From Russia, with concern

Written by Javier Maquieira, Associate

Edited by Kevin Pringle, Partner

Good morning,

Before lockdown became a reality in countries across the world, I wrote here about Vladimir Putin’s plans for further tightening his grip on power. A coronavirus pandemic later, and the Russian president’s authority is being questioned.

It is now clear that Putin and the regional governors he has tried to use as scapegoats underestimated the impact of Covid-19 on the country’s health and economy. To the rest of the world’s astonishment, Russian authorities insisted throughout most of March that the infection rate was low, claiming they would be able to suppress the virus rapidly.

Even in a speech given on 19 April to celebrate Orthodox Easter Sunday – when 42,000 new infection cases had been reported and lockdown measures implemented – Putin assured Russians that the “situation is totally under control” as he trumpeted the country’s “healthy, strong economy”.

His boasting tone was all gone by the time lockdown was extended and almost a third of global oil demand – Russia’s lifeblood – was wiped out.

Yesterday, the country reported the third consecutive day of more than 10,000 new coronavirus cases. Although Kremlin officials have been projecting the outbreak peak to be followed by a phased opening of the economy, the latest rising numbers could see current lockdown restrictions extended well into the summer if Russians don’t abide by the government’s restrictions.

On top of the severe economic impact that lockdown is expected to have on the population, the plummeting of global oil prices is bad news for Russia’s oil-dependent economy and budget. Even when some of the budget shortfall could be covered by the $150bn of oil revenues funnelled into the National Wealth Fund, finance minister Anton Siluanov has warned that Russia could burn through almost half its savings by the end of the year.

Politically speaking, Putin has lost in popularity, too. A new survey by Levada-Center found that 46% of respondents thought the Russian government had responded adequately to the crisis. The same pollster revealed that the president’s approval rating had dropped to 63%, a level not seen since 2013. Not to talk about the anti-Putin protests taking place online.

With the referendum that could have seen him rule for another two presidential terms cancelled and a spectacular Victory Day parade reduced to a video address, Putin’s autocratic aura may be at least dimming, even as his era continues


Figures by the Office for National Statistics (ONS) and Reuters revealed that more than 32,000 people have died from the coronavirus in the UK, making it the country with the highest death toll in Europe. Although it exceeds the death toll of 29,029 in Italy – until now Europe’s worst-hit country – Italian figures do not include suspected cases.

Donald Trump confirmed that the coronavirus task force would be disbanded within weeks. The US president said during a visit to a mask-manufacturing plant in Phoenix that “Mike Pence and the task force have done a great job” but that the White House was now looking at setting up a new group tasked with planning safety and opening. He also insisted that the mission was still not accomplished and acknowledged a human cost to his plans of reopening the economy.

The leading epidemiologist from Imperial College London, Professor Neil Ferguson, resigned from his position as member of the government’s scientific advisory group (SAGE) after breaking Covid-19 lockdown restrictions. In his resignation letter, Ferguson said: “I made an error of judgement and took the wrong course of action.”

Business and economy

Virgin Atlantic announced that it would cut a third of its staff to survive the Covid-19 crisis. The British airline will axe up to 3,150 jobs and close its London Gatwick operations as it scales back and moves leisure flying to London Heathrow. The decision comes after other industry players such as British Airways, Ryanair, SAS, and aerospace manufacturer Rolls-Royce announced similar redundancy plans.

Airbnb plans to lay off 25% of its employees globally as soon as next week in an attempt to stem losses caused by the pandemic. The accommodation booking company, which is scaling back its effort to attract high-end travellers, forecasts 2020 revenue to be less than half what it took in last year.

Marks & Spencer has launched its first home delivery service, allowing customers to order M&S food and household products through Deliveroo. The retailer said deliveries would take 30 minutes and incur a £4.99 fee. The launch comes four months ahead of M&S’s partnership with online grocer Ocado and after rival Sainsbury's introduced the one-hour delivery service Chop Chop.

Columns of note

Mohamed El-Erian summarises in theFinancial Times his three takeaways from the earnings season: (i) there is more dispersion between winners and losers, (ii) balance sheets are largely dominating income statements in the minds of investors, and (iii) visibility over future profits is being obscured to an unprecedented degree. He concludes that policymakers should look at designing post-relief measures that directly address the decline in productivity while investors consider the merits of greater portfolio differentiation and better risk management. (£)

Writing inThe Herald, Iain Macwhirter argues that despite the insistence of some commentators that the UK has been reunited amid the Covid-19 pandemic, Scotland will continue to demand greater control over its own affairs. He adds that if and when the next phase of the coronavirus response arrives, the Scottish Government will not be following a policy dictated by Westminster. 

Source: The New Yorker


What happened yesterday?

London stocks finished higher on Tuesday on the back of a rise in oil prices. The FTSE 100 ended the session up 1.66% at 5,849.42, while sterling was stronger both against the dollar by 0.07% at $1.2452 and versus the euro by 0.67% at €1.1485.

In equity markets, Shell (+5.06%) and BP (+6.09%) rallied, underpinned by the gains in the oil market that have lifted crude oil off decades lows, with the West Texas Intermediate last up 18.49% at $24.16 per barrel and Brent crude adding 11.51% to $30.33.

Meanwhile, Carnival announced it would resume its P&O Cruises operations in Australia and New Zealand after 31 August, reversing earlier gains to close down 0.39% after falling sharply on Monday.

In the US, stocks closed higher as investors bet on the nation’s economy opening up and welcomed further recovery in oil prices. The Dow Jones Industrial Average was up 0.56% at 23,883.09, while the S&P 500 was 0.90% firmer at 2,868.44 and the Nasdaq Composite saw out the session 1.13% stronger at 8,809.12.

What's happening today?


Vertu Motors


Alpha Fx Group., Ascential, Caledonia Min, Clarkson, Dairy Farm Intl, Dunedin, Emis, Glaxosmithkline, Gran Tierra,, Mandarin, Mpac Group Plc, Ocado, Perm Tsb Grp, Princess Priv, Stand.chart., Tclarke, Renewables, Tt Electronics

Int. economic announcements

(10:00) Retail Sales (EU)

(12:00) MBA Mortgage Applications (US)

(15:30) Crude Oil Inventories (US)

Source: Financial Times

Did you know?

In Spain, the beer brand Corona was renamed Coronita (literally, ‘little crown’), as renowned winemaker Bodegas Torres has owned the trademark for ‘Coronas’ since 1907. The packaging is otherwise unchanged.

Parliamentary highlights

House of Commons

Oral questions

Women and Equalities

Prime Minister's Question Time


To approve a Statutory Instrument relating to the Draft Census (England And Wales) Order 2020 - Chloe Smith

House of Lords

Oral questions

Ensuring those accommodated by the National Asylum Support Service are able to follow social distancing guidelines during the COVID-19 pandemic - virtual proceeding - Baroness Doocey

Government support to African countries in relation to the COVID-19 pandemic - virtual proceeding - Lord Oates

Government action to protect the privacy of users and provide oversight of the NHS COVID-19 contact-tracing app - virtual proceeding - Lord Clement-Jones

Announcement by the government of Israel of its intention to commence discussions on applying Israeli sovereignty to Jewish settlements and other territory in the occupied West Bank - Lord Campbell of Pittenweem


Case for increasing income equality and sustainability in the light of the recent health emergency - virtual proceeding - The Lord Archbishop of York

Windrush Compensation Scheme - virtual proceeding - Baroness Williams of Trafford

Scottish Parliament

First Minister’s Questions

Stage 3 Proceedings: Consumer Scotland Bill

Approval of SSIs (if required)