London pre-open: Stocks to fall as UK GDP slumps 20.4%

London stocks were set for more losses on Friday following a dire session on Wall Street amid growing concerns about a second wave of Covid-19 and after data showed the UK economy contracted by a record 20.4% in April.

The FTSE 100 was called to open 30 points lower at 6,046.

Data released earlier by the Office for National Statistics showed UK GDP fell 20.4% on the month in April as the lockdown took its toll, versus consensus expectations for a 20% decline and following a 5.8% drop in March.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The economy will take a long time to recover from the pummelling inflicted by the Covid-19 pandemic. April’s unprecedented drop in GDP extends the decline from January's peak to a gargantuan 25.2%. This collapse greatly surpasses the 6% peak-to-trough decline in GDP seen in the 2008-to-09 recession, which previously was the deepest in post-war history."

Meanwhile, concerns about a second wave of coronavirus infections - which meant US stocks suffered their worst drop in 12 weeks on Thursday - continued to plague investors.

"Reports from Texas and California, and a number of other US states, showed the recent loosening of restrictions has led to a jump in the number of new Covid-19 cases, which sparked a brutal round of selling yesterday," said CMC Markets analyst David Madden.

In corporate news, pub and restaurant operator Mitchells & Butlers said it had had agreed £250m in unsecured lending with its banks and waivers on secured loans in return for a pause on dividends until the end of the financial year to September 2021.

The company added that it currently expected to start reopening sites from July and was burning through £30m - £35m a month before debt servicing.

Informa warned revenue was likely to fall by almost a third in 2020 with physical events unlikely to run in the US until September and other markets taking time to recover from Covid-19 restrictions.

The events and publishing company forecast annual revenue of about £2bn, down from £2.9bn in 2019. More than 160 brands have cancelled events so far at a cost of about £300m, the FTSE 100 company said. Informa said it had identified more than £400m of cost savings.