The week’s news included; Flybe collapses, US Fed cuts interest rates amid coronavirus outbreak, Virgin Media data breach affects 900,000, Wales introduces minimum alcohol pricing.
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 – Why hasn’t AI changed the world yet?
- Investopedia – How JP Morgan makes money
- City A.M. – One month after Brexit: what’s happened so far?
1. FLYBE COLLAPSE
UK regional airline Flybe has collapsed into administration putting 2000 jobs at risk. The airline had been severely struggling and recently received a controversial government rescue deal. Crucially, however, part of this deal was a £100 million government loan which was still subject to Treasury approval. The Treasury, however, did not authorise the loan. The coronavirus outbreak was the final ingredient in FlyBe’s recipe for disaster. A nosedive in demand meant FlyBe no longer had the liquidity to continue operating and had to call in the administrators. All flights were immediately cancelled, and passengers were told not to travel to the airport. The government had been keen to keep FlyBe going partly because it is the sole provider on some domestic UK flight routes. Unfortunately, it quickly became clear the business was unsustainable in its current form.
2. MILAN ON LOCK DOWN
Italy has put a quarter of its population on lockdown in response to the coronavirus outbreak, restricting movement in and out of 15 provinces. Italy now has more coronavirus cases than South Korea with thousands of new cases identified in the past few days. The emergency restriction now prevents all persons leaving or entering “red zones” until at least 3 April except in exceptional circumstances. The majority of the red zone is in the Lombardy region, home to the Italian financial district in Milan. Nearly 10 million Lombardy residents will be restricted while 6 million residents of 14 other provinces will also be restricted, including those in Venice. This will no doubt have untold consequences for the Italian economy but the government deem this measure essential to curtail the alarming rate of infection.
3. US FED CUTS RATES
The US Federal Reserve has slashed interest rates by 0.5% to boost markets amid the coronavirus outbreak. The US central bank held an emergency meeting after G7 finance ministers agreed to implement fiscal measures to mitigate the economic impact of the coronavirus outbreak. US benchmark rates now lay in the range of 1% to 1.25% following the unanimous decision to cut rates. Fears are spreading of a recession due to outbreak which has sent China’s factories into shutdown, hitting businesses across the globe. The OECD predicts that the outbreak could cause the lowest global growth rates since 2009. Australia and Malaysia have also cut rates in response to outbreak. BBC news explores whether cutting rates will be effective.
4. ARAMCO SHARE PRICE SINKS
The world’s most valuable public company Saudi Aramco has sunk beneath its IPO price after OPEC failed to strike a production deal. Saudi has been pushing for a production cut to reduce global amid the coronavirus outbreak. Oil prices had already tanked to around $45 a barrel last week, over $20 lower than January prices. Other members such as Russia however, refused to cut production and talks collapsed. Consequently, oil prices also collapsed 30%. Saudi Arabia’s stock exchange sank 7.7%. Saudi Aramco hit a $1.7 trillion valuation last year following its IPO, but following the collapse of talks, its share price sank to $8.24. This is the first time it has fallen beneath its IPO price.
5. LEBANON DEFAULTS ON DEBT
Lebanon has defaulted on its sovereign debt for the first time. The country announced it would not complete a $1.2 billion bond payment due to economic crisis engulfing the nation. The Lebanese pound has plunged nearly 60% against the dollar since November meaning interest payments are significantly more expensive than a year ago. Furthermore, imported goods have become more expensive making life increasingly difficult and nearly 40% of the nation are now predicted to fall into poverty. Public services are failing, and basic necessities are becoming extortionate. Lebanon currently imports 80% of the goods it consumes. The default on the debt will make borrowing even more costly for Lebanon and impact the wider economy. The middle eastern nation is nearly $90 billion in debt but its GDP is just over $56 billion.
6. VIRGIN MEDIA DATA BREACH
Virgin Media has revealed that a marketing database containing details of 900,000 people was unprotected and accessible online for 10 months. The database did not contain passwords or bank details, but contact details and home addresses were available. The data was accessed by at least one person who is currently unknown. Virgin Media apologized and stated that this was due to an employee failing to configure the database according to procedure. The investigation is currently ongoing. Virgin Media has confirmed it will email affected customers. Most affected persons were television and landline customers, but some mobile customers were also affected.
7. CATHAY PACIFIC FINED FOR DATA BREACH
Hong Kong airline Cathay Pacific has been fined £500,000 for inadequate data protection measures. This action derived from a cyber-attack on Cathay Pacific’s database which exposed personal details of 9.4 customers. The UK regulator, the Information Commissioners Office found that for nearly 4 years from October 2014, the company had inadequate data protection measures in place. These included basic failures such as patching servers, updating operating systems and failing to protect backup files.
Over 111,000 UK customers were affected by the breach. Fortunately for Cathay Pacific the breach was before the introduction of GDPR. Under GDPR firms can be fined up to 4% of global turnover for data breaches. For Cathay Pacific this could have seen a £470 million fine. The owner of BA recently got slapped with a £183 million pound for data protection failures. Fines such as these are wake up calls for businesses, reminding them of the importance of data protection in the digital age.
8. APPLE SETTLES PHONE SLOW DOWN LAWSUIT
Apple has settled a US lawsuit for $500m over its slowing down of older iPhone models. The tech giant was exposed in 2017 for intentionally slowing down older models. Apple said this was to preserve the life of the phone but consumers were not informed that a battery replacement could resolve the issue. Many customers would have simply changed battery instead of getting new phones had they been informed. The backlash saw Apple offer discounted battery replacements but the company denies any wrongdoing.
This latest settlement will cover pay-outs to thousands of iPhone users. Customers named in the settlement will be entitled to up to $3500 and other iPhone 6, 6S, 7 and SE users could receive up to $25 per handset. The lawyers representing iPhone owners will receive $93 million. The settlement must now be approved a California judge in order for the payout to proceed.
9. WALES INTRODUCES MINIMUM ALCOHOL PRICING
Minimum alcohol pricing has officially been introduced in Wales. The Public Health Minimum Price for Alcohol Wales Act 2018 now requires retailers in Wales to charge a minimum of 50p per unit. In real terms, a bottle of wine would cost no less than £4.69. The policy largely targets low cost high strength drinks such as white cider. Minimum pricing is a controversial policy which aims to tackle alcohol addiction but divides opinion. Critics say it disproportionately penalizes the poor despite alcoholism spanning across social classes. Advocates say high strength-low cost drinks exacerbate the issue of alcoholism, putting strain on the NHS which could be avoided. Excessive alcohol consumption costs the NHS in Wales alone £159 million.
Scotland introduced minimum pricing in 2018 and saw a noticeable decline in alcohol sales following its introduction. Cider sales fell 18.6% in the first year of introduction while overall unit sales fell 3.6%. England currently has no plans to introduce a similar measure.
10. ELECTRONIC SIGNATURES
Electronical signatures have now been recognized as legally binding in the UK according to the Lord Chancellor. The controversy stems from legislation that lays out requirements for signature such as deeds but predate the digital era. The lord chancellor found that electronical signatures are binding in most cases and released a ministerial statement confirming this. As long as the signatory intended to sign and other formalities were satisfied an electronic signature would have legal effect. This statement affirms a 2019 report by the Law Commission. View the ministerial statements here