The week’s news included; Thomas Cook’s 555 stores saved, payment
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Opinion articles of the week:
- Financial Times – Can I stop my neighbour renting his flat out on Airbnb?
- BBC News – How reality TV is changing the way we consume fashion.
- City A.M – DEBATE: Last year’s winter fuel allowance for pensioners cost almost £2bn – should the benefit be means-tested?
1. BREXIT DEADLOCK
The UK government has proposed a “pared-down free trade agreement” in order to break the Brexit deadlock. The talks will be focused on securing a simple free trade deal rather than a wide ranging withdrawal agreement. The talks took place between Irish Prime Minister Leo Varadkar and Boris Johnson. Varadkar holds a lot of power on the Brexit issue given the main impasse is the Irish backstop. Securing his approval on any deal will likely see other EU leaders support the deal. EU leaders have agreed to intensify negotiations in order to seek this elusive deal.
In any case, Boris Johnson only has until October 19 to secure a deal before he is obliged by law to ask for an extension. Explosive talks with German Chancellor Angela Merkel made a deal seem increasingly unlikely but these latest talks show a glimmer of hope. It is most likely however, there will be an extension to Brexit and the October 31 deadline will be pushed even further back. One can only speculate how long such an extension will be.
2. THOMAS COOK STORES SAVED
Travel firm Hays has announced that it will buy all 555 of Thomas Cook’s physical stores. Talks will now begin with individual landlords so Hays is unable to guarantee all stores will be saved. Hays says the acquisition will provide it access to markets where it currently has limited or no presence. The intention is to retain all staff and the move could save as many as 2500 jobs. Thomas Cook collapsed last month, putting 22000 jobs worldwide at risk. Hays purchased the Thomas Cook physical stores from administrators
3. HSBC JOB CUTS
HSBC has revealed plans to cut 10,000 jobs. This accounts for 4% of its global workforce and forms part of a cost cutting drive. The cuts will be focused on high paid roles, particularly in Europe, a region which forms a low portion of HSBC’s global turnover. New CEO Noel Quinn was appointed in August and is keen to reshape the business to focus on more profitable areas. HSBC has also been feeling the pinch of the US-China trade war and predicts lower growth.
This round of cuts will be the largest since 2011 when the bank cut 30,000 jobs in order to raise the bank’s return on equity. HSBC currently employs 237,685 people globally.
4. PAYMENT FIRMS DROP OUT OF LIBRA
Facebook’s cryptocurrency launch plans have been dealt a huge blow after nearly all payment firms dropped out of the project. Last week, MasterCard, Visa and South American Mercado Pago all pulled out of the Libra group.
Facebook’s Libra cryptocurrency has faced huge back lash from regulators and governments worldwide. Although the Libra Association would own the currency, there is fear that Facebook would hold too much power over individuals’ data. The 30 founding members are down by 6 big supporters and more could follow suit. With fewer members, Facebook’s share of influence increases which could raise further concern. How Facebook will manage to fight off any regulatory clampdown remains to be seen.
5. PIZZA EXPRESS DEBT
Pizza Express is in trouble and has brought in advisers to help manage its £1.1 billion debt pile. Interest payments on this debt total £93 million a year, wiping out all its operating profits and then some. The payments have led Pizza Express to a loss of £55 million last year. The restaurant chain confirmed however, that it is not in imminent danger of bankruptcy. Its £600 million repayment schedule to outside creditors will only begin in 2021. Regardless however, a debt restructuring seems unavoidable in order for the chain to survive. Pizza Express currently employs 14000 people.
6. DYSON PULLS PLUG ON ELECTRIC CAR
Dyson has dropped its plans to produce an electric car. The vacuum maker announced plans last year aiming to release its vehicle next year but has conceded the project is not commercially viable. Engineers have already
7. HONG KONG STOCK EXCHANGE DROPS LSE BID
Hong Kong Exchange and Clearing (HKEX) has dropped its £32 billion bid for the London Stock Exchange (LSE). HKEX said it was unable to reach agreeable terms with the LSE management and decided to drop the plans. The deal was not expected to go through under the current bid. Analysts had previously said the offer was far too low to ever be acceptable to investors. HKEX offered around £71 per share, £12 per share less than the offer price. In addition, LSE already had plans to acquire financial data firm Refinitiv for £22 billion. The deal with HKEX would have seen LSE abandon
8. AMAZON WADES INTO LEGAL SECTOR
Amazon has waded into the legal services sector with a new IP accelerator firm. The company will allow businesses looking to protect their IP rights to connect with a network of law firms. Amazon says this will allow companies to better protect their IP at a much faster speed than traditional registration. The service will be free, and users will only have to pay the law firm at pre-negotiated rates. The services provided will include; registration of trademarks, copyrights, patents and development of IP protection strategies.
9. HMV ANNOUNCES EXPANSION PLANS DESPITE RECENT RESCUE
HMV has announced expansion plans despite being saved from the brink of collapse just months ago. The retailer’s new owner, Sunrise Records, revealed plans to open new and refurbished stores next year. It even hopes to open HMV’s largest ever store. Sunrise aims to introduce more live music at stores in order to bring in more customers however, whether this will have a significant impact on sales remains to be seen.
Late last year, HMV was on the brink of administration, for the second time in six years.
10. FACEBOOK TAX
Facebook paid just £28 million in UK tax last year despite posting nearly £800 million in gross profit. The US tech giant turned over £797 million in the UK with gross profit of £763 million. Facebook was however, left with pre-tax profits of just £96.6 million after expenses. This has sparked outrage from many who argue tech giants are using loopholes to avoid paying their fair share of tax in the countries in which they operate.
Facebook like many of its Silicon Valley contemporaries is expanding heavily in the UK. It recently opened an office in King’s Cross, London, while increasing its employees by over 50% to 1965. By the end of 2019 it aims to have 3000 UK employees.