Good morning,
In the early hours of this morning, European leaders reached an agreement on the long-awaited recovery fund to aid with the economic fallout from Covid-19. The €750bn package will be made up of €390bn of grants and €360bn in low interest loans; with the largest of the grants going to Italy and Spain, who were worst hit by the outbreak. Tempers flared at times, as the “frugal four” of Austria, Denmark, the Netherlands and Sweden threatened to derail the package, with French President Emmanuel Macron reportedly saying they were putting the whole project of the European Union in danger. Despite this, the leaders have given individual statements, reflecting on how historic this deal is in terms of size and ambition to support each other.
In the UK this morning, the Office for National Statistics released the borrowing figures for the UK. June stood at £35.5bn, compared to a figure of £44.47bn during May and the worst of the Covid pandemic. Despite the significantly large amount, it reflects the ongoing recovery; as employees are gradually being taken off the furlough scheme and moving back into employment. Couple this with retailers, restaurants and bars opening, the government saw an increase in taxes being paid in for the first time since the pandemic hit, which should offer some relief to the Exchequer. For the second quarter of the year, the UK government borrowed £127.9bn, which is over double the amount it planned to borrow this year.
Risk sentiment is also back on, as Oxford University announced they have potentially found a breakthrough in a safe vaccine for Covid. In a small trial of 1,077 participants, the results show that the vaccine creates antibodies to fight the virus. Although there is a long way to go, the positive signs could be what is giving stock markets a boost, in turn, taking sterling with it.
Have a great day. 
Author: Jack Nicholls, Relationship Manager
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