The week’s news included; EU agrees partial ban on Russian oil imports, Frasers Group rescues Missguided for £20m, Biden cancels $5.8bn in student debt, Deutsche Bank unit raided for greenwashing investments.
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:
Opinion articles of the week:
- City A.M. – The influencer economy is one step ahead of us and changing again as TikTok stars demand freedom
- BBC News – How artificial intelligence ‘blew up’ tennis
- Sky News – Why is there chaos at some U.K. airports? How long could it last? What are your rights?
- The Athletic– Does Chelsea Football Club being bought for £2.5bn make financial sense?(Subscription required).
- City A.M. – What’s the future role of Bitcoin in Africa?
1. EU AGREES BAN ON RUSSIAN OIL
The EU has agreed a partial ban on Russian oil imports following weeks of disagreement within the bloc. This new round of sanctions will see 90% of Russian oil imports banned by the end of the year. Russian oil delivered in tankers would be banned, only oil delivered via a section of the Druzhba pipeline will be exempted. This exemption would account for around 10% of imports. Plans to ban Russian oil have been discussed for over a month but faced hurdles from countries like Hungary who are highly dependent on Russian oil imports. These new measures factor their dependency into account. All of Slovakia’s oil, 86% of Hungary’s and 97% of Czech Republic’s oil respectively is delivered through these pipelines.
2. FRASERS GROUP BUYS MISSGUIDED
Mike Ashley’s Frasers Group has bought Missguided for £20 million after the fast fashion retailer fell into administration. Competitor Boohoo was also exploring a bid for the company but ultimately lost out to Frasers group. It transpired two weeks ago that Missguided was on the brink of collapse as creditors launched a winding-up petition. Missguided struggled with supply chain issues along with tough competition and this led to its inability to pay its bills. This deal with Frasers Group will save up to 330 jobs and provide a future for the business. Frasers Group has a reputation for buying struggling companies and keeping them afloat. It’s portfolio includes House of Fraser, Jack Wills, GAME and Evans Cycles. Mike Ashley’s son-in-law, Michael Murray, replaced the retail veteran at the helm of Frasers in 2021. Ashley still remains majority owner of the group.
Retail Gazette explores how Missguided lost its direction and whether it can get back on track?
3. BT – WARNER BROS MERGER INVESTIGATION
The Competition and Markets Authority (CMA) has started investigating BT’s 50:50 joint venture with the US media giant Warner Bros Discovery. The CMA is considering whether the deal could result in a weakening of competition. Under the deal, BT Sport and Warner Bro’s Eurosport will be brought under one entity in the UK and Ireland. The CMA will consider whether the deal will harm rivals like Sky Sports and ultimately harm consumers. The regulator will have until 28 July to decide whether to launch an in depth investigation.
4. UK’s FIRST ELECTRONICALLY SIGNED CONVEYANCE
The first ever electronically signed conveyancing transaction was completed by Hugh James. A qualified electronic signature is verified by an electronic identity check and the transaction was registered with HM Registry. The transfer of title took just 24 hours instead of six to eight weeks as is typical with physical signatures. The technology around electronic signatures have improved in recent years, meaning transactions are more secure and can be deemed legally binding. It is hoped that more frequent use of electronic signatures will improve efficiency in conveyancing. Hugh James is a full service law firm headquartered in Cardiff.
5. BIDEN STUDENT DEBT CANCELLATION
US President Joe Biden has announced that he will cancel $5.8 billion of debt for 560,000 former students. Former students of the for-profit college Corithian will see their debt cancelled due to fraud and deception committed by the now defunct institution. Students were misled about their job prospects as the college inflated job placement numbers and undertook other deceptive practices. This left students saddled with huge debts which they are struggling to repay. The college went bust in 2015.
During his campaign, Joe Biden said he would support cancelling $10,000 of student debt for every borrower. Since becoming President, Biden has approved $25 billion of student loan forgiveness. This latest cancellation is the largest single loan forgiveness action to date. Biden claims his extensions of student loan relief collectively will have saved student borrowers around $75 billion in student loan interest. This is still a drop in the $1.7 trillion student debt ocean. More measures are on the horizon but the student debt crisis is crippling for many Americans.
The US student debt crisis is so acute because student loans are typically treated as normal loans. Loans are repayable every month from graduation regardless of income or employment status, in the absence of specific relief. Missed payments are considered a default and therefore, significantly impact borrowers’ credit scores. This is contrary to the UK, where monthly student loan repayments are automatically linked to the amount you earn. UK graduates earning under £27,295 a year before tax are not obligated to make monthly payments on their debt. Payments over this threshold are automatically deducted and calculated as a proportion of your income. UK student loans are also written off after 30 years whereas US student loans must be repaid in full plus interest. Where a US graduate dies before repayment, their estate may be liable to pay the outstanding balance.
6. DEUTSCHE BANK UNIT RAIDED
Deutsche Bank’s asset management unit, DWS, has been raided by prosecutors in Germany over alleged “greenwashing”. DWS stands accused of misleading investors over the environmental impact of its investments. Prosecutors claimed DWS failed to take into account environmental, social and governance (ESG) factors in many investments, despite making representations to investors that they were. Their investigation stemmed from a whistleblower’s claim that DWS were selling investments as more “sustainable” or “greener” than they were. DWS is also facing investigation from Germany’s financial watchdog BaFin as well as the US SEC over the same issue.
7. GOVERNMENT CANCELS P&O CONTRACT
The UK government has axed its contract with P&O Ferries over its decision to unlawfully fire 800 staff earlier this year. The ferry company was contracted to provide contingency travel services for UK border staff who need to travel to northern France. The Department for Transport and Home Office reviewed its contract with P&O and took the decision to terminate the contract. The government said this was directly in response to P&O’s “unacceptable behaviour”. In March, P&O sacked 800 staff and replaced them with foreign agency workers, paying less than the minimum wage. P&O was able to exploit legal loopholes to hire the foreign staff but still broke the law when sacking the UK staff without formal consultations. P&O’s CEO recognised that the company broke the law but said it was the only viable option. We explored P&O’s conduct in our previous article.
8. STABLECOIN INSOLVENCY REGIME
The UK Treasury has revealed plans to create an insolvency regime for stablecoins to shield investors financially from coins that go bust. Last month, Terra’s stablecoin collapsed, seeing holders lose billions (see previous top 10). New rules will see stablecoin issuers fall into special administration under the Bank of England in the case of a collapse. This will protect consumers from the impact of a collapse that threatens wider financial stability. While Terra was not pegged to real-world assets like other stablecoins, its demise has sparked serious discussion around greater regulation for stablecoins. The UK Chancellor has said he wants to turn the UK into a global crypto hub.
9. TESLA JOB CUTS
Tesla CEO Elon Musk announced that the company would cut 10% of its work force and implement a hiring freeze. This would see around 10,000 jobs lost. Musk deemed the cuts necessary due to a stormy economic outlook. Supply chain problems spurred by the pandemic and semiconductor shortage have been exacerbated by Russia’s invasion of Ukraine. In addition, Musk told all staff that they must return to the office full time or resign. In an internal email, he stated that remote working would end and staff will be required to report to the office for a minimum of 40 hours per week.
The electric vehicle giant employed 99,290 people as of December 2021. Tesla shares dipped 9% in response to the news of the cuts. Shares in the electric car maker are down 25% this year alone. Some have criticised the proposed job cuts given that Musk is currently pursuing a $44 billion takeover of Twitter, largely with his own funds.
10. CIVIL SERVICE FAST TRACK PAUSE
The civil service is halting its fast-track recruitment process for graduates to cut staff numbers. The government had warned last month that 91,000 civil service jobs could be cut in order to bring staffing levels down to 2016 levels. There were 384,000 civil servants in 2016, the lowest number since World War Two. Over 475,000 civil servants were employed as of December last year. These cuts are reportedly to deliver “the best possible value for taxpayers” and bring £3.75 billion in annual savings. Cabinet Office minister Jacob Rees-Mogg claims most additional recruitment was needed solely to deal with Brexit and the pandemic but they are now superfluous. Recruitment freezes were expected and the fast track scheme has now found itself in the firing line. The scheme recruits 1,000 workers annually but this will now be paused in 2023. Ex-cabinet minister Sir David Lidington described the cut as “very foolish”.