The week’s news included; India bans TikTok amid China territory dispute, Airbus slashes 15,000 jobs, TM Lewin closes permanently, Tesla becomes world’s most valuable car company,
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:
- Lawcareers – Oil prices and the future of black gold
- BBC News – Coronavirus: Could ‘immunity passports’ create an antibody elite?
- The Guardian – The UK’s new slavery laws explained: what do they mean for business?
1. INDIA BANS TIKTOK AMID CHINA TERRITORY ROW
The Indian government has banned TikTok and 58 other Chinese-owned apps amid conflict with China. There is increased military presence and conflict between China and India in the Ladakh region. Both China and India claim ownership of the territory and clashes have led to the death of 20 Indian troops.
Now, the Indian government claims apps such as TikTok, WeChat and Clash of Kings are a threat to national security. This is due to the alleged theft of user data from such apps. India has over 120 million TikTok users and has the largest user base outside of China. TikTok is owned by Chinese tech firm Byte Dance and has 800 million active users across the globe.
2. US JOBS GROWTH
The US added a record 4.8 million jobs in June, but unemployment still sits at 11%. This high number of new jobs indicates the reopening of businesses and rehiring of staff who were either furloughed or fired. This jobs increase is nearly double the 2.5 million jobs added in May. Weekly claims for unemployment benefits however, have remained somewhat steady, suggesting these jobs figures are not as indicative of a bounce back as we might think.
Across the US new spikes in coronavirus cases may lead to subsequent localised lockdowns. Large states such as California and Florida have pushed back opening plans due to these spikes. For local governments there is a huge dilemma as to whether to reopen and keep businesses afloat but risk more deaths, or maintain strict lockdowns to the detriment of the economy.
3. AIRLINE INDUSTRY CUTS
Airbus has announced that it will slash a huge 15000 jobs. Airbus produces aircraft but with global orders for new aircraft down by 40% it finds itself in crisis. The cuts will affect workers globally, but Germany is worst affected as 5100 jobs will be lost. In the UK, 1700 jobs will be lost.
Air France KLM has announced plans to cut 7500 jobs over the next three years. The airline, like many others in the industry has had little to no income for the past three months. The company revealed it was losing €15 million every day. France’s government is to provide billions to keep airlines afloat but this will not be enough to save thousands jobs in the industry.
In the UK, the government has released a quarantine free list of countries to encourage people to travel safely. Airlines have also ramped up safety measures in line with guidance. With cases still rising globally and no immediate vaccine available, many will still feel uncomfortable travelling abroad.
4. HIGH STREET DECLINE
It has been a bleak week for the high street as numerous brands announce thousands of job cuts.
SSP Group, which owns UpperCrust and Caffee is to cut half of its entire UK workforce. 5000 jobs will be lost as the company’s stores are based mainly at train stations and airports. With limited passenger travel the firm’s income has practically disappeared.
TM Lewin and Harvey’s have filed for administration. TM Lewin is to permanently close all its 66 stores, with the loss of 600 jobs. The menswear store was founded in 1898, will now continue to trade only online. 240 jobs at furniture store Harvey’s will be lost.
High street restaurants have also fallen into tough times. Casual Dining Group, the owner of Bella Italia, Las Iguanas and Cafe Rouge has fallen into administration. Byron is also to go into administration to protect the company as they seek buyers.
Harrods will cut 14% of its staff, with the loss of 672 jobs. Further cuts could ensue if consumer activity does not pick up significantly. Harrods faces an additional challenge as many of its customers are wealthy tourists but with tourism effectively non-existent, the road to recovery seems long.
5. TESLA BECOMES WORLD’S MOST VALUABLE CAR COMPANY
Tesla has overtaken Toyota to become the world’s most valuable car company. Elon Musk’s Tesla posted better than expected delivery results bumping its market value up to roughly $209 billion. This surpassed Toyota’s $205 billion valuation. Tesla’s growth has been exponential as it only reached a $100 billion in January. Tesla’s surge to top spot is evidence that market value can be driven largely by hype. Toyota posted revenue of $281 billion last year, dwarfing Tesla’s $24.6 billion. Toyota sold over 20 times as many cars last year as the 500,000 Tesla expects to sell this year.
Tesla’s value is riding the wave of increasing market confidence in the future of electric vehicles. Although most major automotive players have electric vehicles in their ranges, Elon Musk has driven Tesla to become the most prominent electric automaker in the public sphere. Investors are banking on Tesla becoming the front runner in the new era of vehicles.
After years of financial struggles and cash burn, Tesla has been in profit for the past three quarters, despite the Covid-19 outbreak. This latest surge in share price to over $1100 will also fill up Elon Musk’s pockets. His pay packet entitles him to a $350 million payout for every additional $50 billion in Tesla’s market value past $100 billion, up to a company value of $650 billion.
6. FITCH DOWNGRADES RECORD NUMBER OF NATIONS
Credit rating agency Fitch has slashed the ratings of a record 33 countries as national economies enter recession. The UK’s rating was already downgraded to AA- in March. Nations across the globe have pumped trillions into their economies to keep businesses and citizens above water. The OECD predicts sovereign debt for the richest nations could increase by $17 trillion due to covid support. The IMF has even predicted global public debt could soon outstrip GDP. This increasing debt amid shrinking economies are raising concerns about nations defaulting on their debt. Defaults on debt could have huge ramifications for global financial stability. How governments manage the post-lockdown economy remains to be seen.
7. WIRECARD OFFICES RAIDED BY POLICE
Wirecard’s German offices have been raided by police as part of an investigation into its €1.9 billion accounting blackhole. The CEO and three board members are under investigation although further details have not been released. The hole was exposed two weeks ago after its auditor EY refused to sign off Wirecard’s 2019 accounts due to irregularities regarding the location of funds.
The UK FCA initially banned Wirecard from continuing any regulated activities in the UK. This however, left thousands of people locked out of their bank accounts. Wirecard provides payment solutions to various UK digital banks and prepaid card providers. Last week however, the FCA lifted the ban on Wirecard’s UK activity.
8. CIRQUE DU SOLEIL BANKRUPTCY
World famous circus group Cirque du Soleil has filed for bankruptcy protection and is slashing jobs. The touring group has been running since 1984 but is now unable to meet its financial obligations due to Covid-19. Global lockdowns saw Cirque du Soleil cancel all its shows and its income plummeted to zero. To stay afloat, it will cut around 3500 jobs or 95% of its staff. The group expects however, to rehire the majority of affected staff once it can start running events again.
9. WIGAN ATHLETIC ADMINISTRATION
Wigan Athletic Football club has fallen into administration just over month after a new owner took over. The English Championship team has performed well on the pitch during football’s return behind closed doors. Unfortunately, off the pitch, in a strange turn of events a seemingly well-run club has fallen into administration. The suspension of the league combined with its return behind closed doors has taken a huge toll on finances. Next Leader Fund took over Wigan in June 2020 but there are questions over funding that was due to be provided to the club but was never received.
Due to the club’s collapse into administration, Wigan will have 12 points deducted from their total. This deduction will apply for this season if they finish outside the relegation zone. If they finish in the relegation zone, their points deduction will be applied next season.
Wigan could just be the first in a long line of football collapses. Smaller clubs rely heavily on ticket sales and matchday concessions. Larger clubs are better equipped to deal with lack of fans but are still losing millions in revenues every game.
10. E-SCOOTERS LEGALISED
Rental escooters are now legal on UK roads. They are banned from pavements and helmets are recommended but not compulsory. Full or provisional, car, motorcycle or moped licenses will be required. Local authorities can now run e-scooter sharing schemes in their areas as they see fit. The schemes will begin with a 12-month trial and roughly 50 local authorities have expressed interested in adopting the scooters. A large reason for the measure is that rental scooters are a greener method of easing growing congestion on public transport, as the economy begins to reopen. Privately owned scooters remain illegal on roads.