The week’s news included; China cuts tariffs on US goods amid Coronavirus outbreak, Petrol/diesel car ban brought forward to 2035, France fines Apple for slowing down phones, YouTube earnings posted for the first time
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:
- BBC News – What Brexit can teach us about the economic threat from coronavirus
- City A.M – the UK productivity crisis is a threat to capitalism
- BBC News – Coronavirus and oil: Why crude has been hit hard
1. DONALD TRUMP CLEARED OF IMPEACHMENT CHARGES
The US Senate has acquitted Donald Trump of obstructing Congress and abusing his position. Donald Trump was impeached in December by the Democrat led House of Representative but for him to have been removed, the Senate would have to find Trump guilty of the charges. The Senate is however, controlled by Trump’s Republican Party so in any case, a large number of rebels would be required for Trump to be removed. The Senate voted 52-48 and 53-47 to acquit Trump of abusing powers and obstructing Congress respectively. The result came as no surprise.
The impeachment charges stemmed from Trump allegedly pressuring Ukraine to gather information on political rival Joe Biden in order to derail his campaign. With the impeachment saga over, Trump will likely use this as a stick to beat the Democrats and appeal to his base. In typical Trump fashion, he took to Twitter to address the “impeachment hoax”.
2. CHINA CUTS US TARIFFS AMID CORONAVIRUS
China has slashed tariffs on 1700 US products as the coronavirus outbreak hits the Chinese economy. The US and China have been embroiled in a trade war for the past three years but tensions are thawing. In December, a phase one trade deal was agreed and China agreed to purchase $200 billion of US goods. Crucially however, the coronavirus has brought the Chinese economy to a standstill. Flights are no longer running and factories have shut meaning exports have tanked. China will now slash tariffs in half on some 1717 products from February 14.
3. PETROL/DIESEL CAR BAN BROUGHT FORWARD
The UK government has brought forward a ban on new petrol and diesel cars from 2040 to 2035. Furthermore, hybrids and plugin hybrids will also be banned under the plans, meaning on electric and hydrogen cars will be available on the market from 2035. This move comes as means for the government aims to reach net zero carbon emissions by 2050. Campaigners say however, this is not soon enough as petrol/diesel cars will still be on the roads for at least another 10-15 years after the ban. Cars will still be bought and sold second-hand. Many suggest more radical encouragement to increase uptake in electric vehicles such as removing VAT. Furthermore, the UK must build millions of new charging points if a switch to electric vehicles is to be successful. Crucially however, cars only make up 1/3 of the UKs CO2 emissions so there is still huge work to do in other sectors, of the economy. BBC News looks closer act how the ban will work in practice.
4. BEREAVEMENT PAYMENTS
A new legal ruling has deemed that government refusal to pay bereavement payment for cohabiting partners is a breach of human rights. Married couples and civil partners are entitled to a maximum £4,300 in government support after the death of a partner and this rises to £9,800 if they have children. There is currently no support for cohabiting couples. This landmark court ruling states that cohabiting couples are entitled to support under human rights law and would require the government to amend legislation to include such persons. The Child Poverty Action Group, who brought the case to court, estimated 2,000 families have lost out on the necessary support
5. APPLE FINED FOR SLOWING DOWN PHONES
France’s DGCCRF, the competition watchdog, has fined Apple €25 million euros for intentionally slowing down older models. Apple revealed in 2017 that older models were deliberately slowed down older models to prolong the life of batteries, not to encourage upgrades. They blamed this on the aging process of lithium ion batteries which after a time could lead to random crashes. Until this point, customers had not been informed about this.
Apple still slows down models from iPhone 6 series onwards and this feature kicks in once the battery starts to degrade. Apple now however, provides clearer information to customers on this. Furthermore, new software ensure the battery performance is smoother. The tech giant also introduced discounted battery replacements. Apple paid the fine issued by the DGCCRF and confirmed the matter had been resolved.
6. ALPHABET POSTS YOUTUBE EARNINGS FOR FIRST TIME
Alphabet has published YouTube’s earnings for the first time and business is booming. Google’s parent Alphabet has long kept detailed breakdowns of ad revenues under wraps, until now. YouTube brought in $4.7 billion in q4, up 31%. Furthermore, Google’s cloud business brought in $2.6 billion. Alphabets revenue in quarter four hit $46.1 billion, a 17.3% rise. Although ostensibly strong, this is in fact the weakest growth rate since 2015 and fell short of analysts’ estimates. Alphabet recently became the fourth US company to hit a $1 trillion market capitalization.
7. MIKE ASHLEY BUYS MULBERRY STAKE
Mike Ashley’s Sports Direct has taken another slice of the retail cake by purchasing a 12.5% in luxury brand Mulberry. Sports Direct is now remodeling itself as a premium brand and is taking steps to shape it’s portfolio in this way. The group recently changed it’s name to Fraser Group and also acquired the Flannels brand. Sports Direct has traditionally been associated with the lower end of the market with it’s plethora of discount sporting goods. The retailer made headlines for it’s poor working conditions and staff treatment. Now, Sports Direct is reforming it’s reputation and will look to build alliances with established luxury retailers to achieve this. A new luxury store under the name Frasers will be launched by Ashley in 2021.
8. CREDIT SUISSE CEO QUITS OVER SPYING SCANDAL
The CEO of Credit Suisse, Tidjane Thiam was forced to resign amid a spying scandal, after nearly 5 years at the helm. In September 2019, it came to light that two former Credit Suisse employees had been put under surveillance by private detectives. One of the employees Iqbal Khan, was monitored due to fears he could poach clients as he took up a new role at rival UBS. Mr Thiam denies knowledge of the operation but there are significant doubts. None more doubtful than Chairman Urs Rohner who has been embroiled in a power struggle with Thiam. Due to the escalating bad publicity over the issue, the the bank’s board voted unanimously to support Mr Rohner boss, accepting Mr Thiam’s resignation. Thiam will leave on 14 February and the current head of Credit Suisse’s Swiss arm Thomas Gottstein will take over as chief.
9. DISNEY+ SUBSCRIPTION BOOM
The Disney+ streaming service has bagged 28.6 million paid subscribers in under 3 months. Buoyed by the popularity of the Star Wars spin-off series “The Mandalorian” and other Disney classics, the success of the new streaming service has surpassed expectations. The service is now targeting to reach between 60 and 90 million subscribers within the next 4 years. Disney+ is still yet to be release in Europe, Latin America and India.
Despite the success of Disney+, overheads and the impact of the Coronavirus outbreak on Shanghai Disneyland dragged profits down 23% last quarter to $2.13 billion.
Although Netflix is the dominant force in entertainment streaming with 167 million customers, the streaming wars are certainly heating up. Apple TV+ also launched at the same time as Disney+ and Netflix is now pumping more than ever into its own original content. Check out our insight article on whether Netflix is ready for this war.
10. IKEA TO CLOSE LARGE STORE
The retail downturn has now affected one of the most stable giants, Ikea, forcing it to close its first large UK store ever. The Ikea store in Coventry will now close with the loss of 352 jobs. Ikea’s store was seven floors and the overheads were enormous and footfall were declining. The Coventry store posted consistent losses and various turnaround plans were attempted by to no avail. Ikea says it will now shift focus to its smaller sites as opposed to large retail park sites. The retailer will attempt to relocate many of those who lost jobs in Coventry. Ikea currently has 22 stores across the UK.