This week’s news includes; Chequers agreement summary, Nissan emissions scandal, Comcast ups its bid for Sky and Facebook buys Premier League package
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:
- The Independent “Why shirt sales won’t pay for Neymar’s £198m world record transfer to PSG – and it’s not even close”
- Legal Cheek “Technology won’t turn the world upside down overnight — but lawyers need to embrace the gradual change that is happening’
- The Independent “Why you too will be working two jobs by 2030 (and probably loving it).”
1. BREXIT-WHITEPAPER: SUMMARY
The UK government has revealed its Brexit-Whitepaper outlining its final negotiation position for talks with the EU. The whitepaper, also known as the Chequers Agreement has had very mixed reactions. Most reviews have been negative but some see it as a positive step forward in defining our future relationship with the EU. The whitepaper has also resulted in the resignation of two cabinet ministers.
What does the whitepaper say and what does it mean?
- The UK will request access to the single market for all goods.
The UK will still have to meet all EU rules and standards for goods. Although, like Norway, parliament would have the option to block EU rules it objects to. The blocking of EU rules however, will have serious consequences. This is the case in Norway’s arrangement, where the Norwegian government seldom blocks EU rules because of such consequences. It appears unlikely that the UK will have total autonomy to forge its own free trade deals.
- The European Court of Justice will no longer have jurisdiction over the UK
While the ECJ will not have authority in its current form, the exact relationship or influence is not clear. The ECJ will still have jurisdiction over the EU rules the UK proposes to comply with. The UK will set up a Joint Committee where the ECJ will play a role in the interpretation of EU rules.
- Freedom of movement will come to an end.
Free movement in its current form will end but a form of free movement may be agreed. The UK’s future immigration status with the EU will be outlined in a separate whitepaper.
- The UK will seek an improved form of equivalence for UK financial services.
The EU already has an equivalence programme for non-EU countries but the government deems this unsuitable given our interconnectedness with the EU. The equivalence programme lowers barriers to business for financial services by deeming financial regulatory frameworks in certain non-EU countries as equivalent to the EU’s. Financial services will not have passporting rights granting automatic access to EU markets. The UK will seek to have a bespoke equivalence programme with the EU.
Who has resigned?
The Brexit whitepaper led to two crucial resignations. Brexit Secretary David Davis and Foreign Secretary Boris Johnson both resigned in the space of 24 hours. David Davis resigned as he stated he would no longer be the best person to deliver Theresa May’s Brexit plan. He felt the government was “giving away too much and too easily” Only a few hours later, Boris Johnson resigned. He claimed that the “Brexit dream was dying” in his resignation letter. The general sentiment is that the concessions are too high and given this is the starting position, Brexiteers are concerned that the benefits of Brexit could be diminished.
Prominent Brexiteer Dominic Raab replaced Davis as Brexit secretary. Jeremy Hunt has been appointed as Foreign Secretary. The key task now for Theresa May will be ensuring that her cabinet are united going into these Brexit negotiations.
What do businesses feel about the deal?
The financial sector has been very critical of the proposals. A city lobby group described it as “regrettable and frustrating”. The city had hoped for a “mutual recognition model” agreement with the EU, in which UK and EU financial service providers would automatically recognise each other’s regulations as equivalent. They felt this would provide the most seamless Brexit transition for financial services. There is a difference between mutual recognition and the government’s proposed enhanced equivalence. With mutual recognition, the EU would automatically accept UK regulations as equal, allowing frictionless trade. With equivalence, the EU must assess whether the specific area has equivalence regulation. The equivalence status can also be withdrawn at short notice.
Despite this, a number of professionals deem the request for enhanced equivalence as a step to achieve this transition. Some groups feel the whitepaper provides much needed clarity on our future relationship with the EU. The CBI felt that the proposals are a good starting block and do well to protect foreign investment and jobs.
Overall however, financial service providers all agree there in much work to be done. This has not stopped something of a financial service exodus. Bank of America, Goldman Sachs, JP Morgan, Barclays, HSBC and many other banks have all announced plans to move jobs to the EU.
Donald Trump arrived in the UK on Friday and faced numerous protests. He did however, criticise Theresa Mays’ Brexit plan. He stated that if the proposals deal could kill any chances of a free trade deal with USA. This is because he feels the agreement will prevent us from effectively forging new trade deals as the UK would still be part of the EU in essence.
He said ““If they do a deal like that, we would be dealing with the European Union instead of dealing with the UK, so it will probably kill the deal. If they do that, then their trade deal with the US will probably not be made.”
2. NISSAN EMISSIONS SCANDAL
Nissan has revealed that data from its emissions tests on a number of vehicles had been altered. This includes data coming from all Nissan factories in Japan except one. An internal investigation is now underway to determine how it happened and the full the impact of the issue. Nissan claims the inspection reports were based on “altered measurement values”.
Nissan’s case is different from VW’s 2015 emissions scandal. VW intentionally put cheat devices which lowered emissions once vehicles were put in test conditions. Nissan simply failed to operate their internal emissions tests as legally required and measurements were falsified. VW was fined 1 billion Euros last month for its own scandal.
This is not however, the first time that Nissan has failed to meet requirements. Last year, over 1.2 million cars were recalled in Japan for failing to meet safety standards. (BBC News)
3. COMCASTS AND FOX BATTLE FOR SKY
Comcast has increased its offer to acquire Sky to £26 billion. This higher bid came within hours of 21st Century Fox increasing its bid to acquire the 61% of Sky that it does not already own. Fox offered £14 a share, trumping Comcast’s initial offer of £12.50 a share. This offer came only 2 days before the Takeover Panel, a UK regulatory authority set a £14 a share minimum offer price. The battle has ensued for nearly 2 years but regulatory hurdles are now being cleared. Last week, the government gave approval to Fox to acquire Sky, on the condition that it sells Sky News. In June, the Culture Secretary confirmed that there would be no public interest concerns with a Comcast acquisition of Sky.
Comcast is however, losing a battle with Disney to acquire Fox. Last month, Disney increased its offer to $71.3 billion and Comcast has not yet put in a counter offer. In addition, Disney has received approval from anti-trust regulators but Comcast has not. This approval may not even be granted given the significant leverage Comcast would gain in negotiations with other content distributors. Disney is solely a content creator, not a distributor so no such advantage is gained through its acquisition of Fox, also a content creator. (BBC News)
4. US TRADE WAR CONTINUES
The US-China trade war continues to escalate. The US has slapped new 10% tariffs on an additional $200 billion worth of goods. This comes only two weeks after both countries impose $34 billion tariffs on each other. Trump has now introduced these tariffs and confirmed that he will impose more if China retaliates to its latest move.
These new measures could be introduced as soon as September. Trump has claimed these measures have been introduced in retaliation China stealing American secrets. Trump has threatened to slap $500 billion worth of tariffs on China, that’s the total value of all Chinese imports to the US in 2017. (BBC News)
Many companies are concerned about the impact on businesses. BMW has announced that it will move some its production out of the US due to the tariffs. The tariffs imposed on imports have increased prices for productions so instead it will move production to China. In addition, they have announced they will raise prices for their US-made SUV’s sold in China as they cannot absorb the 40% tariffs on US car imports. As expected, ultimately, the consumers will pay the prices for these trade wars.
5. TESCO EQUAL PAY LEGAL CASE
1,000 female Tesco staff have successfully launched an equal pay legal battle against their employer. The women work at Tesco check outs and allege they are unlawfully paid less than distribution centre workers who are predominantly male. The law stipulates men and women are paid equally for work of equal value. The case will turn on whether cashier roles and distribution centre workers are considered equally valuable.
The claimants are being represented by Leigh Day who are also handling similar equal pay cases against Sainsbury’s and Asda. If the claim is successful it could cost Tesco billions. In addition, the wider ramifications for the industry as a whole could be enormous. (City A.M)
6. RACISM SCANDALS SEE RESIGNATIONS
Uber’s head of HR Liane Hornsey has resigned amid a racism scandal. Uber has developed a reputation for a toxic work environment and discriminatory culture. This led to the founder and former CEO Travis Kalanick resigning in June 2017. He resigned after a serious of scandals including sexual harassment and gender discrimination cases. Uber paid out $10 million in March 2018 to settle a racial and gender discrimination class-action lawsuit.
Dara Khosrowshahi joined as CEO in August 2017 and vowed to overhaul the culture of the company. It appears any efforts have not taken full effect as of yet.
An investigation into allegations by whistleblowers showed that Hornsey had “systematically dismissed” racial discrimination complaints. Hornsey was accused of using discriminatory language against Uber’s head of diversity and inclusion. She has resigned only 18 months into the job. (The Guardian)
John Schnatter, the founder and Chairman of Papa John’s has resigned for using the N-word during a conference call. He used the word in a media training role-play session. In the session, he was asked how he would distance himself from racist groups. In his response, he noted that founder of KFC, Colonel Sanders was never criticised for using the N-Word.
This not the first racial issue he has been involved in. He had to step down as CEO in 2017 after criticising black NFL players protesting racial injustice. As a sponsor of the NFL, he claimed they were hurting Papa John’s sales as fewer viewers tuned in to NFL games due to the protests.
Papa John’s is the world’s third largest pizza company after Dominos and Pizza Hut. It has over 4900 outlets worldwide and turned over $1.78 billion in 2017. (BBC News)
7. SAMSUNG MOBILE FACTORY
Samsung has announced that it will be opening the worlds the largest mobile phone factory in India. The plan will increase Samsung’s unit capacity from 68 million to 120 million units. The expansion will be complete by 2020. This is part of Prime Minster Narendra Modi’s plan to bring more investment to India. Smart phone usage is in the rise in India, growing 14% over the past year. There are however, only 425 million smartphones users in India. India received over $62 billion in foreign direct investment. (Bloomberg)
8. FACEBOOK PREMIER LEAGUE BROADCASTING RIGHTS
Facebook has obtained the rights to Premier League games in Thailand, Laos, Vietnam and Cambodia. The social media giant paid £200m for the rights for the next three seasons. It has the rights to broadcast all 380 Premier League matches in the four countries.
Big tech is gradually edging its way in sports broadcasting. Last month, Amazon bought the rights to broadcast 20 premier League matches for the next 3 seasons. It will broadcast 10 matches on only 2 days per season and paid £90 million for the package.
9. POUNDWORLD STORE CLOSURES
Poundworld administrators have announced that the retailer will close 25 stores. These stores closed on Sunday and led to 242 job closes. The struggling budget retailer fell into administration in June and has failed to find a buyer.
While these closures make up a fraction of its 355 UK stores, it’s clearly indicative of the effects of a wider slump in retail. Poundworld has been struggling recently like many in the retail sector. Losses grew to £17.1 million in 2017. The company imports the majority of its stock so it took a heavy hit when the value of the pound fell. (BBC News)
10. STARBUCKS TO ELIMINATE PLASTIC STRAWS
Starbucks has made a commitment to banning plastic straws from all stores by 2020. The company has announced that strawless lids will be available at 8000 stores. The number of plastic straws the company provides has been increasing gradually. The amount of straws including in drinks have risen 13% over the past five years.
This forms a wider drive to reduce plastic waste that is harming our environment. Some Starbucks’ stores in London began charging customers 5p extra for using paper cups and offering a 25p reusable cup discount. In just a matter of weeks, some stores saw a 150% rise in reusable cup use.