The week’s news included; Sunak’s job support scheme summarised, Trump nominates Supreme Court justice, EU challenges Apple back-tax ruling,
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 A.M – Green shoots of recovery in the IPO market
- City A.M – Republicans or Democrats: who is better for the economy?
- BBC News – Nike expects permanent shift to online sales
- Law Careers – Influencer marketing and the Gymshark phenomenon
1. SUNAK’S SUPPORT SCHEME
Chancellor Rishi Sunak has unveiled a new Job Support Scheme to replace the furlough scheme. Unlike the furlough scheme, the Job Support Scheme will only be available to companies who can offer staff at least a third of their normal working hours. Sunak made clear that the government would not support businesses that are no longer viable and rely entirely on government support. Workers who are given fewer working hours than normal will receive wages for the hours they work. The government and employer will cover 1/3 of the wages for the hours they don’t work. The government grant will be capped at £697.92 per month. The scheme will prevent mass unemployment when the furlough scheme ends at the end of October. There are some criticisms as some businesses are viable in the long term but are not currently in a position to offer staff work. BBC News looks closer at the scheme.
2. TRUMP NOMINATES SUPREME COURT JUSTICE
Donald Trump has nominated 48-year old Amy Coney Barrett for a position of Supreme Court justice. This follows the death of Justice Ruth Bader who died aged 87 earlier this month. The decision to nominate a candidate was controversial, with critics arguing the nomination should be made after the November election. Furthermore, in 2016, Republican Senate leader Mitch McConnell blocked Barack Obama’s nomination for Supreme Court justice as it was 237 days before the election, and he claimed such decisions should be made outside of an election year. Astonishingly, barely 6 weeks before this year’s election, McConnell has vowed to hold the vote for the nominated Supreme Court justice. The US senate will now decide whether to appoint Barrett. The Republican Party hold a slight majority in the Senate and is expected to approve her appointment.
Barrett is an unapologetic conservative, pro-gun rights and anti-abortion, a polar opposite of her late predecessor. The appointment of Barrett would give the Supreme Court a strong conservative majority. The Conservative majority within the US Supreme Court would be 6-3. Furthermore, Supreme Court justices invariably have a tenure for life so this majority is likely remain for at least a generation. BBC News explores in more detail.
3. EU CHALLENGES APPLE BACK-TAX DECISION
The European Commission has announced that it will appeal the EU General Court’s ruling that Apple did not have pay €13 billion back taxes to Ireland. In 2016, the European Commission found that Apple’s tax arrangement with Ireland constituted an unfair advantage. Ireland allegedly allowed Apple to channel all of its EU revenue through Ireland, where its pays just 12.5% in tax. This meant Apple avoided paying its full EU tax bill in higher tax jurisdictions such as France. The Commission therefore ordered Apple to pay back taxes to Ireland, an order which Apple appealed. In July 2020, the General Court held that there was insufficient evidence to claim Apple had broken tax laws. The case will now go to the European Court of Justice.
4. MICROSOFT ACQUIRES BETHESDA
Microsoft has announced plans to acquire the owner of video game maker Bethesda for $7.85 billion. Bethesda is behind huge series such as Fallout, Doom, Skyrim and Wolfenstein. These series will be added to Xbox’s Game Pass subscription package. This provides exclusive access to over 200 games and ultimate package users have first access to new games free of additional charge.
This acquisition could prove important in the next-gen console race. Both Sony’s PlayStation and Microsoft’s Xbox are launching their new consoles in November 2020. Of the latest generation of consoles, Playstation’s PS4 holds 52% of the console market while Xbox holds just 23%. Microsoft will undoubtedly be keen to shift the balance. Whether this acquisition will help that remains to be seen.
5. WHITBREAD SLASHES 6000 JOBS
The owner of Premier Inn and Beefeater has announced that it may be forced to cut 6,000 jobs after the furlough scheme ends next month. Whitbread has 27,000 people currently on furlough but upon review, 6000 redundancies could be made without further support. The government will pay 60% of employ wages until the end of October after which the scheme will end. Hotel stay sales and food and drink sales have declined 78% and 77% respectively compared with last year. The Eat Out to Help Out scheme boosted numbers but with these new restrictions, any gains are likely to be wiped out.
JD Wetherspoon has also warned that 1000 jobs at its UK airport-based restaurants could be lost. Heathrow has said it is operating at 20% of normal levels as global tourism and business travel has almost grinded to a halt. This huge decline in activity has had a huge knock on effect on other businesses within the airport such as car rentals and restaurants. It is clear without targeted support for the hospitality industry tens of thousands, if not hundreds of thousands of jobs could be lost. Rishi Sunak’s job protection scheme may however, go some way to aiding this issue.
6. BODY SHOP BUYS PLASTIC
Body Shop has announced it will buy 600 tonnes of plastic next year in a move to combat plastic pollution. It will use waste plastic from India in its packaging to reduce the amount of waste plastic it uses and provide better conditions for plastic-waste pickers. Body Shop has been preparing this supply chain for 5 years in order to ensure all plastic picked was suitable to be used in its packaging.
This is certainly a positive step but is quite frankly a drop in the ocean. It is estimated that by 2040 there will be over a billion tonnes of plastic waste in our oceans and landfills. Body Shop has encouraged other companies to follow suit, but it will require a revolution in the way industry uses plastic to really reverse the severe risk to nature posed by plastic pollution.
7. SWITZERLAND VOTES TO RETAIN EU FREE MOVEMENT
Switzerland has voted to retain free movement with the EU. The landlocked nation has a direct democracy system where citizens regularly vote on legislation in referendums. The Swiss People’s Party proposed to end the arrangement with the EU allowing free movement of people which has been in place since the 1990’s. They had hoped to reintroduce control over their borders. The Swiss people voted 62% to 38% to keep free movement with the EU. Critics of the proposals said it would harm the economy and deprive Swiss citizens of unfettered access to the EU. Furthermore, 60% of Swiss exports go the EU so tariffs would have a significant negative impact on business. BBC News looks closer at the referendum.
8. UK BANKS SHUT DOWN EU EXPAT ACCOUNTS
Bank accounts of Brits living in the EU will be shut down at the end of December 2020. The EU and UK seem to have reached an impasse in trade talks and a financial services deal seems unlikely. Lloyds, Barclays and Coutts have all informed British clients living in the EU that accounts will be shut. UK banks would need passporting rights to offer financial services to EU residents. Currently, as the UK is in the transition period, we still retain the EU’S regulatory framework. UK banks with EU subsidiaries will shift customers to these entities but if they do not, they will have to apply for a license to operate bank accounts for EU nationals.
This may have huge implications for UK nationals residing abroad who collect pension payments in UK banks. It also creates a number of tax issues for such people. The waters are very murky and there is no real clarity on the full implications of a no-deal on financial services. Only when the UK officially detaches from EU regulations will the full scale of the disentanglement become apparent.
9. CINEWORLD JOB CUTS
Cineworld has posted a huge $1.6 billion loss for the first half of 2020. The cinema operator saw its revenue crash by $1.4 billion as its 778 sites were shut for most of the period. Although over 500 sites have now reopened, new cinema releases have been delayed which limits options for customers. Cineworld is however, confident that business should pick up again when restrictions ease. It saw strong numbers of viewers flock to its cinemas to view Tenet in July and August. Governments are now however, introducing new restrictions as the world seeing a second wave of the virus and this could hinder growth. Significant restrictions could be fatal for many companies in the entertainment industry who are still reeling from the first wave. Cineworld has now warned that it may need to raise more funds in order to survive. It is currently negotiating with lenders as payment deadlines draw nearer.
10. BANKS RETURN TO WORK FROM HOME
The UK government has changed its guidance and said workers should work from home if they can. This is a U-Turn on its previous guidance encouraging all staff to get back to workplaces. In response to this, Barclays has told hundreds of its staff to go back to remote working, while Societe Generale and Lloyd’s of London have also done the same. NatWest (formerly RBS) has told its staff that it can work remotely. This will no doubt have a significant impact on local businesses who were just beginning to see improved revenues. Thousands of jobs had been lost throughout lockdown as restaurants and cafes lost out on business. With this latest guidance, more jobs are likely to go in the near future.