This week’s news includes; Patisserie Valerie falls into administration, France fines Google over GDPR failings, Tesco overhauls business and Dyson moves HQ to Singapore.
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:
- Sky News International community could ‘roll with’ no-deal Brexit, says OECD head Angel Gurria
- Business Insider Companies are fleeing the UK as Brexit looms — and their actions paint a grim picture for the nation.
- Legal Cheek – 7 Steps to Training contract application success
1. US GOVERNMENT REOPENS
Donald Trump has reached a funding deal with Congress without the $5 billion for his promised border wall, bringing an end to longest government shut down in US history.
Trump conceded temporarily to accept a short term funding bill, keeping the government open until February 15th. During this interim period, long term funding discussions over Homeland Security will take place. Donald Trump has warned however, that if no funding for his wall is granted here, the government will either be shut down again or a state of emergency will be called to circumvent Congress.
The shutdown lasted for 35 days and swathes of public facilities were closed and 800,000 workers went unpaid. In some cases couldn’t afford to travel to work so were forced to call in sick. All affected workers will now receive backpay.
2. WHAT WENT DOWN IN DAVOS
The World Economic Forum was held in Davos last week where world leaders meet to discuss global challenges.
One of the main topics was climate change. Politicians and business leaders ironically arrived up in a record number of private jets to talk about the threat of climate change and pollution. There was however, a consensus that change is required imminently but the extent of that change is what was debated. Sir David Attenborough gave a strong speech stressing the required urgency in action. Despite this, even German Chancellor Angela Merkel recognised that Germany would need coal for “a certain time”, showing the reluctance to make drastic but seemingly crucial changes. The forum saw two notable absences from President Trump and President Xi Jingping, leaders of two of the world’s largest polluters.
On another note, there was widespread concerns about global growth, triggered by the trade war between the US and China as well as a slowing Chinese economy. UK Chancellor Philip Hammond attended in place of Theresa May, aiming providing world leaders with reassurance about Brexit.
For more on what discussed check out The World Economic Forum’s top stories from Davos
3. PATISSERIE VALERIE FALLS INTO ADMINISTRATION
Cafe chain Patisserie Valerie has fallen into administration after an accounting fraud scandal. The chain failed to secure a rescue with lenders but may still be able to sell of profitable parts of the business. Currently, 122 stores will remain open as usually but 71 outlets close with the loss of 902 jobs. The company was kept afloat by various loans, including from the Chairman himself but as the scandal unfolds things appear worse than thought.
In November, a HMRC investigation into a Patisserie Valerie subsidiary uncovered a £20 million blackhole in the company’s books. Their cash holdings from their last audit were substantially lower than was reported in their last audit. It was revealed that there was a £10 million secret overdraft, unknown to the chairman, was spent. The finance director Chris Marsh was arrested but released on bail without charge.
Upon news of the scandal, the company’s share price nosedived 80% in a matter of days and were eventually suspended . Investors criticised the chairman for being “asleep at the wheel”. Shareholders are now considering taking legal action against the company.
4. FRANCE FINES GOOGLE
Google was fined €50 million by the French data regulator, CNIL. This is the first time that the heavy GDPR penalties at the disposal of regulators have been used by CNIL. Under the old rules, the CNIL could only have charged a maximum of €150,000. GDPR allows regulators to fine up to 4% of global annual turnover. CNIL stated the €50 million fine was deemed proportionate to the infringements.
Google was fined for failing to have a legal basis to process information for personalised ads and for lack of transparency and information. These breach fundamental requirements of GDPR. The fine cannot be appealed.
The process was triggered by two complaints issued against Google. One complaint was from data privacy activist Max Schrems and his group “noyb”.Noyb has also this week filed a series of complaints against tech giants including Apple, Amazon and Netflix. After carrying out its own investigation, Noyb claims the large companies have failed to fully comply with regulation. For more on Noyb’s investigation check out BBC News’ report.
Check out our insight article explaining all you need to know about GDPR
5. MASTERCARD FINED £500 MILLION
Mastercard has been fined £500 million (€573 million) for breaching competition law.
Mastercard had prevented retailers from using alternative banking service providers abroad through restrictive contracts. Mastercard set card payment fees for receiving banks at the rates of their home country even if banks received the payments from elsewhere in the EU and the rates were cheaper. The EU Competition and Markets Authority deemed this conduct anti-competitive. Mastercard received a 10% reduction in the fine due to their cooperation in the investigation.
Mastercard is the second largest payment service supplier in the EU behind Visa. The company posted revenue of $12.5 billion in 2017.
Netflix’s UK viewing figures have surged as part of a wider shift to towards digital streaming TV. The number of households with subscriptions to on demand TV increased 22% in the third quarter of 2018, reaching 11.6 million. Netflix saw an increase of 2.2 million UK subscriptions over the past year.
In the US, Netflix joined the Motion Picture Association of America, a powerful Hollywood lobbying group. The move comes as Netflix increasingly develops more of its own original content . The lobbying group represents six legacy Hollywood studios
Despite its ostensible success, Netflix’s most recent earnings fell shortly of estimates and the company has seen its share price dip. (see previous Top 10)
7. TESCO TOTAL OVERHAUL
Tesco is set to overhaul its business and will announce roughly 15,000 job cuts. The move will see closures of its meat, fish and bakery counters. Staff canteens and in-store bakeries will be replaced with vending machines. This is expected to affect the vast majority of its 732 large stores.
This forms part of a wider turnaround for Tesco in a bid to be more competitive in the ever growing supermarket wars. It now seems that major job cuts will become more common to try and slim down staff costs. At the start of 2018, Tesco had nearly 450,000 workers, dwarfing its nearest competitors Sainsbury’s by over 200,000. It does however, boast nearly double the market share of Sainsbury’s with 27.6% of the market.(Bloomberg)
Check out our company watch page for more on Tesco.
8. SANTANDER BRANCH CLOSURES
Santander has announced that it will closing 140 UK branches, putting 1270 jobs in jeopardy. The move comes as part of a wider market shift towards digital banking as footfall at branches declines. Santander has seen customer transactions at its branches fall by 23% in 3 years. Online transactions on the other hand have increased by 98% over the same time frame. It will now invest £55 million to refurbish and modernise 100 of its branches.
The Spanish bank has spoken to unions about its plans and it hopes to move around 400 affected workers to other departments.
Santander joins competitors RBS, Lloyds and Barclays in making the shift towards digital and closing down stores.
9. DYSON SHIFTS HQ TO SINGAPORE
Leading Brexiteer James Dyson has announced that he will be moving Dyson’s headquarters and tax base to Singapore. Dyson will however, only move two senior jobs and will still retain its production in UK. Dyson cited commercial reasons for the decision and affirmed the move was unrelated to Brexit. The move is designed to make the company “future proof”, particularly with the company’s growing sales in Asia.
Some MP’s have labelled this move as hypocritical, showing a lack of support for post-Brexit Britain. The move of headquarters will see all of Dyson’s future intellectual property registered in Singapore. While existing IP registered in the UK will not move, there is concern that this could mark the onset of a wider IP exodus for the UK.
Starbucks coffee could now come straight to your front door. This month, Starbucks is to trial coffee delivery in London. It has already piloted schemes in the US and hopes to replicate the success in the UK. The service runs in partnership with Uber Eats. The scheme will operate in a few company operated stores in the capital with a view to roll out to licensees. The Starbucks Delivers service currently operates in China across 2000 stores. A number of US cities will also have the service rolled out in the Spring.