This week’s news includes; UK interest rate rises to 0.5%, Apple shares hit record high, Exxon Mobil investing $1 billion per year in green energy, oil prices hit $60 a barrel.
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. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- Bloomberg states “You can’t move a supermarket to Frankfurt. That’s why Brexit is a mess for British retailers.
- The Independent lists five reasons why the Bank of England’s interest rate rise is a good idea.
- Bloomberg looks at why the Bank of England’s rate increase might spook Britain’s economy.
1. UK INTEREST RATE RISES
The Bank of England has voted 7-2 to increase interest rates from their record low of 0.25% to 0.5%. This is the first rate rise in 10 years. Two more rate rises are expected within the next three years.
This decision will primarily hit millions of consumers with variable rate mortgages who have enjoyed record lows for the past decades. The rise however, will be somewhat welcomed by the UK’s 45 million savers who have faced negligible interest rates on their savings will now see their savings growing marginally faster.
The primary reason for the rise was due to the Bank of England’s aim to control inflation which currently stands at 3% and its prediction that wages will soon rise. It expects that this decision s will help keep inflation steady.
The Bank of England also expressed concerns that consumer borrowing was increasing at an alarming rate so deemed this would. Many analysts argue however, that the rise in borrowing is not a result of increased consumption but rather the borrowed money is being spent on necessities. Inflation has soared in comparison to wages and this has substantially affected household disposable income.
While this hike in interest rates appears negligible it is the first step on the road to normality. It also a sign that the central bank feels confident despite external shocks, that the economy is sufficiently recovered from the crisis for us to move forward.
Sky News looks closer at why the Bank decided to raise interest rates.
2. APPLE SHARES HIT HIGHS AHEAD OF IPHONE X
Apple share price hit a record high after it beat revenue expectations. The tech giant posted revenues of $52.6 billion for the fourth quarter, a 12% increase from last year. This beat analysts’ expectations by almost $2 billion. Apple has also made surprising inroads in China where sales increased by 12% despite not having grown in over a year.
Shares rose to $175.12 a share, taking Apple’s market cap to a staggering $900 billion. Apple the largest company in the world by market cap, and it requires its share price to rise by $20 per share to become the first trillion dollar company.
The iPhone X was released on November 3rd and many analysts are expecting very strong sales. Apple has been criticised in recent years for lacking innovation but despite this, there is no indication that Apple will be slowing down any time soon.
3. EXXON MOBIL INVESTS $1 BILLION IN GREEN ENERGY
Energy and gas giant Exxon Mobil has revealed that it is spending over $1 billion a year on low-carbon energy projects. Some of the projects include algae based biofuel, biodiesel produced from agricultural waste and research into producing plastic more cleanly.
While Exxon Mobil added that any commercially viable solutions will take at least a decade to come to fruition; this is a notable step in the right direction to combat climate change. (Bloomberg)
Climate change is becoming an ever more pressing issue as this week the Congressional Budget Office predicted that 10 million Americans will be affected by climate change by 2075, particularly in coastal areas. Read more on their predictions and proposals in Bloomberg’s report.
Bitcoin hit a record high yet again. Last week it had passed $6300 and part of this was due to CME (a futures exchange operator) announcing plans to introduce Bitcoin futures contracts. Bitcoin has risen by over 500% in 2017 alone and this is an additional boost for the cryptocurrency as confidence continues to soar.
Another huge encouragement comes as analysts believe Amazon may soon accept Bitcoin payments. Speculation arose when it was noticed that Amazon has opened up 3 cryptocurrency related domains although the purpose of this has not yet been announced. Amazon is the largest online retailer with revenue of over $135 billion.
5. OIL PRICES
Oil prices have reached $60 a barrel for the first time since July 2015. In 2016 Brent crude prices plummeted to a low of $27 due to oversupply and limited demand. Thanks to combined action from major oil producing nations to reduce global production this has helped stabilise the price. OPEC (whose main member is Saudi Arabia) has cut output by nearly 2 million barrels per day. This pact of production cuts is due to end in March 2018 but there are talks to renew it in order for oil prices to reach highly profitable levels.
The continued rise in oil prices will come as bad news for consumers as low oil prices have helped keep inflation relatively low over the past 2 years. With inflation already at 3% it is difficult to see how
Read Sky News report for more on the hike in oil prices.
6. WOMBLE BOND DICKINSON MERGER COMPLETE
The merger between the US’s Womble Carlyle Sandridge & Rice and the UK’s Bond Dickinson went live last week. The new firm, called Womble Bond Dickinson, now has over 1000 lawyers across 24 locations and is worth roughly £340 million.
The Law Society Gazette looks closer at the deal.
7. EASYJET GERMAN EXPANSAION
EasyJet has made inroads in Germany by acquiring a number of Air Berlin assets for roughly €40 million. The purchase includes leases for 25 aircraft as well as take-off and landing spaces. EasyJet will also recruit roughly 1,000 pilots and cabin crew who currently work for Air Berlin. This will allow them to operate domestic flights within Germany, not just international flights as is currently the case.
The deal will make easyJet the largest carrier in Berlin but it is still subject to regulatory approval. It is expected however, that this could improve competition in the German air travel sector as it sets easyJet as a legitimate for Lufthansa.
Reuters looks closer at the competition elements of deal.
8. RYANAIR’S CANCELLATION CRISIS TO COST £111 MILLION
Ryan has revealed the costs of its recent cancellation issues. In September, Ryan cancelled thousands of passenger bookings after significant shortages of pilots. The airline operator has already funded £22 million and over the next 6 months further refunds and new packages for pilots will cost them £61.6 million. These costs will continue to rise over the full year and its estimated this will cost them €125 million (£111 million).
Despite these issues however, pre-tax profits for the 6 months to the end of September were up 11% to £1 billion while total revenues were up 7% to £3.8 billion.
Business Insider looks closer at the cancellation crisis.
9. BT PROFITS HIT BY SPORTS RIGHTS COSTS
BT suffered a 1% decline in profits in the last quarter. It blames a number of factors for this, including a 2% rise in operating cost largely attributed to increased costs of sports broadcasting rights. Pre-tax profits fell to £666 million but BT has said it will take “robust action”.
BT’s mobile business on the other hand showed more positive signed. It acquired mobile operator EE last year and added nearly 300,000 new subscribers.
BBC News looks closer at the issue.
10. UK RAIL COMPANIES VOW TO IMPROVE
The Rail Delivery Group (RDG) has announced that there will be a “landmark coming together” of railway operators to improve services. Britain’s railways had their worst performance in decade last year as 12.3% of all trains failed to reach their destinations on time.
RDG is a pan-industry body and has announced this commitment for closer cooperation to improving their services over the next 18 months and better the public image of the railway. Railway unions claimed this pledge was the “same old fantasy” and believe that no material changes will occur.
BBC News looks closer at the current issues facing the railways, including Brexit.