kingdom, even if they have not previously used the furlough scheme.
“The scheme will run for six months starting in November and employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention bonus.”
Coronavirus has sent shockwaves through the UK economy
12.08pm update: Chancellor unveils new government scheme
Mr Sunak has announced a “pay as you grow” scheme to allow firms to repay bounce back loans over a period of up to 10 years.
He has aslo announced a VAT freeze at 5% until next March.
The government will also top up wages of workers, up to two-thirds of their hours, for next six months, he said.
12.05pm update: No10 spends £12bn on track-and-trace
Mr Sunak says the Government has now provided “over £12 billion for Test and Trace”.
He said: “In economic terms, while our output remains below where it was in February, we have seen three consecutive months of growth and millions of people have moved off the furlough and back to work.”
12.00pm update: Rishi Sunak addresses House of Common
The Chancellor is speaking to the House of Commons.
He has warned the UK economy faces a “permanent adjustment” due to coronavirus.
He said he has made the painful decision to end furlough
He said: “I cannot save every business. I cannot save every job.”
Mr Sunak said it would be “morally wrong” to keep the scheme going.
11.30am update: FTSE fights back
The FTSE is slowly making up for lost ground after falling a percentage point this morning.
The UK index fell from 5,899 to 5,832 in a sharp drop earlier today.
It has risen to 5,874 since then and looks set to break even later today.
10.00am update: Currency latest
The pound at 10am was 1.2736 dollars compared to 1.2753 dollars at the previous close.
The euro at 10am was 0.9151 pounds compared to 0.9154 pounds at the previous close.
9.40am update: EU markets suffer
Like the FTSE, European markets are also suffering this morning.
Euronext 100 is down 0.94%, CAC 40 is down 0.72%, DAX is down 0.58% and Swiss Market Index is down 0.95%.
FTSE is down 0.75%.
8.45am update: Rishi Sunak to address nation
Rishi Sunak is set to outline his economic plan for the months ahead, after it was announced the Budget has been cancelled.
Instead, the Chancellor will lay out his Winter Economic Plan in the House of Commons later today.
He will address MPs sometime after 11.45am.
8.15am update: FTSE plummets on open
The FTSE has dropped sharply on open, falling more than 1% in just a matter of minutes.
The UK index closed at 5,899 yesterday after a difficult day – and today looks no different.
The FTSE has already dropped to 5,833 this morning – a loss of 65 points (1.10%).
More to follow…