Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
UK mortgage lending slumps to record low in April
Mortgage lending in the UK fell to a record low due to the coronavirus crisis in April, according to new figures from the Bank of England.
Just 15,848 mortgages were approved for house purchases in the month, around 80% lower than the level seen before the pandemic swept the country, the bank said.
“Weakness in the housing market associated with COVID-19 was reflected in weak mortgage market activity in April,” the bank’s latest Money and Credit report said.
The number of approvals in April — the lowest since the bank started collecting this data in 1993 — was around 50% lower than in the weakest month for mortgage lending during the financial crisis.
“Unsurprisingly, mortgage approvals went off a cliff in April as lockdown put the economy on hold,” said Andrew Montlake of mortgage broker Coreco.
“Since the lockdown was eased in mid-May we have seen a sharp increase in enquiries, reflecting the significant pent-up demand in the market right now.”
The Bank of England also said on Tuesday that households made a net repayment of £7.4bn ($9.3bn) in consumer credit in April.
UK house prices saw their steepest monthly fall in May since the global financial crisis more than a decade ago, new figures suggest.
Lender Nationwide’s closely followed house price index showed the average UK property price drop 1.7% between April and May as the coronavirus lockdown dramatically curbed activity.
The pandemic has brought an abrupt end to the recovery in property prices and activity since prime minister Boris Johnson’s election victory in December.
Market activity slowed to a trickle for much of the lockdown as the UK government urged against house moves, with many estate agents shutting their doors and physical viewings and valuations off the cards.
The government lifted restrictions earlier in May, but the severe economic downturn is taking its toll on the market and prices are widely expected to fall further.
Gross domestic product (GDP) in the European Union’s second largest economy will shrink by 11% this year due to the coronavirus pandemic, according to France’s finance and economy minister Bruno Le Maire.
This is a greater contraction than the previously expected -8%. For comparison, the German economy is expected to shrink by around 6.6% in 2020.
The country was hard hit by the pandemic and, while the government took measures to protect the health of the French people, “the economy practically stalled for three months, and we will pay for it with growth," Le Maire told RTL radio station.
France has so far reported 189,348 cases of coronavirus and 28,836 COVID-19 deaths, according to the latest data from Johns Hopkins University. Its death toll is among the highest in Europe.
French GDP shrunk 5.3% in the first quarter, and the contraction is expected to be much more drastic for the second quarter, when extreme lockdowns were in full force.
The number of people being furloughed on the government’s job retention scheme continues to rise, even as the UK begins to lift some restrictions on businesses.
HMRC tweeted on Tuesday that 8.7 million people had been furloughed by 1.1 million businesses across the UK as of Sunday. The programme has so far cost the UK government £17.5bn.
The new figures mean 300,000 more people have been placed on furlough in just the last week. The rise comes despite some easing of lockdown restrictions.
Open air markets and car showrooms were allowed to reopen from Monday (1 June), while non-essential retailers like clothes shops can start to re-open from 15 June.
The job retention scheme was announced in March as a way to prevent the COVID-19 lockdown sparking a wave of mass layoffs.
Under the terms of the scheme, the Treasury pays 80% of staff salaries to a maximum of £2,500 per month.
European stocks rose on Tuesday despite continued civil unrest in the US, as investors weighed signs of a looming economic recovery from the coronavirus crisis.
Slowing infection rates and reasonably upbeat economic data were contrasted with scenes of protest outside the White House, where president Donald Trump gave a speech threatening to use the military to quell violence across the US.
What to expect in the US
Futures were pointing to a positive open for US stocks on Tuesday.
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