This week’s news includes; Iran sanctions, Dyson wins EU legal battle, Tesla appoints new chairman, KPMG stops offering consultancy services to audit clients and oil prices slump.
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:
- Legal Cheek All firms should publish gender pay gap data says Law Society
- BBC News House prices in the UK could fall in 2019 if the government fails to reach a Brexit deal, one senior economist has said.
- The Lawyer Access to Justice: what more can City law firms do?
1. IRAN SANCTIONS
US sanctions on Iran came into effect last week and are expected to “choke Iran”. The US has implemented further economic sanctions after it pulled out of the deal. These penalties were originally lifted in 2015 as part of the Iran nuclear deal. The deal opened up trade with Iran in return for gradual reductions in nuclear capabilities. Donald Trump however, called it “the worst ever” agreement and pulled out in May. The US wants Iran to further curb its ballistic missile program and support for international terrorism. The US has received significant criticism from almost all allies over this move. The EU, China and Russia are all firmly committed to the nuclear deal and are pushing the US to reconsider.
The key sanctions are;
· Iran is prohibited from purchasing US dollars and precious metals
· US persons and entities are completely banned from dealing with Iran, including purchasing Iranian oil
· Non-US firms and financial entities with US interests who deal with Iran can also face fines from US authorities
The EU, China and Russia have been looking at ways to circumvent the sanctions. Iran says it will continue to sell oil and bypass the sanctions. Eight countries however, China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey have been given a waiver regarding the purchase of oil. As these nations are the biggest importers of Iranian oil, the waiver helped stabilise global oil prices. The waivers last for 6 months and the countries may reapply at the end of the period.
Al-Jazeera looks at the sanctions in more detail.
2. DYSON WINS LEGAL BATTLE
Dyson has won its lawsuit against European courts over labelling laws for vacuum cleaners. Dyson claimed that efficiency tests carried out on empty machines do not reflect real life conditions. The current law allows Dyson’s competitors to claim their machines are more effective than they actually are as tests do not take into account clogging and loss of suction. The legal battle began in 2013 and was initially dismissed in 2015. Dyson appealed and the case went all the way to the European General Court where Dyson’s argument has now been upheld. The company now claims this will prevent other manufacturers exploiting the current system. Dyson is best known for its bag-less vacuums and turned over £3.5 billion in 2017. (The Independent).
3. TESLA APPOINTS NEW CHAIRMAN
Tesla has appointed Robyn Denholm as its new chairman after Musk was forced to step down earlier this year. This puts an end to speculation that James Murdoch could take the role. Denholm was the finance chief of Telstra, an Australian telecoms firm. She has been on the Tesla born since 2014. Elon Musk was forced to stepped down as chairman of Tesla in August by the SEC. Musk tweeted he had secured funding to take private when there had been no official offer. The SEC deemed this a fraudulent statement and fined Musk $20 million and forced him to step down as chairman. He was permitted to remain as CEO. (BBC News)
Check out our company watch page for more on Tesla
4. KPMG STOPS CONSULTANCY FOR AUDIT CLIENTS
KPMG has announced that it will stop offering consultancy services to its audit clients. This forms part of its move to eliminate potential conflicts of interest. The big four accountancy firms hold something of a monopoly on the auditing of large company. The firms have traditionally provided a range of services to individual clients. KPMG audits 90 of the FTSE 350 companies. MP’s have called for the big four to be broken up after a number of significant audit failings including Carillion, Ted Baker and Patisserie Valerie. The amount of fines imposed by the Financial Reporting Council has increased 23%. The Competition’s and Markets Authority has even launched an investigation to determine how competitive the industry is. (BBC News)
5. EU PARTS FACTORIES SHUT
Schaeffler and Michelin have announced plans to close UK factories. The closures put 1,400 jobs at risk and forms part of wider uncertainty in the auto sector.
German car parts manufacturer Schaeffler has announced that 570 jobs are at risk with the closure of its factories in Llanelli and Plymouth. Schaeffer produces a number of parts for the defence and aerospace sectors.
Michelin plans to close its Dundee factory where its employs 845 people. The tyre maker says the plant was no longer financially viable due to a fall in demand for its premium tyres. The company will now relocate production to factories in Germany, the US, South Korea and China.
There have been a number of warnings from car makers about the impact of Brexit. Many vehicle manufacturers run on a “just-in-time” basis where the movement of parts to the production lines occur on a seamless basis. Companies have warned that even slight disruption to this flow by barriers to trade could cause significant financial harm. (The Guardian)
6. OIL PRICE SLUMP
Oil prices have crashed nearly 20% in just over a month. In early October, oil hit $76.41 per barrel but by November prices sunk to just over $60. The newly issued US sanctions on Iranian oil affect nations worldwide and has significantly cut demand for oil. Eight large importers of Iranian oil including China and Japan have been granted a 180 day waiver to import oil. Increased US supplies are also driving down prices. Stockpiles have been increasing for the past seven consecutive weeks. The world’s largest producers US, Saudi Arabia and Russia seem set on increased production so prices could see further decline in the coming months.
Sky News looks closer at the bear market.
7. LLOYDS GOES DIGITAL
Lloyds bank will create 2000 jobs as part of its £3 billion digital development investment. The plan will see 8000 jobs created at the expense of 6000 existing jobs. The jobs will be cut from across the whole business, although these 6000 will be entitled to apply to the newly created jobs.
This marks a significant positive change for Lloyds in its recovery from the financial crisis. Lloyds was formed in 2008 through the merger of HBO’s and Lloyds TSB. The bank received a £20 billion bailout from the government in the crisis. Last year however, the government sold it’s final shares for a profit. Lloyds currently has over 14 million customers and is the UK’s largest digital bank. The bank turned over £18 billion last year.
8. ADDISON LEE DRIVERLESS
Addison Lee has begun trailing it’s self driving cars in Canary Wharf. The cars were manned and are mapping the streets to pave the way for the roll out of the technology. It will map out over 250,000 roads over the coming months. Addison Lee has teamed with Oxbotica and hopes to offer driverless taxi services by 2021. Addison Lee is not the only taxi firm delving into the driverless scene. Uber and Lyft both have plans to launch driverless car services within the next few years. Uber has by far pumped the most into this project. It recently signed a $500 million deal with Toyota to work on its development. Tech firms and automakers are scrambling to be the first mover in the autonomous vehicle market. Whether the wider population and infrastructure is ready for this development remains to be seen.
9. NEW LOOK TO CLOSE STORES
New look has announced that it will lose up to 100 stores to turn around it’s fortunes.
New look has been a prominent casualty of the high street. Over-expansion and rising costs led to the company posting a huge loss last year. The retailer said it would shut 60 stores in March but this number is set to rise. In the 6 months to September, sales fell 3.7%. New Look’s struggles are largely due to its huge overheads. The retailer currently has over 600 stores. Rising staff costs and rents combined with falling sales has led the company to an unsustainable financial position. 26 stores are currently operating rent-free but could face closure. After all closures are complete it is expected to have around 500 stores. New Look will now invest more in its online sales to get itself back on track. Online competitors are zooming ahead. For example, while New Look is stumbling, ASOS profits increased by 28% for the year.
10. UK HIGH STREETS
UK high streets stores are closing at a rate of 14 per day. PwC undertook research on 500 high streets and over 2692 stores closed in the first six months of 2018.Confidence in the high streets has been falling rapidly. The effects have been felt across both retail and casual dining. The government has pledged £1 billion to cut business rates for smaller shops. This may be too little too late for many businesses. The collapse of high streets has been due to a multitude of factors. Along with business rates, online competition, rising staffing costs and lower footfall have hit businesses heavily. In 2018, so far we have seen the collapse of Poundland, Toys R Us and Maplin.
Check out our insight article explore the slump in the casual dining sector.
