Opinion articles of the week:
African nations will be the unseen victims of Brexit. Click here for more information.
Analysts believe one key data point shows why the recent UK interest rate cut was essential. Click here for more information.
Will Brexit be the beginning of the end for the European Union? Click here for Bloomberg’s analysis.
1. UK ECONOMY
A rise in consumer spending helped the UK economy power ahead in the months running up to the EU referendum, with little sign the vote hurt investment or the wider economy, official statisticians have said.
The Office for National Statistics confirmed a previous estimate that GDP growth picked up to 0.6% in the second quarter from 0.4% in the first quarter.
The figures will be a boost to the chancellor, Philip Hammond, who has repeatedly asserted that Britain entered the post-referendum period from a position of strength. But economists said the second quarter would come to represent a high point for this year, with growth set to grind to a halt over coming months as the EU vote hurts business confidence. (The Guardian)
Bloomberg questions whether GDP has now become an irrelevant economic metric. Click here for the debate.
2. THERESA MAY TO TRIGGER ARTICLE 50 WITHOUT COMMONS VOTE
Prime Minister Theresa May will not hold a parliamentary vote on Brexit before triggering Article 50 and opening negotiations with the EU.
May will invoke Article 50 without consent of parliament, in a move that will be hailed by eurosceptics.
Those opposed to leaving the EU have said that the referendum is legally only advisory and the approval of parliament is necessary to formally take the UK out of the currently 28-member bloc.
The Prime Minister has said time and time again that “Brexit means Brexit” and a Downing Street source said: “The Prime Minister has been absolutely clear that the British public have voted and now she will get on with delivering Brexit.”
The Telegraph reported that May has consulted government lawyers who have told the Prime Minister she has the executive power to invoke Article 50 and begin the formal process of exiting the EU without a vote in Parliament. (City A.M)
In October the Supreme Court will consider whether Parliament should hold a vote on whether to trigger Article 50 will be heard by the UK Supreme Court. (Business Insider)
3. UBER SELF-DRIVING CAR LAUNCHES IN PITTSBURG
Uber’s first fleet of self-driving cars were spotted in the streets of Pittsburgh on Friday. The company first announced the rollout in early August, along with a $300 million partnership with Volvo to develop the autonomous vehicles.
While the custom Volvo XC90 SUVs do drive themselves, humans will still reside at the wheel of the vehicle, and likely offer to charge your phone or at least hand you the AUX chord.
Bloomberg reports that the deal isn’t exclusive to Volvo as Uber “plans to partner with other automakers as it races to recruit more engineers.” (The Independent)
For more on the introduction of these vehicles click here. (BBC News)
Uber is however set to lose the more money than any other tech company in history though after it loses $1.2 billion in 6 months. Click here for more. (The Independent)
4. APPLE POTENTIAL OWE $19 BILLION IN US TAXES
The European Commission is expected to levy a judgment against Apple in the next few months that could total in the billions of euros. JPMorgan has estimated that Apple could be on the hook for as much as $19 billion — or about 17 billion euros — the Financial Times reports.
The commission is accusing Apple of striking a sweetheart tax deal with Ireland, in which the iPhone maker would move its profits to wholly owned Irish subsidiaries to reduce its corporate taxes.
Apple has one major defender in its corner, though: the US Treasury Department and, by extension, the Obama administration. The Treasury released a white paper on Wednesday, commissioned by Treasury Secretary Jack Lew, that did not mince words while defending American companies, including Apple, Starbucks, and Amazon.
It says that the Brussels-based investigation of Apple is “supranational” and essentially accused the European Commission of executing a power grab and unfairly targeting American companies. (Business Insider)
5. CHEMCHINA BUYS SYGENTA FOR $43 BILLION
China Inc.’s global ambitions cleared a big hurdle after the U.S. national-security regulator approved China National Chemical Corp.’s planned $43 billion takeover of Swiss seed giant Syngenta AG.
The decision in favour of China National Chemical, or ChemChina, comes amid growing opposition to Chinese investment from Europe to Australia. If completed, it would be China’s largest overseas acquisition to date.
The industry had been watching for a decision from the Committee on Foreign Investment in the U.S., or CFIUS—a government body with the power to block deals it deems a threat to the nation’s security—because about a quarter of Syngenta’s sales come from North America.
While analysts and Chinese industry officials hailed the decision as a major step forward for what would be a landmark Chinese takeover, the deal still faces potential roadblocks from regulators in the European Union.
Chinese companies are on a spending spree—signing $159.2 billion in overseas deals so far this year, surpassing the record amount in the full year 2015, according to Dealogic. The shopping push by China comes amid urgency inside its labyrinth of state-owned enterprises to diversify their sales streams as China’s economy slows. ChemChina’s deal for Syngenta marked a bold move onto the global stage by the Chinese company, whose ambitious founder and chairman, Ren Jianxin, has for years looked to raise its international profile. The company also said last year it was acquiring Italian tire maker Pirelli & C. SpA for around $7.7 billion.
The Chinese chemicals industry celebrated the U.S. decision, which was announced Monday in a joint statement by the companies. The deputy secretary-general of the state-backed China Petroleum and Chemical Industry Federation, Pang Guanglian, described the U.S. approval as a key hurdle to closing the deal. (Wall Street Journal)
6. WHATSAPP TO SHARE USER DATA WITH FACEBOOK
WhatsApp is to start handing over user information to parent company Facebook, in a huge reversal of its previous policies.
The company has long been committed to ensuring that WhatsApp user data remains private – telling users when it was acquired by Facebook that “Respect for your privacy is coded into our DNA, and we built WhatsApp around the goal of knowing as little about you as possible”. But it has just announced that it will be making a change to those policies, allowing it to hand over information about its users to parent company WhatsApp.
The new changes to the terms and conditions allow Facebook to see the phone number that people use with their WhatsApp account. That gives them a way of tracking people that is shared across the two sites, helping Facebook gather data for ads.
WhatsApp says that the change has been made to help make the experience better for its users. But it might be a sign that the panic that set in with many people when Facebook bought WhatsApp – that private information and messages are going to be used for ads, which is Facebook’s primary business. (The Independent)
Regulators are “looking into” plans for WhatsApp to share user information with Facebook. Users launching the app today were told that agreeing to the new policy would see their account information shared with the “Facebook family of companies”, which includes Instagram and virtual reality tech company Oculus.
Information Commissioner Elizabeth Denham said the changes would affect “a lot of people”, with some thinking it will mean “a better service” and others “concerned by the lack of control”.
“Organisations do not need to get prior approval from the ICO to change their approaches, but they do need to stay within data protection laws. We are looking into this.”
7. VOLSWAGEN SETTLES DISPUTE WITH SUPPLIERS
Volkswagen has settled a major dispute with suppliers that had disrupted car production at more than half its German plants and threatened to derail its recovery following the diesel emissions scandal.
The German car maker said it had resolved its differences with CarTrim, which makes seats, and ES Automobilguss, which makes cast iron parts for gearboxes, after more than 20 hours of talks that ran through the night. The suppliers were seeking compensation for lost revenue they said ran into tens of millions of euros, after VW cancelled a contract.
The dispute affected about 28,000 workers at six of the car maker’s ten German factories on Monday when it halted production of the top-selling Golf and Passat models, as well as assembly of engines, gearboxes and emissions systems. Volkswagen said on Tuesday that the suppliers had agreed to re-start deliveries and that the affected plants would gradually resume production.
Analysts at UBS had estimated that a one-week production halt at the carmaker’s Wolfsburg headquarters would cost it €100m (£86m) in profit and have a knock-on effect on other suppliers.
It comes as Volkswagen is seeking to recover after the admission last year that it had installed illegal software that deactivated pollution controls on 11 million cars worldwide. Last month, it set aside an additional €2.2bn (£1.9bn) to cover the cost of the scandal, taking the total provision to more than €18bn (£15bn). It has had to pay for car recalls and buy-backs as well as a multi-billion dollar US legal settlement. (Sky News)
8. UK CAR INDUSTRY ON THE UP
Car production has increased for the 12th month in a row, with over a million vehicles built in the UK so far this year, new figures show. Output rose by 7.6% in July compared to the same month last year, to 126,566, amid double digit growth for home and export markets, the Society of Motor Manufacturers and Traders (SMMT) said.
The number of cars built totalled 1,023,723 in the first seven months of the year, the first time the one million milestone was reached in July since 2004. Exports were up by 6% last month, with a 14% rise in output for the domestic market. More than three-quarters of a million cars built in the UK this year were for overseas markets – almost four out of five of all cars manufactured.
Mike Hawes, SMMT chief executive, said, “UK car production in 2016 is booming, with new British-built models in demand across the world.
“Manufacturers have invested billions to develop exciting new models and produce them competitively here in the UK… future success will depend on continued new car demand and attracting the next wave of investment so Britain must demonstrate it remains competitive and open for business. (Business Insider)
9. RYAN LOCHTE
Brazilian police charged American swimmer Ryan Lochte on Thursday with filing a false robbery report over an incident during the Olympics in Rio de Janeiro. A police statement said Lochte would be informed in the United States so he could decide whether to introduce a defense in Brazil..
Lochte initially said that he and fellow swimmers Jack Conger, Gunnar Bentz and Jimmy Feigen were robbed at gunpoint in a taxi by men with a police badge as they returned to the Olympic Village from a party on 15 August. However, security video suggested the four actually faced security guards after vandalizing a gas station restroom.
Lochte left Brazil shortly after the incident. Three days later, local authorities took Conger and Bentz off an airliner heading to the United States so they could be questioned about the robbery claim. They were later allowed to leave Brazil, as was Feigen, after he gave testimony. Feigen, who initially stood by Lochte’s testimony, was not charged.
Lochte has since acknowledged that he was highly intoxicated and that his behavior led to the confrontation. It is not clear from the video whether a gun was ever pointed to the athletes. Under Brazilian law, the penalty for falsely filing a crime report carries a maximum penalty of 18 months in prison. Lochte could be tried in absentia if he didn’t return to face the charge.
The United States and Brazil have an extradition treaty dating back to the 1960s, but Brazil has a long history of not extraditing its own citizens to other nations and US authorities could take the same stance if Lochte is found guilty.
The charges in Brazil raise questions about the future for Lochte, who is planning to take time off from swimming but wants to return to compete in the 2020 Tokyo Olympics. He has 12 Olympic medals, second only to Michael Phelps among US male Olympians. . (The Guardian)
Four major sponsors of Ryan Lochte dropped him on Monday. Speedo, Polo Ralph Lauren, and Gentle Hair Removal and mattress maker Airweave all said they would be cutting ties with Lochte after the aforementioned incident.
Speedo said “we cannot condone behavior that is counter to the values this brand has long stood for”. Ralph Lauren said it had signed Lochte to an endorsement deal specifically for the 2016 Games and the company will not be renewing the contract.
Likewise, Airweave — which provided mattresses for Team USA in Rio — said its agreement with Lochte was “in support of the Rio 2016 Olympic Games” and the company has decided to end the partnership.
But Lochte’s photos were still all over the website of Gentle Hair Removal, which made Lochte a figurehead of their advertising campaigns since signing the athlete in April. But Gentle Hair Removal’s parent company, Syneron-Candela (ELOS), announced Monday that it’s parting ways with Lochte. (CNN)
10. FRANKIE AND BENNY’S TO CLOSE 33 UK STORES
The struggling owner of Frankie & Benny’s and Garfunkel’s has swung to a loss and announced that it is shutting 33 under-performing sites as part of strategic review. The Restaurant Group booked pre-tax losses of £22.5 million for the first half of the year as it took a hit from a £59.1 million exceptional charge linked to the store closures and writedowns.
The store closures will affect up to 1,000 jobs, although it is understood that the company will redeploy the vast majority in other outlets. Like-for-like sales fell 3.9% as the group, which has issued a string of profit warnings, flagged a “challenging trading period”.
The Restaurant Group admitted it has lost value-conscious customers at Frankie & Benny’s after “significant price increases”. The firm pledged to “look at the pricing architecture of the menu” and “reinvigorate the value offer” in a bid to attract more families to its outlets. The next phase of the review will look at stablemates Chiquito, Coast To Coast, Joe’s Kitchen and Garfunkel’s. (Business Reporter)