Below are our top 10 stories that you need to know about. Be sure to check our twitter page for regular posts of important headlines. Click on the links for full stories.
Opinion articles of the week:
The Economist claims there is good reason to be worried about the global economy. Click here for the debate.
Why borrowing in dollars is is central to the business cycle in developing countries? Click here for more.
BlackRock, the world’s largest asset manager, has warned against Britain leaving the European Union, claiming it would come with “big risk” and “little reward”. Click here for more.
1. BRAZILIAN ECONOMY
Brazil’s GDP fared worse than almost any other major economy in 2015, contracting by 3.8%. Economic growth in the world’s seventh-largest economy has fallen sharply in recent months. This was due partly to low commodity prices and sluggish global growth.
But political paralysis has hampered Brazil’s efforts to tackle its economic problems, including a budget deficit that has reached 10.8% of GDP. President Dilma Rousseff is trying to head off the opposition’s efforts to impeach her over alleged accounting irregularities, which means she cannot afford to alienate supporters in her Workers’ Party by cutting spending or raising taxes.
For more analysis on Brazil’s economy click here. (BBC News)
China aims to lay off 5-6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two reliable sources said, Beijing’s boldest retrenchment program in almost two decades.
China’s leadership, obsessed with maintaining stability and making sure redundancies do not lead to unrest, will spend nearly 150 billion yuan ($23 billion) to cover layoffs in just the coal and steel sectors in the next 2-3 years.
The overall figure is likely to rise as closures spread to other industries and even more funding will be required to handle the debt left behind by “zombie” state firms.
The term refers to companies that have shut down some of their operations but keep staff on their rolls since local governments are worried about the social and economic impact of bankruptcies and unemployment. Shutting down “zombie firms” has been identified as one of the government’s priorities this year, with China’s Premier Li Keqiang promising in December that they would soon “go under the knife”. (Reuters)
3. FACEBOOK TAXES
Facebook Inc. will stop routing advertising sales of its largest U.K. clients through Ireland, increasing its British tax bill by millions of pounds in a bid to improve transparency after facing criticism on tax avoidance.
Changes will be put in place in April, with the higher tax bill to be paid next year. Smaller business sales, where advertising is booked online with no staff intervention, will still be routed through the company’s Ireland offices, which will remain the firm’s international headquarters. On Monday Facebook will inform its larger U.K. customers that from April they will receive invoices from Facebook U.K. and not Facebook Ireland.
Facebook received widespread criticism in October after the social network giant was revealed to have paid only £4,327 ($6,128) in taxes for 2014, less than the average U.K. worker. Google Inc. has also faced controversy over its U.K. tax affairs, settling a 130 million-pound payment in back taxes in January.
The overhaul of tax structure comes after increasing global pressure on its tax affairs and as a reaction to changing tax rules, the BBC, which first reported the news said, citing unidentified sources. Last year the U.K. implemented a new Diverted Profits Tax that assesses a 25 percent rate on the profits of companies found to have avoided U.K. tax in due to “contrived” arrangements. The current top U.K. corporate tax rate is 20 percent, and it is set to fall to 18 percent by 2020. (Bloomberg)
4. BARCLAYS DROPS OUT OF AFRICA
Barclays will sell its Africa business as part of a plan by new Chief Executive Jes Staley to simplify the bank’s structure and seek higher shareholder returns, it said after reporting a 2 percent profit drop and slashing its dividend.
The British lender plans to sell its 62 percent stake in Barclays Africa Group over the next two to three years, ending its presence on the continent after more than a century and becoming a “transatlantic” bank focused on the United States and Britain.
It would then concentrate on two divisions, Barclays UK and Barclays Corporate and International, to comply with ring-fencing regulations aimed at safeguarding its retail banking business from riskier operations. (Reuters)
For more on why Barclays is pulling out of Africa, click here.
5. SPORTS DIRECT DROPS OFF FTSE 100
Sports Direct has officially been relegated from the FTSE 100 after its market value tumbled by more than £1.5bn in just three months amid weak trading and allegations about its treatment of staff. It’s a bitter blow to the company’s founder Mike Ashley, who also owns Newcastle United, the Premier League football club currently at risk of relegation to the Championship.
It was confirmed that Sports Direct would be joined in the lower tier FTSE 250 by Aberdeen Asset Management, engineering business Smiths Group and drugs firm Hikma Pharmaceuticals. Rising to the top table in their places would be Morrisons – just three months after it was relegated – the newly-merged bookmaker Paddy Power Betfair, publisher Informa and healthcare firm Mediclinic International. The changes take effect after markets close on Friday, 18 March. (Sky News)
Royal Dutch Shell Plc is lining up assets for a $30 billion divestment program that may extend from the U.S. and Trinidad to India following its record takeover of BG Group Plc, according to people with knowledge of the matter.
Assets linked to Shell’s interests in Trinidad & Tobago and stakes in oil and gas fields in India may be on the block, two of the people said, asking not to be identified because the plans are confidential. Pipelines in the U.S. are also high on the list, they said, adding that disposal plans aren’t final and will depend on demand.
Raising money through divestments is crucial for Shell after the BG purchase wiped out more than $10 billion of its cash, prompting a credit-rating cut from Fitch Ratings Ltd. as debt-to-equity levels rose. Oil’s collapse over the past 20 months has eroded balance sheets across the industry and the outlook for a sustained market rout may hinder Shell’s efforts to find buyers for the assets. (Bloomberg)
7. MORRISONS AMAZON GROCERY TIE UP
Morrisons will supply groceries to Amazon customers in the UK under a new deal with the US online giant. The supermarket said it will supply products for the Amazon Prime Now and Amazon Pantry services.
Amazon Pantry was launched in the UK last year, escalating competition with the big four supermarkets, but did not offer fresh food. Under the new deal, Morrisons will supply fresh, frozen and non-perishable goods to Amazon customers. The expanded Amazon service will be available later this year. (BBC News)
8. WHATSAPP ENDS BLACKBERRY SUPPORT
The world of smartphones looks very different to the one WhatsApp was born in seven years ago. Today BlackBerry has approximately 1% of the market, but in 2009 it was a world-leading smartphone vendor. It made sense over the years for WhatsApp to support all the main mobile platforms in its efforts to be accessible to everyone.
Now the Facebook owned company has decided that platform ubiquity is not worth the limitations that can bring to developing new features. WhatsApp will be ending its support for all BlackBerry devices, even the most up-to-date models, at the end of 2016, the company says in a blog post. It’ll also end support for Nokia S40, Nokia Symbian S60, Windows Phone 7.1 and older version of Android, 2.1 and 2.2.
The problem isn’t just that these platforms aren’t relevant to smartphone users anymore, but limited in what they can do with forthcoming features that WhatsApp has planned, it said. (Forbes)
9. DRIVERLESS HGV’S
Driverless Lorries are to be trialled in the UK, Chancellor George Osborne is expected to confirm in his Budget speech this month.
The Department for Transport said the UK would “lead the way” in testing driverless “HGV platoons”. The technology enables vehicles to move in a group, using less fuel, it said. The Times reported trials would take place on the M6 in Cumbria later in 2016, with vehicles in convoy headed by a driver in the leading lorry. The tests would take place on a quiet stretch of the motorway, it said.
The paper said the plans could result in platoons of up to 10 computer-controlled Lorries being driven metres apart from each other. It said the chancellor was preparing to fund the trials as part of plans to speed up lorry deliveries and cut congestion. (BBC News)
10. PLASTIC BAG MAKER GOES BUST ‘DUE TO 5P CHARGE’
The introduction of a 5p charge for plastic bags in England has been blamed for a packaging firm going into administration. Forty workers have been made redundant at Nelson Packaging’s factory in Lancashire.
Managing director Michael Flynn said it was mainly due to “the English bag legislation and corresponding impact on customer and retailer demand”. He also blamed “aggressive overseas competition”.
The 5p charge for bags was introduced in England in October and followed the introduction of charges in Wales, Northern Ireland and Scotland. (BBC News)