This week’s news includes; Patisserie Valerie accounting black hole, High Court approves fracking in the UK, Facebook pays only £7 million in tax and Uber drivers on strike 

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:

  • City A.M The global vaping industry risks being choked in a regulatory cloud
  • eFinancial Careers Will you need to know coding for future banking jobs? It’s complicated.
  • City A.M Should Britain heed the Japanese Prime Minister and join the Trans-Pacific Partnership after Brexit?
  • Legal Cheek 11 things law students need to know about legal design.
  • BBC News Is it the end of the supermarket checkout till?



Café chain Patisserie Valerie  was on the brink of collapse last week. The company’s main subsidiary Stonebeach faced a wind up petition due to a £1.1 million tax bill . The company then became aware of “significant and potentially fraudulent, accounting irregularities”.  A £20 million black hole in Patisserie Valerie’s’ accounts were exposed. In May the firm reported cash reserves of £28.8 million. The firm revealed last week that there was a “material shortfall” between the reported figure and the actual figure.

It later transpired that the company had a secret £10 million overdraft of which £9.7 million had been spent. Neither the board nor the auditors were aware of these overdraft facilities.

The share price of the company plummeted over 85% in just a few days. On Tuesday the firm was valued at £450 million and by Friday it had crashed to £67.7 million. Trading was suspended on the firm was on the brink of collapse.

The chain was saved on Friday by the chairman, Luke Johnson, providing the company with a £20 million loan.  Without this liquidity the firm said it could not continue trading. This loan saved its 200 stores and the jobs of 2800 employees. An additional £15 million was raise through the issue of new shares. On Friday the chief finance officer was suspended and arrested.

Many questions, especially for the auditor Grant Thornton, still remain as to how this occurred. The investigation is bound to continue for months if not years.


The UK High Court has allowed fracking in the UK for the first time since 2011. The court dismissed an injunction application brought by environmental campaigners to block energy firm Cuadrilla from fracking in Lancashire.

The court stated there was no evidence to show that there a “medium risk” posed by fracking. The full environmental impact of fracking is somewhat inconclusive. Campaigners argue it. Advocates claim fracking will provide the UK with cheaper, cleaner and more sustainable energy. In 2011 however, a number of small earthquakes occurred in Lancashire across areas surrounding a test fracking site. The British Geological Survey deemed that it was “highly probable” that fracking was responsible for the earthquakes quakes. Fracking has been suspended in the area ever since.

Following the court’s decision, campaigners claimed the judge failed to take into account key considerations regarding environmental and safety risks. Another legal challenge brought forward by Friends of Earth is still being considered.  (The Independent)


Stock markets have been sinking in the past week. Over £60 billion was wiped off the FTSE 100 last week while the US stocks saw its worst drop in since February.

The main reason for the sell-off has been market fear around interest rates. The US Federal Reserve has announced that it will raise interest rates faster than expected. This would be the fourth increase of 2018. Increase rates will push repayments up for companies and reduce profits.  The Dow Jones Industrial Average and Nasdaq saw a 3% and 4% single day fall respectively, last week. Investors have also been concerns about escalating trade wars and with China.

This announcement also affected global markets. Borrowers with debt in US dollars will face higher repayment costs. In addition, dollars become more attractive to hold as rates increase so investors tend to sell off holdings of other currencies. Sky News looks closer at the sell-off and the reason behind it.


Google fights anti-trust fine

Google has launched a challenged against its $5 billion antitrust fine issued by the EU. The EU Commission claimed that Google used its dominant market position in the smartphone market. The EU claimed that Google forces phone manufacturers to pre-install Google search and Chrome browsers on handsets. Manufacturers who decline are prohibited from using the Android system in their models. Android is found in over 80% of smartphones. (Reuter)


Google’s social media platform Google + will be shut down after user data was left exposed. Up to 500,000 users are thought to have been affected. The firm knew about it in March but seemed it not serious enough to tell the public.

Google + was supposed to be Google’s challenge to Facebook. It experienced no such success. The number of users its social media site has had been keep very secret by Google. In light of this issue however, it has stated the site has low usage and 90% of user sessions are under 5 seconds.  Google+ powered networks will still be available but the social media platform will cease operations. (BBC News)


Facebook’s UK tax bill increased but only amounts to 1% of its total UK sales. Facebook paid £15.8 million in tax last year. This is a 6% increase on the year before. Facebook, like Amazon, grants employees shares as a form of employee benefit. Shares given to employees are tax deductible so Facebook only actually paid £7.84 million.

Facebook tax bill starkly contrasts the record £1.35 billion in UK sales it registered last year. It saw a 50% rise in pre-tax profits to £60 million. Governmental anger is growing on multinational corporations who “artificially” Reduce their tax bills. Amazon only paid £4.5 million in UK tax last year despite UK profit of £1.9 billion.

The chancellor, Philip Hammond, has pledged a new “digital services tax” to force these tech firms to pay their fair share of tax. The companies contend that they pay all taxes they are liable to pay. (The Guardian)

The UK seems set to clamp down on tax avoidance by these multinational as criticism from all sides grow. The companies will however, not pay more tax than they have to, within the boundaries of the law. Without legislative change, the tech firms will continue to enjoy this periods of relatively miniscule tax bills.


HSBC has reached a $765 million settlement with the US Department of Justice. The settlement relates to the banks mis-selling of mortgage backed securities between 200 and 2007. The DoJ claimed HSBC misled investors about the securities and they subsequently incurred heavy losses. This conduct took place in spite of concerns raised by internal controls. HSBC has already paid $400 million to US authorities in 2016 due to its poor servicing of home loans. The sale of these securities across the financial sector led to the 2008 financial crisis.

Big banks have paid out significant sums for their mis-selling of these mortgage-backed securities. Deutsche Bank paid out $14 billion, while JP Morgan and Bank of America have all paid out $13 billion and $16.7 billion respectively.


JLR will shut its Solihull plant for two weeks following sustained periods of weak demand for its cars in China. JLR blames the tariff wars between the US and China along with economic uncertainty. JLR sold 57,114 cars in September, almost 20% less than September 2017. Year on year sales in China have nearly halved, 46% down. Chinese demand for imports has declined due to the economic impact of US tariffs.

JLR also primarily produces diesel cars. European governments have been clamping down on diesel cars and this is affecting demand. The UK government plans to ban all petrol and diesel cars by 2040.

These factors have forced JLR to stem their production rate of cars. Plant Staff will be off work for two weeks from the 22nd of October.  Staff will however, be on full pay during this time. Last month, JLR moved 2000 worker to a three day week to cope with this falling demand and to meet expected falls in demand following Brexit. (City A.M)


Snap’s launch of its own scripted content did not go down well with investors. “Snap Originals” will see Snap, the parent of Snapchat produce its own content. The company has teamed up with a number Hollywood production houses. This failed to instil investors with any confidence whatsoever. Prices fell to their record low following the announcement. Snap’s share price has fallen 52% this year alone.  Snap recorded its first ever fall in daily active users last quarter. CEO Evan Spegiel released an internal memo outlining plans for growth and acknowledge the slump following the app redesign. He said the company needs to get back to its “roots”. Snap will also be expanding into new markets such as Mexico and Asia. (Business Insider)

Many analysts are not confident that Snap can ever reach profitability. With user numbers declining, the recent slump merely marks the beginning of the end for Snap. Check out our company watch page for more information on Snap.


Confectionery giant Mondelez International has revealed that it will make all its packaging recyclable by 2025. It will also redesign packaging making recycling information clearer.  Aside from the environmental benefits the recyclable packaging will cost considerably less. This forms part of the group’s long term sustainability program. Mondelez owns common brands such as Cadbury.  The company sells products in 165 countries and produces thousands of tons of packaging every year. This new initiative will apply to all 52 of its owned brands.  (Business Insider)


Hundreds of Uber drivers nationwide staged a strike last week over pay and working conditions. Drivers switched off their apps from 1pm last Tuesday. Drivers demand a fare increase to £2 per mile and increased commission.

An employment tribunal decision in 2016 affirmed that Uber drivers were employees. Drivers are therefore, entitled to employee benefits such a holiday pay and sick leave. Campaigners say Uber has failed to implement this judgement. Uber supposed its pay record and claimed that it had introduced new employee benefits

Uber posted a loss of $404 million despite increasing revenue. It was recently valued at $72 billion, making it one of the most valuable privately owned companies in the world. (BBC News)