The week’s news included; Mini budget summarised, Boeing pays out $200m to settle 737 Max lawsuit, Crocs settles trademark dispute with Walmart, Trump faces tax fraud lawsuit.

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 – Why banks are rushing to jump on the lucrative BNPL bandwagon.
  • BBC News – Will this huge tax cutting gamble pay off?
  • City A.M. – As politics resumes, a cold winter is closing in on Truss’ free market plans

1. UK MINI BUDGET

New Chancellor Kwasi Kwarteng released a “mini-budget” last week but there was certainly nothing mini about the proposals. Kwarteng unveiled a huge tax cut program fuelled by fresh borrowing. The plan is to boost growth via what appears to be “trickle-down” economics. The plan is to cut taxes for the highest earners to boost spending, ultimately benefiting the wider economy. Here are some of the key announcements:

  • The 45% higher rate of income tax will be scrapped. Income tax will be cut from 20% to 19% from April 2023. The cap on bankers’ bonuses will be scrapped. 
  • April’s 1.25% National Insurance rise will be reversed from November.
  • Workers on University Credit who work less than an equivalent of 15 hours a week at National Living Wage will face cuts to their benefits unless they take active steps to work more hours. 
  • Stamp duty will be cut. No tax will be paid on the first £250,000. First-timer buyers stamp duty threshold will increase from £300,000 to £425,000.
  • IR35 rule changes introduced in 2017 and 2021 that govern temporary contractors will be cancelled. 
  • The planned increase of corporation tax to 25% will be scrapped.  New designated investment zones will be created to boost growth and jobs. 
  • Household bills will be capped at £2500 as per the energy price guarantee. 

The cost of the tax cuts will be £45 billion per year while the energy package will cost £60 billion for the next six months. Earlier in the week,  the government also announced a energy price discount for businesses which would cost an additional £25 billion or more. All of this will be funded by additional borrowing.

Analysts are scratching their heads about how many of these measures will deliver economy-wide growth. Markets were not impressed by Kwarteng’s plans and this sent sterling plummeting. The pound fell by $1.10 for the first time since 1985.  Investors also sold off UK government debt as the outlook appears bleak. With the UK economy officially in recession (discussed below), investors were hoping for a more coherent economic plan from Liz Truss and Kwasi Kwarteng but failed to get it. Whether this gamble on growth by the Chancellor will pay off remains to be seen. 

2. BOEING PAY OUT $200M OVER 737 MAX

Boeing has settled a lawsuit regarding its 737 Max aircraft for $200 million. The aerospace giant was charged over the fatal 737 Max crashes in 2018 and 2019. The charges, brought by the Securities and Exchange Commission (SEC), alleged Boeing misled investors over the safety of its aircraft. Former Boeing CEO Dennis Muilenburg, also reportedly made false statements about the safety of the 737 Max. Two 737 Max flights crashed in 2018 and 2019, killing 346 people. The aircraft crashed due to a technical issue that Boeing knew about. Despite the issue, Boeing assured airlines, passengers and investors that they were safe. Boeing has been ordered to pay $200 million to settle this charge while Muilenburg will pay $1 million. The regulator accused both Boeing and Muilenburg of putting profit before people. In total, Boeing has paid out $20 billion in settlements and fines related to the crash. 

3. INTEREST RATE HIKE

The Bank of England has hiked interest rates to their highest level since 2008. Interest rates now sit at 2.25%, up 0.5% from the last monetary policy committee meeting. The Bank is striving to combat rising inflation by making borrowing more expensive and dampening demand in the economy. With rising interest rates and inflation, it comes as no surprise that the Bank has said the UK is in recession. The UK economy shrank by 0.1% in the second quarter and it is expected to fall by a further 0.1% in Q3. 

4. SAINSBURY’S SELLS 18 STORES

Sainsburys is to sell 18 of its stores to an investment trust and lease them back. LXi REIT is a real estate investment trust that will pay £500 million to buy Sainsbury’s stores. Most of the 18 stores are based in the south of England. Contracts have been exchanged but LXi still needs to raise funds for the deal. LXi is exploring selling shares or taking on more debt to finance the deal. If the deal goes through, long term leases on the sites will prove highly lucrative for the trust.

Supermarkets are raising cash to cope with rising interest rates, wholesale produce costs and energy costs. Co-op recently sold its petrol sites to Asda in a £600 million deal. Sainsbury’s has already penned another deal to sell off 21 other stores. 

5. CROCS SETTLES WALMART TRADEMARK DISPUTE

Crocs has settled a trademark infringement dispute against Walmart. The clog-maker claimed that Walmart along with 20 other companies copied their design. Crocs has been keen to protect its design after it secured the design patent for its Classic Crocs Clog in 2019. Since then, Crocs has taken action against both wholesalers and retailers across the globe who import and sell potentially infringing products. It has already settled disputes with a number of US retailers and Walmart has become the latest on the list. The terms of the settlement were not disclosed but Crocs and Walmart confirmed the matter had been “amicably resolved”. 

6. TRUMP FACES TAX FRAUD LAWSUIT

Former US president, Donald Trump, along with three of his children are facing a huge tax fraud lawsuit. The State of New York has sued the Trump Organisation, alleging that they lied about the value of their real estate to pay less tax. Over 200 counts of false or misleading valuations have been alleged between 2011 and 2021. The family are reported to have made at least $250 million from the scheme. Donald, Donald Jr, Ivanka and Eric Trump were all named as defendants along with the Trump Organisation and two executives. New York’s Attorney General has brought proceedings forward to refer the case to federal prosecutors and the US tax board, the Internal Revenue Service (IRS). Donald Trump denied the allegations and called it “another witch hunt”.

7. SECRET CINEMA SOLD FOR $100M

Secret Cinema has been sold to a US based events ticketing platform for $100 million. The London-based cinema provides a unique experience by hosting viewings in secret locations. Audiences are also encouraged to dress up as part of the cast and are even able to become part of the story in some experiences. Secret Cinema has hosted productions of Stranger Things, Casino Royale, Star Wars and Alien, for example. In London, over 100,000 people viewed Casino Royale at Secret Cinema.  Over 300,000 people attended their Stranger Things collaboration in the US, the first LA production. New York ticketing company, TodayTix, has bought Secret Cinema aiming to expand the cinema company’s international growth and offer more experiences.

8. TESLA RECALL

Tesla is set to recall over 1 million vehicles in the US over safety concerns. US regulators found that Tesla windows may close too quickly and do not properly react to obstructions, meaning people’s fingers could get caught. The National Highway Traffic Safety Administration flagged this as a breach of safety standards. No claims, injuries or deaths have been reported in relation to the problem. The issue applies to Model S sedans, Model X SUVs, 2020-2021 Model Y SUVs and 2017-2022 Model 3 Sedans. In total, nearly 1.1 million cars are affected. Owners will be informed by post from 15 November. 

Tesla is no stranger to the regulators and has had to perform many recalls over the past few years. Mr Musk has referred to the regulators as “the fun police”.  Tesla’s share dipped 3.5% in response to the news. 

9. MANCHESTER UNITED LOSS

Manchester United has posted a £115 million loss for 2021/22. This amounts to losses of around £2 million per week. The football club however, posted £583 million in revenue, up 18% as fans returned to stadiums and normal revenue streams returned. Debt however, rose over 20% to £514.9 million. The club’s wage bill increased over 500% last year with the signings of Cristiano Ronaldo, Jadon Sancho and Raphael Varane. Wages hit £384.2 million last season, the highest figure in Premier League history. The club is forecast to retain current revenue levels despite not qualifying for the lucrative Champions League.

10. MIKE ASHLEY STEPS DOWN FROM FRASERS

Mike Ashley will step down as a director on the Frasers Group board. Ashley will not stand for re-election in the upcoming  vote for the board members of the retail conglomerate. Last year, Ashley stepped down as CEO of the company and handed the reigns over to his son-in-law Michael Murray. Ashley still retains a 61% stake in Frasers and has committed to a £100 million investment in to the business.

Frasers Group has often been the saving grace for failing retailers. Earlier this year, Frasers Group bought Missguided out of administration for £20 million. Frasers’ portfolio also includes Jack Wills, House of Fraser, Evans Cycles and GAME.