The week’s news included; UK government approves HS2 but China offers to build it quicker & cheaper, $26 billion T-Mobile Sprint merger gets green light, $4.1 billion Viagogo-StubHub merger put on ice, Court of Appeal rules on Islamic marriages
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 AM – How tax is transforming in the digital age.
- Telegraph Currency experts fear IMF no longer has firepower to act as world’s lender of last resort’
- CNBC – Monzo CEO Tom Blomfield: Big banks are set up to ‘kill’ change
- The Independent – How modern football became broken beyond repair.
1.HS2 GETS THE GO AHEAD
The government has decided to approve High Speed 2 (HS2) railway project despite spiralling costs. Works had already begun on Stage 1, the line between London and Birmingham but the cost of the project was grossly underestimated. HS2’s budget was only £56 billion in 2015 but has nearly doubled to a staggering £106 billion. The government held a review to decide how to proceed in light of this and have backed the project entirely.
Supporters say the line will decrease travel times, improve capacity, create jobs and fundamentally begin to close the North-South economic divide. The benefits are inadequate for many opponents particularly in Wales and the North of England. People in these areas in some cases face train journeys of 6 hours to travel just 30 miles due to poor rail connections. Many argue the money spent on HS2 should go towards addressing these issues rather than speeding up already well-connected routes. Furthermore, greater connections to London could lead to a drain of talent and resources from the North to London. Stage 2 which covers the East Midlands is not expected to be completed until 2040, nearly a decade after the Stage 1 – London line.
The project has spiralled in costs largely because of the gross underestimation of land purchase costs. Some properties along the route were not even accounted for and now keep adding to costs. Furthermore, because tracks must run in a straight line to achieve the 360mph speed, dealing with the land and natural features such as rivers is proving costly. This element also sparked outrage amongst environmental campaigners. There are also allegations of mismanagement by the board and a failure to capitalise on potential efficiency savings.
In another twist to the tale, a China has now offered to build HS2 for a much lower cost within 5 years. The Chinese state rail company are in preliminary discussions with the government but this unsurprisingly has drawn mixed reactions.
2. JOHNSON’S CABINET RESHUFFLE
Boris Johnson reshuffled his cabinet last week bringing some significant departures, including (now former) Chancellor Sajid Javid. Sajid Javid resigned after he refused Boris Johnson order to fire his aides. He
Some of the other notable changes from the reshuffle include;
- Former Brexit Secretary Stephen Barclay becomes chief secretary
to the Treasury as theofficial EU departure on 31 January 2020. positionwas abolished following the UKs
- Amanda Milling replaces James Cleverly as minister without portfolio and the Conservative Party chairman
- Business Secretary Andrea Leadsom is sacked and is replaced by Alok Sharma
- Housing Minister Esther McVey is sacked and is replaced by Robert Jenrick
- Environment Secretary Theresa Villiers is sacked and replaced by George Eustice, who resigned as a minister last year over Theresa May’s Brexit plans
- Attorney General Geoffrey Cox was asked to resign by the PM. He is replaced by former Brexit Minister Suella Braverman
3. T-MOBILE SPRINT MERGER
The $26 billion merger between T-Mobile and Sprint has been given the green light following a legal challenge. A number of US States moved to block the deal in the courts after it was agreed in 2018. They believed this deal breaches competition law, as now, US mobile phone users will just have 3 choices of networks: T-Mobile, Verizon and AT&T. A US judge ruled last week that the deal would not be harmful to consumers, paving the way for the deal to progress.
Sprint is currently owned by Japan’s Softbank so this verdict comes as a rare win in recent times. Through it’s $100 billion Vision Fund Softbank also holds large stakes in troubled giants such as Uber and WeWork. These companies drove Softbank to a $6.5 billion loss in the third quarter of 2019. The bank was however, buoyed by the news of Sprint’s takeover with shares rising 12%
4. HARRY’S MERGER DROPPED
Edgewell Personal Cares’ planned £1.4 billion takeover of men’s grooming company Harry’s has been pulled due to competition issues. The deal, announced in May, triggered serious concerns from regulators and the US Federal Trade Commission (FTC) even threatened legal action. This is fundamentally because such a deal could substantially weaken competition to the detriment of consumers. Edgewater Personal Cares is an industry giant owning brands such as Wilkinson’s Sword.
Harry’s entered the market as a challenger with its trendy brand image has brought it huge popularity amongst millennials. Founded in 2013, the company boasts 2% of the US men’s shaving industry and its growing. The vast majority is held by P&G, Unilever and Edgewell Personal Care.
5. VIAGOGO STUBHUB MERGER PUT ON ICE
The Competition and Markets Authority has halted ticked resale sites Viagogo and StubHub’s $4.1 billion merger. The CMA is investigating the merger due to concerns that it may decrease competition and consequently harm consumers. It had to issue a warning after the regulatory body suspected the entities would merge prior to the finally ruling. Viagogo and StubHub must now report to the CMA every week proving they have not integrated and are prevented from taking any action that may lead to this, prior to a final decision. Despite this, the firms expect to be able to merge by the end of March 2020. Viagogo has however, had its fair share of trouble with the CMA in the past. The CMA only dropped it’s lawsuit against Viagogo over poor and misleading practices in September 2019. This could influence the final decision of the CMA, particularly due to the impact on customers. Viagogo is buying StubHub from eBay.
6. COURT OF APPEAL ISLAMIC MARRIAGE RULING
The Court of Appeal has ruled that couple who sought an Islamic wedding ceremony should not have been entitled to nullity of marriage as it was not a valid marriage. In this case, a couple got married in an Islamic ceremony in 1998 but did not have a civil ceremony. After 18 years when the wife issued a divorce petition, she sought a decree of nullity under the Matrimonial Causes Act 1973. Nullity of marriage means that the marriage was void and was never is considered valid. People seek annulments instead of divorce to protect their property and to avoid the legal complications of divorce. In the family court, the judge ruled that the wife was entitled to a decree of nullity. The attorney general argued however, that she was not entitled to this decree because the Islamic ceremony had no legal effect. Legally, nullity of marriage can only have effect on marriages which were considered legal marriages under the 1949 Marriage Act. The Court of Appeal has upheld this concept and deemed the couple’s marriage as a “non-qualifying ceremony”.
Many commentators have called for the law to be updated to recognise a wider range of religious marriage ceremonies as legally valid.
7. UK POSTS 0% GROWTH
The economy saw 0% growth in last quarter of 2019, which although poor, was still above some estimates. Over the year however, the UK economy grew 1.4% in 2019, up from 1.3% in 2018. Economists estimate that the start of 2020 will be positive so there are no immediate fears of recession. The stagnant GDP figure was largely due to weak manufacturing output, all too common in a sector that is consistently underperforming. Manufacturing has been hugely impacted by Brexit uncertainty with some plants pausing operations due to concerns about leaving with no deal.
8. MAN CITY BANNED FROM EUROPEAN COMPETITION
Manchester City Football Club have been banned from European club competitions for the next two seasons due to breaches of UEFA rules. Financial Fair Play (FFP) rules require clubs to break even and their expenditure in the pursuit of success must not exceed their income. According to the CFBC, the club overstated sponsorship revenue and breached “break-even” information submitted to UEFA between 2012 and 2016. In addition to the 2 season ban, they have also been issued a €30 million fine. They were also fined in 2014 for a breach of these regulations. Crucially, however, this ban could see football club could miss out on a staggering £170 million in revenue from participating in European matches. Manchester City said they were disappointed in the ruling but not surprised. They will appeal the decision to the Court of Arbitration for Sport
9. RBS CHANGES NAME
The Royal Bank of Scotland is to change its name to NatWest Group. This comes as part of a move to reform it’s image following it’s 2008 bailout. Over 80% of RBS branches operate under the name NatWest so they say this is the driving force behind the change.
RBS is still 62% owned by the government after it was bailed out for £46 billion. The bank has however, turned it’s fortunes around after a turbulent few years. RBS posted bottom line profit of £3.1 billion for 2019, an over 90% increase from 2018.This came despite, a huge £900 million PPI payout in the run up to the August 2019 deadline.
RBS under it’s new chief Alison Rose is now focused on accelerating progress. The bank has now made pledges to tackle it’s carbon footprint and provide greater support for ethnic minority entrepreneurs.
10. OLA STEPS INTO LONDON
Indian ride hailing app Ola, is set to shake up the UK market as it steps into London. The app aims to be number 1 in London within a year. Ola is already well established in cities outside London and boasts 3 million UK customers. With Uber’s London operating license potentially revoked long term however, like many operators, Ola is looking to cash in. It currently has 25000 drivers, behind Uber and Bolt’s 45000 and 35000 drivers respectively.
Ola seeks to succeed where Uber fundamentally failed, on safety. The Ola app has numerous safety features including a panic button and an irregular route tracker. Drivers with more than 6 points on their license are also barred from being drivers. Inadequate passenger safety is the core reason why Uber’s license was not renewed by TfL so it’s not surprise this is a priority for Ola. Ola’s license will run until the end of 2020. Uber is operating as normal until their appeal of TfLs decision is complete.