The week’s news included; Biden hits the ground running with 17 executive orders on day one, Uber faces huge lawsuit against London cabbies, BT to face £600m court case, Google threatens to pull search out of Australia
Below are our top 10 stories that you need to know about. Be sure to check our twitter page, Facebook page and Instagram 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– Will Netflix’s pandemic success in 2021?
- City A.M – Retail therapy: How has the Covid-19 pandemic changed the way we shop?
- CNBC – Why international stocks could outperform U.S. markets this year
- BBC News – How Covid turbocharged the QR revolution
1. BIDEN BECOMES PRESIDENT
Joe Biden has officially become the 46th President of the US and he has hit the ground running. Biden was tipped to be the candidate to bring about a return to the ordinary but his first few days in office have been anything but. Understandably, his main objective is tackling the pandemic while protecting jobs and the economy. Last week, he signed several executive orders to get his plan started.
He signed an order to double the federal minimum wage from $7.25 to $15 an hour. He also made extra provisions for food and financial assistance for the poorest Americans. Americans can also receive unemployment benefits if they refuse a job which they believe could put their health at risk.
Furthermore, he re-joined the Paris Climate Accord and the World Health Organisation, both of which his predecessor had withdrawn the US from. He also ended the so-called Muslim travel ban and cancelled the permit for the controversial Keystone XL oil pipeline. On his first day in office Biden signed 17 executive orders.
After an eventful first week, Biden isn’t done yet. His big-ticket item is a $1.9 trillion Covid relief package which is going through Congress. Biden also promised 100 million doses of the vaccine administered in his first 100 days in office. Check out more of Biden’s key promises here.
2. BREXIT DISRUPTION
Brexit has been causing significant disruption at ports, and both businesses and consumers alike are starting to feel the pinch. Shoppers buying items from EU websites are facing import duties of around £100. These additional costs are due to customs duties and other related charges and in some cases can amount to an additional 35% of the original sale price.
In transit, the situation is dire. Numerous goods travelling to or from the EU are being rejected at the borders causing mass disruption. Online retailers on both sides of the channel are struggling with the requirements. The additional paperwork and charges required to move goods is costly and is causing delays. When goods are returned, it is so costly that retailers are now better off writing off the cost of goods rather than incurring the customs costs. The additional requirements have meant some retailers have lost swathes of sales due to extra red tape. A UK cheesemaker instantly lost 20% of his sales after the introduction of the requirement to provide a £180 health certificate on retail orders to consumers in the EU. For this company that’s a huge £250,000.
It is not however, all doom and gloom. Last week, Nissan hailed the Brexit deal and committed to producing its electric vehicle batteries in Sunderland. Nissan spoke strongly against the prospect of a no-deal Brexit warning it would be catastrophic for business. Now, however, Nissan COO says the deal has given the UK a competitive advantage. Furthermore, any disruption currently faced he described as “peanuts”.
3. UBER FACES £250m LAWSUIT
London taxi drivers are launching legal action against Uber for damages that could cost £250 million. The group action lawsuit representing thousands of cabbies will argue Uber failed to follow private hire laws between 2012 and 2018. London’s laws state that passengers must either contact a centralised office for minicabs or hail cabs on the street. The claimants argue Uber passengers hailed drivers directly.
Drivers are claiming for lost income which could amount to £25,000 for full-time drivers. The litigation manager is expecting up to 30,000. 4,000 taxi drivers have signed up and a further 5200 are in progress.
Uber is having a tough time in London. It spent around 18 months fighting in court to get its licence to operate renewed by TfL. It has been plagued by scandals and regulatory issues, but this upcoming lawsuit could be the costliest. The legal action will be brought forward by early 2022 at the latest.
4. BT LAWSUIT
BT is facing a huge £600 million claim for historic overcharging for landline phones. The Competition Appeals Tribunal will be considering the case.
The case was brought forward by CALL (Collective Action on Landlines). They are represented by consultant and former Ofcom worker Justin Le Patourel. They claim BT overcharged 2.3 million landline customers for 8 years. Ofcom already found BT guilty of overcharging customers between 2009 and 2017. The cost of providing the service fell but BT increased prices, contrary to regulatory rules. BT subsequently reduced its prices but did not compensate customers so CALL will be seeking to obtain this compensation. CALL can only seek damages from 2015 onwards due to legal limitations. Customers could be entitled to £500 each.
5. O2 VIRGIN MERGER
The Competition and Markets Authority has expressed concern about the proposed O2 and Virgin Media & Mobile merger. Its full-scale investigation into the deal is still ongoing but it has said the £31 billion venture could see higher prices for consumers. Concerns centre around O2’s wholesale business as other network providers utilise on O2’s network such as Sky Mobile and GiffGaff. Virgin also runs the UK’s second largest broadband cable network. This creation of a telecoms behemoth could see the higher prices for wholesale customers and in turn for consumers. The CMA did acknowledge however, that Virgin and O2 are not in close competition. O2 focuses on mobile customers while Virgin targets broadband customers with mobile services as an add on.
Virgin owner Liberty Global and O2 owner Telefonica have pledged to create 4,000 jobs and 1,000 apprenticeships if they receive regulatory approval.
6. GOOGLE THREATENS TO PULL OUT OF AUSTRALIA
Google has threatened to pull out of Australia after the government announced plans to force media outlets to pay news publishers. This would be a world first as new publishers complain tech giants like Google have been distributing and benefitting from their content without paying any royalties. Australia’s government deem that Google holds a monopoly over Internet searches and gains customers from hosting news content. The new law is designed to ensure news publishers are paid fairly. Australia’s parliament still needs to pass the law but are keen to push it through this year.
This new law would require outlets to negotiate a price with publishers. If no agreement is reached, the government will mediate negotiations. These rules would apply only to Google and Facebook initially.
Google has said that the laws are “unworkable” and has said it will withdraw Google search from Australia. Google Australia turned over $3.7bn and $7.7m was from news content.
7. HSBC TO CLOSE 82 BRANCHES
HSBC will shut 82 UK branches by September as customer footfall declines and overheads increase. The bank claims that consumers are increasingly opting for online services. Now, 90% of all HSBC customer contact is by phone, online or app. Commercially, having such a wide network of branches to cover just 10% of business doesn’t make sense. Branch closures will still have a significant impact on local communities though. Many individuals and small businesses require face-to-face services and easy access to larger cash sums.
The closures are not expected to result in any redundancies. Affected staff will move to other nearby branches. Furthermore, 81 of the branches are within one mile of a post office where they can access these services.
8. RAILWAY RESURRECTION
The UK government has announced nearly £800 million in funding to resurrect two defunct passenger rail lines. The funding is designed to help ‘left-behind’ communities and will create an estimated 1500 jobs.
East West Rail will connect Oxford and Cambridge via Bedford, Milton Keynes and Aylesbury. This line has been closed since 1968 and will receive £760 million to reopen. The Northumberland Line was closed to passengers in 1964 but still carries freight. The line will be altered to provide passenger services between Newcastle-upon-Tyne and Ashington. New smaller stations along the route will be opened in the process. This line shall receive £34 million.
The trains will be diesel, with the ambition of upgrading to cleaner power in the future. Critics have questioned why the government did not opt for electrifying the railways given the climate emergency and Co2 targets.
9. UNILEVER SETS LIVING WAGE BAR
Consumer goods giant Unilever has said it will stop business with any firm that does not pay a living wage by 2030. This will apply to all businesses in the 190 countries in which it operates. The exact wage will by calculated in conjunction with local partners. The wage should be enough to cover food, water, housing, education, healthcare, transport and clothing, and also include a provision for unexpected events,
Unilever are moving to become an ethical brand based around sustainability and fairness. Analysts say this will attract more customers in the process regardless of price. They have committed to cutting fossil fuels from their cleaning brands and plans to cut the amount of plastic its uses by 50%. The living wage pledge, however, is a gamble. Smaller businesses, particularly in the developing world, may simply cut ties rather than pay a living wage and slash their already tight margins.
Unilever owns brands such as Marmite, Ben & Jerry’s ice cream and Dove soap. The company turned over nearly €52 billion in 2019.
10. JAY Z RAISES $10m IN CANNABIS BUSINESS
Jay-Z has raised $10 million for his fund investing in minority-owned cannabis businesses. The cash was raised via an acquisition made by a SPAC called Subversive Capital Acquisition. A SPAC is a special purpose acquisition company. The SPAC bought two California-based cannabis companies and this acquisition formed a company called The Parent Company. Jay Z was appointed Chief Visionary Officer. He is also Head of the Social Equity Venture. This venture will receive $10 million and a further 2% of net income per year to invest. The venture is designed to help minority-owned cannabis businesses. Cannabis is becoming big business. In the US, the industry is expected to be worth $35 billion by 2025. Look at Jay-Z’s deal in more detail here.