This weeks news includes; Uber loses London private hire license, Toys ‘R’ Us files for bankruptcy protection, PwC launches US legal practice, Deliveroo posts massive loss.
Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Click on the links for full stories. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- The Independent looks at Deutsche Bank claim that Hard Brexit could lead to the next financial crisis.
- CNN explores how technology will affect employment in “Robots: Is your job at risk?
- Sky News looks at why the car industry is getting worried.
1. UBER LOSES LICENSE IN LONDON
TFL has refused to renew Uber’s private hire license to operate in London. TFL stated it took the decision on grounds of public safety due to Uber’s poor background check methods.
Uber’s licence runs out on the 30th of September but it has until the 13th of October to launch an appeal and can operate until any appeal has concluded. Uber has already stated that it will appeal but criticized the decision claim that “London is closed to innovative companies.”
To find out more about the issues Uber has faced in recent months read BBC News’ report.
2. MOODY’S DOWNGRADES UK CREDIT RATING
Moody’s has lowered the UK’s credit rating from Aa1 to Aa2 due to concerns over Brexit. The credit rating agency took this decision largely due to the economic challenges posed by Brexit coupled with the UK’s spiralling debt and the government’s lack of coherent plan to deal with it.
Moody’s decision will increase the cost of borrowing for the UK government and at a time where the budget deficit still stands at roughly £50 billion this is a blow for the government. The government, understandably, has criticized the decision, calling the agency’s outlook “outdated”. The decision to reduce the rating was taken before Theresa May’s Brexit speech in Florence.
This is not the first time the UK’s rating has been lowered since the Brexit vote. In the days after the referendum, Standard and Poors, another major credit rating agency, lowered the UK’s rating from AAA to AA. Fitch also reduced their rating of the UK from AA+ to AA.
3. TOYS R US FILES FOR BANKRUPTCY PROTECTION
Toys ‘R’ Us has filed for bankruptcy protection in the US and Canada amid its debt restructuring. It has however received approval for a $2 billion which will provide some certainty for the future. The company has over 60000 employees but in recent years it has been unable to keep up with stiff online competition from competitors such as Amazon. Despite most stores being profitable, Toys ‘R’ Us has a substantial amount of debt and needs to restructure it in order for the company to remain viable
Stores in the UK will not be affected by this as all European operations are not included in the proceedings. Read BBC News’ report for more information.
Toys ‘R’ Us has said however that it sees its future with smaller outlets and pop up stalls rather than the megastores it currently operates. To find out more about the CEO’s plans for the future read Reuters’ report.
4. PWC OPENS US LEGAL OUTFIT
PwC is about to open a new law firm in Washington D.C. The law firm will be called ILC Legal and will specialise in internal corporate cases. This will aid PwC set up a complete package where they can offer access to all of their accountancy and consultancy services. They will primarily provide advice on international legal issues not operate as fully licensed attorneys, rather as special legal consultants. This means they cannot advise on United States law but they’re aiming for a client based dominated by multinational companies.
This is another step into legal sector taken by one of the big 4. In the UK, PwC, KPMG and EY have all been granted ABS (Alternative Business Structure) licenses allowing them to offer legal services. Read the New York Times report for more information.
5. GOOGLE AGREES $1.1 BILLION WITH HTC
Google has signed an $1.1 billion agreement with HTC as part of plans to develop its smartphone offerings. The deal will see over 2000 personnel move from HTC to Google’s Silicon Valley office. HTC currently manufacturers Google’s “Pixel” and “Pixel XL” phones. The deal will also provide Google with a license for some of HTC’s hardware intellectually property. HTC has been struggling in the smartphone market, only having 3% of the market share, dwarfed by Apple and Samsung.
To find out more about the deal read BBC News’ analysis.
6. DELIVEROO POSTS HUGE LOSSES
Deliveroo posted a loss of £129 million in 2016. Losses were up by almost £100 million from 2015, despite overall sales increasing by the same about to £128.56 million. These poor financial figures stem from its rapid expansion and rising costs. Deliveroo now operates in 12 countries and has almost 30,000 riders. Part of this financial issue stems from its enormous delivery costs which obliterate its profit margins. Delivery costs hit a record level of £127.47 million leaving a £1.1 million.
Read BBC News’ report for more information.
Bitcoin price rose above $4000 again after falling below $3000 just last week. Chinese regulators recently banned the use of cryptocurrency funding methods and there were worries that they would shut down all exchanges but it emerged that not all exchanges will be affected by the ban, including Bitcoin. The price rose 30% in 3 days in response to the news but Bitcoin’s resilience is increasingly being tested by regulators and industry professionals.
Jamie Dimon, CEO of JP Morgan Chase criticized all those trading Bitcoins calling the whole cryptocurrency a fraud. Prices also fell shortly after these comments. It will be interesting to see whether the price will continue to rise or whether increased scrutiny will send Bitcoin crashing.
8. APPLE TV RIVAL ROKU PLANS IPO
Roku has announced its plans to raise $252 million from its initial public offering. It plans to offer 15.8 million shares for up to $14 per share. The company has however been running at loss as it was $24.2 million in the red for the 6 months to June of this year. Despite this, this IPO could see the company valued at over $1 billion.
Roku sells cheap streaming boxes that give users access to a number of sites such as Netflix and Youtube.
To find out more about Roku’s business and its IPO read Business Insider’s analysis.
9. FCA CALLS FOR ACTION OVER PERSONAL DEBT CRISIS
The Financial Conduct Authority (FCA) has urged the government to come to the aid of vulnerable consumers facing ever growing debt. New research figures show that there are 8.3 million people with debt issues and a large proportion of them are vulnerable.
There is apparently £200 billion of unsecured consumer debt owed by individuals in the UK. Gig economy workers as well as renters were highlighted as particularly vulnerable consumers as many have to borrow to sustain basic everyday living costs. Many people are falling into areas on council tax and utility bills and roughly 2.2 million with debt (credit cards and/or loans) are in financial distress.
The Bank of England has also hinted that interest rates could soon rise from their record low of 0.25% and this would only increase the pressure on consumers who already face huge amounts of debts. The head of the FCA Andrew Bailey has stated that the government must address these issues in the gig economy for example to prevent a serious social crisis.
To find out more about debt issues in the UK read the Guardian’s report.
10. JIMMY CHOO SHAREHOLDERS APPROVE TAKEOVER
98% of Jimmy Choo shareholders have voted in favour of the £900 million takeover by Michael Kors. The deal between the two looks set to go ahead after being finalised in July. Jimmy Choo’s profits over the first 6 months of 2017 have nearly tripled to £18.1m so this appears to be good business for Michael Kors.
Read the Independent’s report for more information.