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The UK has secured its first post-Brexit trade deal following an agreement with Japan.
The government claimed the agreement will boost trade with Japan by £15.2bn over the next 15 years and UK businesses will enjoy tariff-free trade on 99% of exports to the country.

International Trade Secretary Liz Truss agreed the deal, in principle, with Japan’s foreign minister Toshimitsu Motegi on a video call on Friday morning.

Image: Ms Truss pictured in talks with Japan Foreign Minister Toshimitsu Motegi in June Pic: Andrew Parsons / 10 Downing Street
Ms Truss said the deal “goes far beyond” the EU-Japan trade deal that the UK will leave at the end of this year, when the Brexit transition period ends.
She also hailed the agreement as an “important step” towards the UK joining a wider 11-nation trade deal, known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

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Prime Minister Boris Johnson tweeted: “We have taken back control of our trade policy & will continue to thrive as a trading nation outside the EU.”

Government analysis found that a deal with Japan would boost the UK’s GDP by around 0.07% over 15 years and increase UK workers’ wages by £800m in the long run.

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The agreement comes as the UK’s negotiations over a post-Brexit trade deal with the EU continue to stall, with both sides admitting on Thursday that “significant” differences remain in key areas despite the completion of eight rounds of talks.

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Department for Trade figures reveal that in 2018 the UK’s trade with the EU was worth £659.5bn – while trade with Japan was worth £29.1bn.
Challenged as to whether the estimated £1.5bn uplift to UK GDP over 15 years from a Japan deal was significant – considering it is a fraction of NHS spending – trade minister Greg Hands told Sky News: “This is the first of what we hope will be a series of deals.
“Our Conservative manifesto commitment is for 80% of UK trade to be covered by such deals within the next three years.”
Ms Truss said on Friday: “This is a historic moment for the UK and Japan as our first major post-Brexit trade deal.
“The agreement we have negotiated – in record time and in challenging circumstances – goes far beyond the existing EU deal, as it secures new wins for British businesses in our great manufacturing, food and drink, and tech industries.”

Japan deal a ‘stepping stone’ to CPTPP goal

She added: “From our automotive workers in Wales to our shoemakers in the North of England, this deal will help build back better as we create new opportunities for people throughout the whole of the UK and help level up our country.
“Strategically, the deal is an important step towards joining the Trans-Pacific Partnership and placing Britain at the centre of a network of modern free trade agreements with like-minded friends and allies.”
The news of an agreement is a breakthrough after suggestions last month that negotiations had stalled over access to food and agricultural products.
It was reported that the UK had sought better terms for blue cheeses but Japan wanted to keep to existing EU tariffs.

Image: The agreement includes protections for Melton Mowbray pork pies
Asked whether the UK will now be able to export more agricultural produce to Japan than it could while an EU member, Mr Hands replied: “I believe we will.”
He added: “We’ve secured geographic indicators for 70 products rather than just seven, including Cornish pasties, including Melton Mowbray pork pies – a lot of iconic British produce.
“In terms of the actual tariff-rate quotas involved, we’ve got really good access on pork, on beef.
“There’s £430m worth of food and drink exports to Japan each year from the UK.
“We’ve got key continuity and improvement across most of those produce, so I think it’s good news for agricultural exports into Japan.”
Emily Thornberry, Labour’s shadow international trade secretary, welcomed the UK-Japan agreement.
But she added: “Necessary as this agreement is, the government’s over-riding priority has to be securing the oven-ready deal that they promised us with Europe, which Japanese companies like Nissan have told us is crucial to the future of the investment and jobs they bring to Britain.”
Liberal Democrat trade spokesperson Christine Jardine MP said: “”The agreement’s economic contribution will be a drop in the ocean.
“The government has failed to leverage any meaningful benefit from its independent trade policy, whilst a deal protecting our EU trade is nowhere in sight.
“There couldn’t be a more reckless approach to international trade.”

In ordinary times chancellors and prime ministers would trade a limb for a monthly increase in GDP of 6.6%, but these are far from normal days and there are already signs that the post-lockdown bounce back may be losing some of its zip.
The positives first.

The recovery in July continues the V-shaped trajectory established in June, and after the cliff-edge descent of a record 20% fall in the second-quarter it is at least heading in the right direction.

Image: Construction proved the best-performing sector for growth in July

Where jobs have been lost in UK economy
Where jobs have been lost in UK economy

But July’s growth is less than the 8.7% in June, suggesting the elastic of the COVID-19 bounce-back may already be approaching its limits.
Much of the recovery since the dog days of April can be attributed to the easing of lockdown restrictions. Bricks and mortar retailers reopened in June, and in July pubs and restaurants returned, albeit with distancing reducing capacity and anxiety capping demand.

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With those two major sources of consumer spending back in business, the economy is still 11.7% smaller than it was pre-lockdown and the question the Treasury may be asking is where the rest of the recovery will come from.

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Chunks of the economy still remain closed including nightclubs, theatres, concerts, events and sports grounds, and city centres still have a post-apocalyptic feel with daytime footfall still down more than 80%.

Heathrow traffic still more than 80% down

Until all sectors are open and the economy is operating round-the-clock we may not be able to judge just how real or resilient the recovery is, but dancing and dining are unlikely to fill the hole.
With the furlough tap due to be turned off in October (and despite mounting pressure the Chancellor maintains it will end) an unemployment wave is coming and it may sweep away consumer confidence as well as hundreds and thousands of jobs.
And we are yet to see what impact the new “clearer” restrictions set out in the rules of six do to people’s appetite for socialising in public.

Image: The ONS data shows output remains almost 11.7% below its pre-pandemic peak
Nor will the UK, for all its reliance on services, eat and drink its way out of recession.
The construction industry performed best of all sectors in July but is still 11.6% down on pre-lockdown levels, likewise manufacturing at -8.7%.
The chancellor’s response to the latest figures was a rote list of measures, many of them hugely welcome, the government has taken so far, including the KickStart scheme to help the young unemployed and the job retention bonus.
He, like the prime minister and the scientists advising them, still cannot be certain how far the pandemic has left to run, and our economic fate is still shaped most by health policy.
But continuing growth and restoring confidence may need more than a boilerplate list of the story-so-far from No 11.

The economy remained 11.7% below its coronavirus pandemic peak in July as the UK emerges from its sharpest recession on record, official figures show.
The Office for National Statistics (ONS) reported gross domestic product (GDP) grew by 6.6% in the month as more parts of the economy awakened from the enforced hibernation of the COVID-19 lockdown.

The deep sleep for activity sparked the largest recession in UK history in the second quarter of the year – a slump of 20.4% – driven by the first full month of COVID-19 restrictions in April.

Month-on-month growth was recorded in May and in June.
ONS director of economic statistics Darren Morgan said of July’s growth: “While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic.

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“Education grew strongly as some children returned to school, while pubs, campsites and hairdressers all saw notable improvements.

“Car sales exceeded pre-crisis levels for the first time with showrooms having a particularly busy time.

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“All areas of manufacturing, particularly distillers and car makers, saw improvements, while housebuilding also continued to recover.
“However, both production and construction remain well below previous levels.”

Where jobs have been lost in UK economy
Where jobs have been lost in UK economy

The update was released as ministers come under greater pressure to heed warnings of a deepening employment crisis as the Job Retention Scheme, that has supported wages of almost 10 million people during the crisis, is wound down.
A committee of MPs became the latest group to join the bandwagon on Friday, calling on Chancellor Rishi Sunak to introduce targeted support for sectors still struggling to reopen because of coronavirus rules.
There are dire predictions, most recently from the Bank of England, that the UK could have three million unemployed by the end of the year, while business groups argue an exit from the EU without a trade deal in January risks deepening the damage.

Caan: Kickstart must help older workers and SMEs

After the ONS update, Mr Sunak said: “While today’s figures are welcome, I know that many people are rightly worried about the coming months or have already had their job or incomes affected.
“That’s why supporting jobs is our first priority and why we’ve outlined a comprehensive Plan for Jobs to ensure nobody is left without hope or opportunity.

‘Hard times are here’

“We’re helping people return to work with a £1,000 retention bonus for jobs brought back from furlough. And we are creating new roles for young people with our Kickstart scheme, introducing incentives for training and apprenticeships, and supporting and protecting jobs in the tourism and hospitality sectors through our VAT cut and last month’s Eat Out to Help Out scheme.”
Yael Selfin, chief economist at KPMG UK, said of July’s GDP figures: “Expect more of the same in August owing to the boost from the Eat Out to Help Out scheme.”
But he added: “The risk of a second wave of infections in the autumn could derail the nascent recovery and put the economy into a lower gear.”

Chancellor Rishi Sunak has been urged by a cross-party group of MPs to consider “targeted extensions” to the coronavirus furlough scheme.
The wage subsidy scheme, which has supported millions of workers temporarily laid off because of the pandemic, is due to end on 31 October – and some fear that could mean large-scale job losses.

Now the Treasury Select Committee, led by Conservative MP Mel Stride, has joined calls from industry groups and opposition politicians to look at continuing the support in some form.

Job loss fears as furlough scheme winds down

Mr Stride said: “The chancellor should carefully consider targeted extensions to the Coronavirus Job Retention Scheme and explain his conclusions.
“The key will be assisting those businesses who, with additional support, can come through the crisis as sustainable enterprises, rather than focusing on those that will unfortunately just not be viable in the changed post-crisis economy.”

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The committee’s latest report on the economic impact of the pandemic also urges further efforts to stimulate consumer spending – following the popularity of the Eat Out To Help Out initiative.

Among other recommendations, it presses the chancellor to set out a “roadmap” for repairing battered public finances after the crisis.

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The report warns against too-hasty tax increases that might stifle an economic recovery but describes lifting the “triple lock” guarantee on state pension increases as a “sensible proposal”, despite a Conservative manifesto pledge to keep it.

Ending furlough ‘the most difficult decision’

On the furlough scheme, the report cites the needs of “a large proportion of business in sectors such as hospitality and leisure that are suffering the most from social distancing” which “may still have a viable long-term future at the end of October” when the scheme is due to end.
Figures from the Treasury last month showed 9.6 million jobs have been supported by the initiative at a cost so far of more than £35bn. Mr Sunak has insisted it will not be extended.
Instead, the government has offered a £1,000 bonus to employers for every furloughed worker brought back – though the select committee report said in many cases this will cover employees who would have gone back to work anyway.
Bank of England Governor Andrew Bailey has backed an end to the furlough scheme but others including Labour have called for a rethink.
The Treasury said it would “continue to innovate in supporting incomes and employment through our Plan for Jobs”, but stopped short of commenting on the report’s recommendations.

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Mike Cherry, chairman of the Federation of Small Businesses, said that the government should look closely at a potential successor to the furlough scheme.
He said: “The priority should be protecting viable small businesses – and all the jobs they provide – that have been disproportionately impacted by the coronavirus crisis.”
Steve Turner, assistant general secretary of trade union Unite, said: “Hundreds of thousands of workers could face a desperate future unless the prime minister and chancellor move swiftly to modify the Job Retention Scheme.”
Germany has agreed to extend a job support scheme for its workers until the end of next year.

Scottish-born Citigroup executive Jane Fraser is to become the first woman to lead a Wall Street bank after being announced as the firm’s next boss.
Cambridge-educated Ms Fraser, who began her career at Goldman Sachs in London, will take over from current chief executive Michael Corbat in February.

The 53-year-old’s promotion to one of the top corporate jobs in the US has been widely expected since she was named Citigroup president last year.

Image: Citi reported a 73% fall in second quarter profits
She is also currently chief executive of its global consumer banking division.
Ms Fraser joins a small group of women who have broken through to the top ranks of major financial firms.

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Among them are Alison Rose, who became the first woman to head a major British bank when she was appointed chief executive of Royal Bank of Scotland – now NatWest group – last year.

Ms Fraser joined Citi in 2004 and has served in a number of top roles at the firm including as head of its US consumer and commercial banking unit and boss of its Latin America division.

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Last year she received $12.5m in salary and bonuses plus a one-off $12.5m as she was promoted to the role of president.
The bank explained that the one-off award was “in support of leadership continuity and management succession planning”.

Some firms ‘out of touch’ on women leaders

Mr Corbat, who is retiring after 37 years at the bank including eight as chief executive, said in a statement announcing her appointment: “I have worked with Jane for many years and am proud to have her succeed me.
“With her leadership, experience and values, I know she will make an outstanding CEO.”
Ms Fraser said: “Citi is an incredible institution with a proud history and a bright future. I am excited to join with my colleagues in writing the next chapter.”

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A married mother-of-two, she has spoken publicly about the challenges of balancing her career and family life.
Interviewed by CNN in 2014, Ms Fraser said: “You can’t have it all at the same time – you can have it all, spread over decades.”
In a speech in 2016, she said: “I am a working mother. I always joke with my team and say I have three boys at home: I have a 14-year-old, a 16-year-old and a 59-year-old.”
Citi, together with other US banking giants, has been counting the cost of the coronavirus crisis on the economy – in July setting aside $7.9bn to cover the cost of loans turning sour.
The provision resulted in the firm reporting a 73% fall in quarterly profits.
Mr Corbat said at the time: “We are in a completely unpredictable environment… The pandemic has a grip on the economy, and it doesn’t seem likely to loosen until vaccines are widely available.”

Caffe Nero has become the latest high street coffee chain to seek rent cuts from landlords amid tough new restrictions that could hamper the hospitality sector’s recovery from COVID-19.
Sky News has learnt that Caffe Nero, which operates 660 stores across the UK, has appointed KPMG to review options relating to its property portfolio.

More than 90% of the chain’s outlets have reopened since the coronavirus lockdown ended in June, with about 30 sites having remained shut since then.

First UK coffee subscription a ‘big investment’

KPMG is understood to be working with the chain, which is owned by Gerry Ford, on a range of possible options, which analysts say are likely to include mechanisms that would enable rent cuts and possible limited store closures.
Caffe Nero is understood to have been performing strongly prior to the COVID-19 crisis, employing about 5000 people and serving 135 million customers annually.

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The slower-than-expected return to offices in city centres has had a severe impact on many of Caffe Nero’s rivals, including Pret a Manger and Costa Coffee, which between them have announced plans to make more than 4500 people redundant in recent weeks.

One source said that Caffe Nero executives had been engaged in “constructive dialogue” with landlords but needed to intensify talks as the company seeks to address its fixed cost base.

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A spokesperson for Caffe Nero said: “It has been a difficult period since lockdown measures were introduced by the government and we’re working incredibly hard to navigate our way forward.
“As part of this, we are working closely with advisors to help review our options and assist with our ongoing negotiations with landlords.”
The company declined to comment specifically on the prospect of any store closures.

The UK government has rejected EU demands to scrap draft legislation that Brussels deems a “clear breach” of the Brexit withdrawal deal.
The EU’s demand – accompanied by a threat of legal action and a suggestion Brexit trade talks could be halted if the UK does not back down – followed emergency talks between senior EU and UK figures on Thursday.

But senior cabinet minister Michael Gove, the Chancellor of the Duchy of Lancaster, vowed the UK “would not and could not” agree to the EU’s request to drop the legislation.

Image: Boris Johnson formally signed the Withdrawal Agreement in January. Pic: Andrew Parsons / 10 Downing Street
The stand-off over the Withdrawal Agreement has cast fresh tensions over the relationship between Brussels and London, with trade talks over a future EU-UK relationship continuing to remain deadlocked.
Following an eighth round of negotiations this week, both the EU and UK chief negotiators admitted “significant” differences remain in key areas.

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The UK Internal Market Bill, published by the government on Wednesday, seeks to alter key elements of the Withdrawal Agreement that Prime Minister Boris Johnson signed with Brussels earlier this year.

The proposed law has whipped up a storm of anger both from the EU and at home – including from leading Conservatives.

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Amid the row, European Commission vice-president Maros Sefcovic travelled to London on Thursday to meet with Mr Gove.
Mr Sefcovic told Mr Gove that if the legislation were to be passed “it would constitute an extremely serious violation of the Withdrawal Agreement and of international law”.
He added that by putting forward the bill, which was published on Wednesday, the UK had seriously damaged trust between the EU and the UK.
“It is now up to the UK government to re-establish that trust,” the European Commission said in a statement after the meeting.
The European Commission also rejected claims that the bill is designed to protect the Good Friday Agreement in Northern Ireland.
“In fact, it is of the view that it does the opposite,” the statement added.

Image: European Commission vice-president Maros Sefcovic (right) held emergency talks in London
Mr Sefcovic told Mr Gove that the implementation of the Withdrawal Agreement – including its provisions for the Irish border – was a “legal obligation” and that the EU “expects the letter and spirit of this agreement to be fully respected”.
Violating the terms of the Withdrawal Agreement would “break international law, undermine trust and put at risk the ongoing future relationship negotiations” on a UK-EU trade deal, Mr Sefcovic added.
He also warned the EU “will not be shy” in using “a number of mechanisms and legal remedies” that are contained in the Withdrawal Agreement to address violations.

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Irish foreign affairs minister Simon Coveney thanked Mr Sefcovic for his “important statement”.
But Mr Gove later revealed he had made it “perfectly clear” to Mr Sefcovic that, while the UK government is “committed to the implementation of the Withdrawal Agreement”, it “could not and would not” scrap the bill.
“This legislation is critical to ensuring that there is unfettered access for goods from Northern Ireland to the rest of the United Kingdom,” he said.

‘There’s a lot of anger’ – Irish PM

Ahead of a planned parliamentary vote on the legislation next week – during which some Tory MPs have vowed to rebel against the government – Mr Gove expressed his hope that “across the House of Commons there will be a recognition that we have an obligation to the people of Northern Ireland in order to make sure that they continue to have unfettered access”.
Mr Gove added that the government also had a duty to ensure the Northern Ireland Protocol – which forms part of the Withdrawal Agreement – was “implemented in a way that makes sure the gains of the Good Friday Agreement are absolutely secured and enhanced in the future”.
The meeting between Mr Sefcovic and Mr Gove took place at the same time as EU and UK officials were concluding the eighth round of negotiations on the future UK-EU relationship, which have so far made little progress.
Without a trade deal by the end of this year – when the Brexit transition period ends – the UK will likely have to trade with the EU on World Trade Organisation terms from next year.

Image: EU chief negotiator Michel Barnier admitted ‘significant differences’ remain over trade negotiations
Following the latest round of talks in London, EU chief negotiator Michel Barnier said that “significant differences” remain between the two sides.
He accused the UK of “refusing to include indispensable guarantees of fair competition in our future agreement, while requesting free access to our market”.
“To conclude a future partnership, mutual trust and confidence are and will be necessary,” Mr Barnier added, as he noted the EU was “intensifying its preparedness work” ahead of a possible no-deal outcome at the end of the year.
The UK’s chief negotiator, Lord Frost, said this week’s talks had seen “useful exchanges” but added “a number of challenging areas remain and the divergences on some are still significant”.
“We have engaged in discussions in all areas,” he added.
“We have consistently made proposals which provide for open and fair competition, on the basis of high standards, in a way which is appropriate to a modern free trade agreement between sovereign and autonomous equals.”
The two sides will meet in Brussels next week to continue talks, with Lord Frost saying he was “working hard” to reach a deal by the middle of next month.
The pound has been under pressure amid the latest tensions over Brexit and on Thursday dipped to its lowest level against the euro since March, at just over €1.08.
It also slipped against the dollar, dipping below $1.29.

Minister admits new bill will break law

In tabling the UK Internal Market Bill, the government has admitted the proposed legislation does break international law in a “very specific and limited way”.
Senior Conservatives – including three former Tory leaders – have criticised the plans.
Earlier on Thursday, Lord Michael Howard accused the government of damaging the UK’s “reputation for probity and respect for the rule of the law”.
“How can we reproach Russia or China or Iran when their conduct falls below internationally accepted standards, when we are are showing such scant regard for our treaty obligations?” he told the House of Lords.

Tory MP will vote against UK Internal Market Bill

Senior Tory MP Sir Roger Gale indicated he is ready to lose the Conservative whip in order to vote against the bill next week.
“I shall do what I have to do on the basis of principle,” he told Sky News.
“And the principle is that this United Kingdom keeps its word internationally.”
French foreign minister Jean-Yves Le Drian told Foreign Secretary Dominic Raab, when the pair met to discuss Iran on Thursday, that a breach by the UK of the Withdrawal Agreement would be “unacceptable”.
Rachel Reeves, Labour’s shadow Chancellor of the Duchy of Lancaster, said: “The government promised the British people they would deliver their ‘oven-ready’ deal.
“But just months later they are seeking to undo it, squandering valuable time and losing focus during a pandemic.
“A deal must be reached as a priority so that the government can then get a grip on tackling the coronavirus and protecting jobs, businesses and communities.”

Two private equity firms founded by former partners at Goldman Sachs were the architects of a £375m takeover bid rejected last month by Saga, the over-50s travel and insurance provider.
Sky News has learnt that Reverence Capital Partners, which was set up by former Goldman veteran Milton Berlinski in 2013, was the leader of a consortium that pitched a 33p-a-share offer to the board of Saga several weeks ago.

The London-listed company spurned the approach in favour of a refinancing led by Sir Roger de Haan, its former chief executive, who is to take a substantial stake in Saga at an average price of 22p-a-share.
Insiders said that Reverence and its partner had lined up investment bankers at Morgan Stanley to work on their bid, but that the consortium had been forced to withdraw after Saga’s board declined to provide the buyout firms access to information needed to conduct due diligence.

Image: Mark Wilson, the former Aviva chief executive, was spearheading the private equity approach Pic: Aviva
Most buyout firms are not permitted to launch hostile bids for public companies under the terms of their funds.

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Mark Wilson, the former Aviva chief executive, was spearheading the private equity approach.

On Thursday, Saga’s chief executive Euan Sutherland attacked the company’s previous private equity backers – Charterhouse and Permira – when he said that they had “left Saga in a weakened position, loaded with debt, starved of investment and driven with a very short term focus”.

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A source close to the Reverence bid said that its proposed business plan would have left Saga with lower debts than its board currently envisages.
Mr Sutherland also described Saga as “a proud British business, with a strong brand, loyal customers and great people” with the aim of “creating significant long-term value for all our investors”.

Image: Saga chief executive Euan Sutherland attacked the company’s previous private equity backers
The company is, however, unlikely to resume paying dividends for several years.
An insider close to the private equity approach pointed to the deterioration in the COVID-19 outlook for British consumers since its offer initially emerged.
Shares in Saga were trading at about 14.85p on Thursday afternoon, less than half the value of the indicative offer.
Alongside its £150m capital-raising, of which Sir Roger is contributing two-thirds of the money, the company is to undertake a stock consolidation which it hopes will reduce the level of volatility in its share price.
Sir Roger’s return as a major shareholder and chairman has been cited by people close to Saga as a sign of confidence in its management and strategy.
His installation represents a remarkable comeback 16 years after he sold the company to Charterhouse, the British private equity firm, for £1.35bn.

April 2019: Saga moves to inject life into insurance offer

The son of Saga’s founder Sidney de Haan, Sir Roger has not been a shareholder in the company since then.
Saga raised £550m in an initial public offering in London in 2014.
At the time, the company was worth well over £2bn, while it now has a market capitalisation of little more than £150m.
Like other cruise and tour operators, Saga has seen substantial chunks of its operations brought to a halt by the coronavirus crisis.

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It has said it hopes to resume cruises later this year, although Saga and other operators have said they expect passengers to return only slowly.
Saga disclosed last year that Elliott, the activist hedge fund manager, had taken a 5% stake, prompting expectations of a break-up or other corporate activity.
The company also has a sizeable insurance business, selling a broad range of products targeted at the so-called ‘grey market’.
Saga declined to comment on the private equity consortium, while Reverence could not be reached for comment.

The word resilience has been heard a lot during this crisis from businesses – whether that is the resilience of supply chains, the resilience of broadband infrastructure or the resilience of employees as they battle to work in trying circumstances.
With memories of the global financial crisis still fresh, there has also been an emphasis on financial resilience, the ability of a business to withstand intense balance sheet pressure during the current pandemic.

A good example emerged today in the form of Lloyd’s of London.

Image: Lloyd’s is regarded as one of the pillars of the City of London
The world’s oldest insurance market said it would be paying claims worth an estimated £5bn as a result of COVID-19, of which £2.4bn came during the first half of the financial year, pushing the market to a pre-tax loss of £438m.
That compared with a pre-tax profit of £2.3bn during the same period last year.

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But John Neal, chief executive, said the fact Lloyd’s had been able to pay billions of pounds in claims showed how the market had demonstrated “real resilience and strength” during a “truly challenging moment in global history”.

He told Sky News: “Everyone remembers 2017, when we had three hurricanes in the US, the total cost of those was around about £3.5bn, so [COVID-19] is quite similar in size to a very, very major catastrophic event – but remember those were three losses added together.

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“This is just one event in itself.
“So, in terms of recent history, it’s up there with the largest single loss that the market’s ever encountered.

Image: Payouts included claims related to the cancellation of the Tokyo Olympics
“It is very substantial.
“The good news, I think, is that we are paying out.
“There are times when we have got to stand up and look after our customers – and that’s our priority.”
Mr Neal said that around two-fifths of payouts related to COVID-19 were to cover the cancellation of events – ranging from individuals cancelling their wedding right up to the postponement of the 2020 Tokyo Olympic Games.
He said a further quarter had come from claims where customers had either taken protection against the pandemic itself or against foreclosure of their business.
The remainder had come across a range of insurance products but particularly on credit and financial lines.

Image: Lloyd’s chief executive John Neal said the COVID claims were ‘very substantial’
In terms of geography, he said COVID-related claims had broadly reflected where Lloyd’s does its business, with just over half of all claims coming from the United States and a sixth coming from the UK.
A further 7% came from the rest of Europe and the remainder from the rest of the world.
Mr Neal said he was confident about the assumptions underpinning the forecast for a total COVID-related payout of £5bn.
He said those assumptions included a second wave of the virus.
Mr Neal added: “Our thinking really runs through what happens quarter on quarter.
“So we paid £2.4bn or assumed that the total cost will be £2.4bn [in the first half].
“After recovering £2bn from reinsurance in the first half and, we’ve got money set aside, roughly £600m, for what we think is coming in the second half of the year.
“So far, we’ve been pretty accurate in calling the total value of the loss and the cost of the claims.
“So we’re confident in the numbers that we’ve reported today and the monies we’re setting aside.”

COVID-19: Britons urged to return to office

One of the main strengths of the Lloyd’s market, historically, is the way in which people are able to transact face to face.
That was interrupted when, at the start of the pandemic, Lloyd’s closed the underwriting room at its world-famous headquarters, designed by the architect Richard Rogers, on Lime Street.
The underwriting room reopened at the beginning of the month but Mr Neal said the return to work was only happening gradually.
He added: “At its maximum, we get about 6,000 or 7,000 people in the underwriting room.
“We’re in the hundreds at the moment – we have put in place measures that allow us to be appropriately socially distanced.
“The room benefits from having escalators, not elevators, and so we can get to a capacity of 50%.
“So twice what a normal building can cope with, and we think that’s going to build through September October, but it’s hundreds here at the moment – probably building to a new capacity, for the time being, of 2-3,000.”

The biggest fall in employment for a decade has seen fears spread of a new recession.

He said the market had installed digital capability allowing brokers and underwriters to connect face to face even if only one of them was physically present in the Lloyd’s Building.
Mr Neal said the market had not been denuded by the fact that brokers and underwriters had not been able to meet face to face.
He added: “The good news is that we’ve been able to work, but it’s just harder and activities just take longer without some face to face connection.
“So to be able to get a bit of the face to face connection back, and combine it with some of the digital capabilities we’re talking about, is perfect.
“Face to face definitely has a value – but getting that connected with a digital capability, and getting the two to work together, is perfect.”

‘Pandemics are not included’ – insurance industry

The huge COVID-related payouts Lloyd’s is making would have put immense strain on most business.
It was not lost on Mr Neal that they come at a time when, ironically, underwriting conditions are the best for a decade.
He said: “If you take COVID out, and the fulfilment of our obligation to our customers, the underlying performance is the best it’s been for a while.
“That reflects the effort that we’ve been in [to improve performance], and it reflects some beneficial tail winds from pricing.
“So we’re confident, as we look into 2021 and 2022, that we’re well set.”

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Along with the London Stock Exchange and the Bank of England, Lloyd’s of London is traditionally one of the three pillars of the City of London.
That such a systemically important financial institution has been able to weather the COVID storm is a reassuring sign as the Square Mile braces itself for the potential upheaval of Brexit.

Portugal and Hungary are being added to England and Northern Ireland’s quarantine list, meaning any travellers arriving from 4am on Saturday will have to isolate for two weeks.
The restriction will not apply to travellers returning from Portuguese island Madeira and the Azores.

French Polynesia and Reunion have also been added to the list of countries from which travellers to England and Northern Ireland will have to quarantine for 14 days, which will also be enforced from early Saturday morning.
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Image: Those coming to the UK from Sweden will no longer need to isolate
However, those arriving in England and Northern Ireland from Sweden from Saturday morning will no longer need to isolate after a so-called “travel corridor” was established.

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Transport Secretary Grant Shapps announced the latest changes to England’s quarantine measures as he hailed how “enhanced data” meant the government now has “the capability to assess islands separate to their mainland countries”.

He also reminded all travellers to the UK they must complete a Passenger Locator Form prior to entry.

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“This is vital in protecting public health and ensuring those who need to are complying with self-isolation rules,” he posted on Twitter.
“It is a criminal offence not to complete the form and spot checks will be taking place.”

Portugal added to England’s quarantine list

The Portuguese foreign ministry has said it “regrets” the decision to remove its mainland from its safe travel list.
Wales and Scotland have also made changes to their travel lists, both removing Hungary and Reunion as safe destinations for travellers, requiring arrivals from those places to quarantine from 4am on Saturday.
Wales and Scotland also now deem Sweden a safe place to travel to.
It comes a week after England made no changes to the travel corridors – but Wales and Scotland both took different approaches, sparking anger and confusion from some holidaymakers.
Sky News reporter Annie Green is in the Algarve, on Portugal’s south coast, and said many British holidaymakers were expecting the decision to be made this week.
However, some described it as “ridiculous”.
“We can work from home” one couple told Sky News. “But it’s our daughter who now can’t go to college which is the biggest issue”.

The rule of six – here’s what you can and can’t do in England from Monday

Another couple said they felt lucky as, unlike others, they are able to work from home.
Last Thursday, Wales added Portugal to its quarantine list – but excluded the Azores and Madeira – while Scotland took a blanket approach to the whole country.
Some tourists had been expecting England to do the same, cutting short holidays and forking out hundreds of pounds for early flights home, given the coronavirus infection rate was as high as 23 per 100,000 people.

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Ministers say countries where the figure is higher than 20 per 100,000 are at risk of being added to the list – but at the start of this week the UK tipped over that threshold itself.
The biggest restrictions since the first COVID-19 lockdown have been announced in response, significantly cutting the maximum number of people able to gather legally.
Changes have been made to England’s quarantine system too, so now islands can be treated separately from whole countries.
Mr Shapps made the announcement on Monday, and at the same time added seven Greek islands popular with sun-seeking Britons to the quarantine list.