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UK credit rating downgraded by Moody’s amid growth concerns | Moody’s

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Credit ratings agency Moody’s has downgraded Britain’s credit status, citing a decline in economic strength in the wake of the coronavirus pandemic and continued Brexit uncertainty.

With the government struggling to contain a second wave and ministers under pressure to sanction extra spending to protect businesses and jobs, Moody’s lowered the UK’s sovereign debt rating by one notch to Aa3 from Aa2.

The ratings agency said it expected that the public finances would worsen as a result of the pandemic, though it expected the overall debt burden to stabilise next year, leading it to drop the “negative outlook” attached to the rating to one of “stable”.

Brexit was also blamed for the weaker forecast of growth and tax receipts over the next year, despite assurances from No 10 that the UK economy will flourish whether a trade deal is secured or not before the transition period ends at the end of December.

Boris Johnson said on Friday that the UK should get ready for a no-deal Brexit outcome, but stopped short of announcing that the country would exit the trade talks.

In a damning indictment of the government’s negotiation strategy, Moody’s said its failure “to manage change in a predictable and confidence-building manner is evident with respect to the UK’s approach to Brexit, in its inability to achieve an outcome which meaningfully replicates the benefits of EU membership and in its approach to implementing the agreement reached with the EU to date”.

“Even if there is a trade deal between the UK and EU by the end of 2020, it will likely be narrow in scope, and therefore the UK’s exit from the EU will, in Moody’s view, continue to put downward pressure on private investment and economic growth,” the agency added.

The ratings downgrade follows a string of reports on the government’s finances that have shown debts rising and tax receipts falling over the next year.

The government’s stricter measures to tackle the pandemic have heaped more pressure on an economy already weighed down by Brexit uncertainties.

Earlier this week, the Institute for Fiscal Studies said that by the middle of the decade, the public finances could suffer a £200bn shortfall that the government will need to fill by raising taxes, cutting spending or by borrowing further funds.

Rishi Sunak has been urged by the International Monetary Fund to protect the economy from further damage by increasing borrowing, making use of ultra-low interest rates offered to so-called safe haven countries like the UK.

But the downgrade is likely to persuade Treasury officials that they need to be careful before agreeing to increase the deficit further, possibly triggering a further downgrade.

The UK lost its status as one of the world’s triple-A rated nations in 2016 and was further downgraded in 2017 as it struggled to bring down its debts despite six years of austerity.


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Restaurants see new Covid restrictions as U.S. cases hit record high

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Restaurants are facing a new wave of restrictions, posing yet another obstacle in their attempts to stay afloat and recover from the coronavirus pandemic.

New daily Covid-19 cases in the United States hit a record high of 88,521 on Thursday, according CNBC analysis of data from Johns Hopkins University.

“We’re starting to find ourselves on a steep slope of the epidemic curve, so I think you’re going to see cases accelerate,” former Food and Drug Adminstration Commissioner Dr. Scott Gottlieb said on CNBC’s “Squawk Box.” “There’s about 15 states where the positivity rate’s above 10%, the reproduction number is greater than one in all 50 states right now.”

The positivity rate shows the percentage of tests for the coronavirus that come back positive, while the reproduction number is a way of gauging Covid-19’s ability to spread. Both of these numbers suggest a rapid increase ahead.

The surge in cases has led some areas of the country to reimpose tighter restrictions on dining. Indoor dining is once again banned at Chicago restaurants, starting Friday. In Denver, restaurant capacity has been slashed from 50% to 25% and last call for alcoholic drinks is now 10 p.m.

In Europe, which is facing a second wave of infections, country-wide dining mandates are happening once again. France is re-entering lockdown, which includes temporarily shuttering businesses considered nonessential, like bars and restaurants. Germany’s eateries and bars will shut for one month, starting Nov. 2, in a partial lockdown.

While the pandemic has stretched on, restaurants and their out-of-work employees have been left waiting for another stimulus package from the federal government. Loans given to eateries through the Paycheck Protection Program have since run out, and September’s unemployment rate of 7.9% means many consumers don’t have the cash to spare on dining out.

Chain restaurants are bouncing back more quickly than independent establishments, but the uncertainty around the surge of Covid-10 cases makes forecasting their recovery even more difficult.

Starbucks, for example, said Thursday that 63% of its U.S. cafes have limited seating. The coffee chain expects to return to same-store sales growth by the end of its fiscal second quarter in March, but that forecast assumes that cafe seating and operating hours will near full capacity by that time.

Some full-service restaurant companies, like Texas Roadhouse and Darden Restaurants, have tied their sales recovery directly to loosened dining restrictions.

And cold weather means that many restaurants that have relied on patio dining will take a hit. A Bank of America survey of 1,000 consumers found that 60° Fahrenheit is the cut-off temperature for most diners. Cheesecake Factory‘s reliance of outdoor dining led the bank to downgrade its stock in August.

Taking the new restrictions in stride will be easier for fast-food chains, whose reputation for convenience and low prices helped the sector rebound faster than the broader industry. Yum Brands’ Taco Bell, for example, saw 30 million more customers order their food via drive-thru lanes during the third quarter compared with the same time a year ago.

“We know it’s a fluid environment, and that as we’re seeing in Europe, it’s just not an environment where we can predict and guide for 2021,” Yum CEO David Gibbs told analysts on Thursday. “We do have confidence in our team based on how they recovered so far, and that whatever thrown our way, we’ll be able to pivot to it.”

And for the rare restaurant that has thrived during the pandemic, new restrictions don’t pose a threat. Wingstop has seen its sales surge during the pandemic, despite its dining rooms remaining closed for more than seven months. The chicken wing chain is instead relying on its tech investments and popularity with customers ordering food delivery.

“Highlighting the strength of our business model, we’ve experienced positive results throughout the pandemic, with Q3 2020 same-store sales growth totaling 25.4%,” spokesperson Megan Sprague said in a statement to CNBC.


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McRib returns to McDonald’s nationwide for the first time since 2012

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McDonald’s McRib

Source: McDonald’s

Starting Dec. 2, McDonald’s McRib is returning to menus nationwide for the first time since 2012.

The limited-time pork sandwich is brought back every year but is notoriously hard to find. McDonald’s even released its own McRib locator app to help customers locate restaurants that sold it.

The fast-food giant brought the McRib to 10,000 of its 14,000 U.S. restaurants last year in its biggest rollout since 2012. The item has been appearing on McDonald’s menus in the U.S. since 1982, helping the chain attract customers to its restaurants during the holiday season.

The nationwide launch this year comes as McDonald’s U.S. sales are rebounding from the coronavirus pandemic. Earlier in October, the chain said same-store sales in its home market rose nearly 5% in its latest quarter. The popularity of the McRib could fuel even higher sales growth, although a resurgence of Covid-19 cases could hinder McDonald’s recovery.

Shares of McDonald’s, which has a market value of $162 billion, have risen 6% so far this year. The stock was down nearly 2% late-morning Friday amid a broader market sell-off.


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Dr. Scott Gottlieb says do not throw away months of Covid sacrifice

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