The week’s news included; US withdraws from World Health Organisation, EU unveils 750 billion euro rescue package, Boohoo buys £320m of PLT shares, Sweden’s economy grows in Q1 due to lax lockdown
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:
- Financial Times – Brexit risks making London’s dirty money fight harder, says lawyer
- Law Careers.net – How will the Competition and Markets Authority (CMA) respond to complaints about unfair practices in relation to cancellations and refunds?
- City A.M – Britain’s creative industries can be the beating heart of recovery
1. US CUTS TIES WITH WHO
The US has terminated its relationship with the World Health Organisation (WHO) over its handling of the coronavirus outbreak. Donald Trump accused the WHO of being under China’s control and ignoring China’s misleading reporting of coronavirus statistics. Trump threatened to permanently withdraw if the WHO did not agree to implement “major substantive improvements” within 30 days.
If it fails to comply, the US will “redirect” the $400 million in funds annually allocated to the WHO towards other global health issues. This withdrawal could have huge implications for the WHO as the US is the largest contributor. Trump’s decision has drawn heavy criticism, from abroad and at home including from the American Medical Association who said the decision “serves no logical purpose”.
2. EU RECOVERY FUND
The European Commission has revealed a €750 billion coronavirus recovery fund for member states. These funds will prop up member states with €500 billion in grants and €250 billion in loans. The funds will be included in the long-term EU budget for 2021-2017. The EU will borrow the money for the fund and will be repaid through EU budgets in future. Some states oppose the idea of issuing grants without any commitment to economic reform. In particular, Austria, Denmark, the Netherlands, and Sweden suggest any aid should be issued as low interest loans. The EU 27 countries will need unanimous support from all member states in order for the proposals to take effect. Amendments are likely to take place before any aid is passed. This proposal comes in addition to €750 billion in bond purchases by the European Central Bank.
3. LONG MARCH TO NORMALITY
The government has introduced the “Test and trace” system in England to help begin the easing of lockdown measures. Anyone with coronavirus systems can order a test from the NHS Test and Trace website. People who have tested positive for covid-19 will be contacted and will be requested to provide information on who they have come into contact with. Those who have come into contact with infected people will be told to self-isolate for 14 days. The scheme will help ease lockdown measures by identifying and isolating potential spreaders. There are 25,000 tracers who will be contacting those testing positive. BBC News looks closer at how the system will work.
The UK furlough scheme will end in October and employers will pay increasing contributions to their employees’ wages under the scheme. Currently, workers on the furlough scheme receive 80% of salaries up to £2500 a month. Employers will pay 10% of this from September and 20% from October. 8.4 million workers are currently on the scheme and it costs the government £14 billion every month.
Traders and lawyers are returning to offices with some new working patterns. Last week, 14 of the UK’s largest law firms discussed their various plans for returning to the city. Only 10% of Fieldfisher staff will return to the office initially and this will gradually increase. Investment bank Citigroup will also bring back under 10% of its London staff to its Canary Wharf office. Temperature testing, advising face masks and restrictions on numbers of people in communal areas is to become the norm.
English competitive sport is now permitted behind closed doors from 1 June. Premier League football is set to return on 17 June. Four players out of the 1008 players and staff tested for coronavirus have tested positive. These players have gone into self-isolation.
4. FRANCE RESCUES CAR INDUSTRY
France has announced an €8 billion rescue package for its car industry amid a coronavirus slump. The car industry globally has slashed thousands of jobs and France’s main carmakers Renault and PSA have also suffered. Renault posted its first annual loss in 10 years but the governments package did not include a widely anticipated loan for the car giant. The government package did however, include €1 billion in grants to encourage consumers to buy electric vehicles and stimulate demand. Citizens will also receive a €3000 grant to upgrade to less polluting cars. The French government is keen to reignite the sector as new car sales have tanked 80%. The government is also seeking to accelerate the adoption of electric vehicles. France is currently the largest producer of electric & hybrid vehicles and aims to produce 1 million by 2025. Check out our article exploring the revolution that is electric vehicles.
5. GERMAN COURT RULES ON VW
The German Federal Court, BGH, has ruled against Volkswagen in a landmark diesel-gate compensation case. A Volkswagen car owner demanded the full purchase price of his car due to the diesel emissions scandal. The court ruled that he was entitled to partial reimbursement once the vehicle was returned to VW. The car owner will be entitled to a “usage compensation” based on the number of kilometres driven. This has huge implications for the carmaker as it will now reimburse thousands of German claimants who return their vehicles. This ruling, however, does not cover new claims, only ongoing claims.
The dieselgate scandal broke in 2015 where VW was found to intentionally install cheat devices in cars. These devices produced artificially low emissions under test conditions. On the road, emissions were around 40 times higher than under test conditions. Some 11 million vehicles worldwide were affected. Volkswagen has paid a staggering €30 billion in fines and compensation to date.
6. BOOHOO PLT SHARE PURCHASE
Fashion retailer Boohoo has purchased the remaining 34% stake in Pretty Little Thing for £320 million. Boohoo will pay £270 million up front and £54 million if Boohoo sustains an average 491p share price over a six-month period through till 2024. This move appears to be driven by pressure from Shadowfall, a short seller who claimed in a damning report that Boohoo gave a “misleading impression” of its cash position and implied Pretty Little Thing was a 100% owned subsidiary. These allegations were denied by Boohoo. Boohoo however, sprang into action, upping its stake from 66% to 100%. The retailer raised £198 million earlier this month from investors as part of a post-coronavirus M&A drive. Boohoo shares jumped 12.96% in response to the news.
7. TED BAKER SHARE SALE
Ted Baker is to launch an £80 million share sale in an attempt to stay afloat. The high street retailer consulted with shareholders agreed to raise capital to survive the coronavirus outbreak. Ted Baker’s total market capitalisation currently sits at around £80 million after years of decline so the share sale is a huge task.
The high street store has been embroiled in controversy over the past few years. Late last year, it was involved in an accounting scandal. Auditors found Ted Baker’s inventory value was overstated by a whopping £58 million, nearly three times as large as initially estimated. Earlier in the year, reports of sexual harassment by the founder of the chain led to his departure and revamp of HR policies. The retailers share price has tanked 95% from its 2015 peak and now sits barely above its 1997 IPO share price.
8. SWEDEN POSTS GROWTH DUE TO LAX LOCKDOWN
Sweden has posted economic growth of 0.4% in quarter one, driven by its comparatively relaxed coronavirus restrictions. Unlike most of its neighbours, Sweden did not impose a full lockdown, only implementing social distancing measures and advising citizens to work from home where possible. Bars and restaurants remain fully open and students under 16 still attend school. The rationale was to adopt a herd immunity strategy. This kept the Swedish economy ticking, while powerhouses like Germany saw a 2.2% decline in the first quarter. But this relaxed approach came at a significant human cost. Sweden reported the more coronavirus infections and deaths than Finland, Denmark, Norway and Iceland combined. Sweden has recorded 36,727 and 4,300 deaths to date, and it has the highest daily death rate per capita in the world.
9. WARNER MUSIC PREPS FOR LISTING
Warner Music is preparing to list on the NASDAQ stock exchange and is aiming for a $13 billion valuation. The music giant put its listing ambitions on hold due to the coronavirus, but it is now reigniting its plans. Warner will sell 70 million shares and hopes to raise $1.8 billion from the listing. Warner Music represents 800,000 artists including some of the largest names like Ed Sheeran , Bruno Mars and Madonna. The company turned over $4.5 billion last year.
10. VIRGIN MEDIA TO LEAVE UK HIGH STREET
Virgin Media is to shut all 53 of its UK stores in a permanent shift towards remote working. The stores will not open once and the 341 affected staff will be offered newly created positions. Virgin Media is seeking to move towards working from home due to its success during the lockdown. The company has received good feedback from customers who are now making more enquiries online and over the phone. 300 new jobs will be created in customer care and these jobs will be permanently home based. A further 50 new roles will be in sales. Virgin Media had long been looking to reduce its presence on the high street and the move forms part of this plan.