The week’s news included; Government U-Turns on 45p tax rate scrap, Bolt drivers seek compensation over workers’ rights, Elon Musk’s Twitter purchase is back on, Afrochella sued by Coachella over trademark.
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:
- BBC News – Is Truss’s growth plan running out of time?
- City A.M. – Online tech regulation needs to change business models, not censor content
- CNBC – Are ESG ETFs a gimmick? The debate surrounding the transparency and social agendas of sustainable investing
- The Guardian – Tech firms say laws to protect us from bad AI will limit ‘innovation’. Well, good
1. GOVERNMENT U-TURNS ON TAX CHANGE
The government has announced that it will U-turn on its plan to scrap the 45p tax rate for the highest earners. Two weeks ago, Kwasi Kwarteng’s mini budget sent markets into meltdown. The pound crashed and it triggered a monetary intervention by the Bank of England. Despite this, both Truss and Kwarteng had been firmly defending their policies until last week. Even the day before the latest U-Turn Truss said publicly that she was committed to their policies. Now, the government has said the removal of the 45p tax rate for earners over £150,000 had become a distraction from their “strong package”. They say they have listened to the responses and they “get it”. There was a strong possibility that this plan would have caused a Tory revolt and failed to pass through Parliament. For a Prime Minister less than a month into her Premiership this is not a great start. Many are questioning her judgement and with so many major challenges ahead, are concerned for the future.
2. ELON MUSK TWITTER DEAL RESUMES
Elon Musk has changed course (again) on his plans to purchase Twitter. The eccentric billionaire now says he aims to complete his purchase of Twitter by the end of October. Musk had tried to pull out of the deal in July, but Twitter sued him in order to force the deal through. The two sides were due to meet in court later this month, but Musk requested a pause in proceedings while they seek an agreement. Although Musk has now said he wants to complete the deal, Twitter is concerned that Musk is unable to obtain funding. Twitter wants to continue with the litigation as planned and call the postponement “an invitation to further mischief and delay”. The judge postponed the trial until 5pm on 28 October 2022, allowing the parties to complete the transaction. Musk now has barely 3 weeks to secure $44 billion in funding. This appears to be getting harder as two companies that had pledged $1 billion to fund the deal have pulled out. Musk confirmed that both Apollo Global Management and Sixth Street Partners were no longer part of the $7.1 billion in equity financing announced in May. It appears Musk will have to secure most of the $44 billion through selling Tesla shares which have already sank by nearly 40% over the past year.
3. BOLT DRIVERS SEEK COMPENSATION
Drivers for ride-hailing app Bolt are seeking compensation over workers’ rights. Over 1600 drivers have joined a group action lawsuit in the UK, claiming that they have been wrongly classified as self-employed contractors rather than workers. As workers they would have been entitled to holiday pay and minimum wage. This mirrors the case against Uber last year where the Supreme Court ruled that Uber drivers were workers. Uber subsequently implemented the contractual changes and gave out £150 million in compensation. Bolt, however, has said that their case is different to Uber’s and drivers enjoy greater flexibility. Whether this will stand up in court remains to be seen. Estonia-based Bolt has 65000 drivers across the UK.
4. PORSCHE IPO
Porsche has become Europe’s most valuable car maker after its huge IPO. The luxury car manufacturer is now worth €84 billion, overtaking its former owner, Volkswagen. Porsche’s market cap briefly touched €85 billion as its share price reached €93 before later dipping to €91. Volkswagen floated 12.5% of Porsche to raise funds for investment in electric vehicles. In total, €19.5 billion was raised in the IPO. This marks the largest European IPO ever. Porsche is now the fourth largest car manufacturer in the world by market cap behind Tesla, Toyota and Chinese car maker BYD.
5. UK CREDIT OUTLOOK DOWNGRADE
Credit rating agency Fitch has slashed the credit outlook of the UK. Fitch has changed its outlook for the credit rating of the UK government debt from “stable” to “negative”. The agency said this reflects the concerns around the huge borrowing needed to fund Kwasi Kwarteng’s budget. Although the outlook has been downgraded, the overall rating stayed at AA-, well below the maximum AAA rating. Only 11 countries have a AAA rating from Fitch. U-turns from the government and action from the Bank of England stabilised the pound and bond yields. Fitch’s latest action, however, shows that confidence in the government and its plans remain low.
6. OCTOPUS CLOSES IN ON BULB
Octopus Energy is close to buying collapsed energy firm Bulb. Bulb collapsed last November and was bailed out by the UK government costing roughly £2 billion. Since then, the government has been funding the company as wholesale energy prices rose, expected to cost an additional £2 billion. Octopus is now expected to pay up to £200 million to take on Bulb’s 1.6 million customers. The company would need an additional £1 billion in government funding to tide it over the winter, but Octopus is committed to repaying this gradually. There will also be a profit-sharing arrangement on Bulb’s future profits. On the sale however, the taxpayer will lose out on a huge £4 billion. Sky News looks closer at the saga.
7. AFROCHELLA SUED BY COACHELLA
Music festival Coachella has sued a Ghanian festival organiser for using the name Afrochella. Coachella argues that Afrochella’s use of this name infringes upon their trademarks of “COACHELLA” and “CHELLA”. Coachella says this is a fraudulent attempt to confuse customers and give the impression that the US based festival is associated with Afrochella. Afrochella has run promotions with this name both in Ghana and the US, refusing to change the name following demands from Coachella. Furthermore, Afrochella have attempted to register their name as a trademark in Ghana, to which Coachella has already objected. Afrochella is also a music event taking place in Accra, Ghana in late December 2022. The lawsuit was filed in California jointly by Coachella Music Festival LLC and Goldenvoice LLC. See the full submission here.
8. UK INSOLVENCIES ON THE RISE
Between April and June, England and Wales saw the highest number of company insolvencies since 2009. 5629 companies went bust in the second quarter, the majority of these being construction, manufacturing, accommodation and food service businesses. Companies have already warned that things may get worse as energy costs soar. The lack of government support for businesses to deal with energy costs is leading to an alarming number of collapses. The core costs of running businesses such as supply costs, heating, lighting and production are all becoming unsustainable for many companies. Until recently, businesses had no energy caps and in some cases energy bills have gone up 600%. Some respite will now come as Liz Truss announced the Energy Bill Relief Scheme that will limit the costs per unit of energy for businesses.
9. KIM KARDASHIAN SETTLES SEC CHARGES
Kim Kardashian has settled SEC charges over failing to disclose a paid promotion for a crypto asset on her Instagram. Kardashian will pay $1.26 million to settle the case. The reality TV star was paid $250,000 for an Instagram post about the EthereumMax crypto token. In the post however, she failed to disclose to her then 220 million followers that she was paid for the promotion, contrary to US Federal law. In addition to the settlement figure, she has agreed not to promote crypto assets for three years and will cooperate with the SEC. The regulatory framework around crypto assets is developing rapidly as regulators around the globe catch up with the technology. They are keen to weed out scams and protect investors from unrealistic expectations on returns.
10. SEPHORA RETURNS TO THE UK
Beauty retailer Sephora is returning to the UK after 17 years out of the market. A website for the store will be opening in October and a new London flagship store will open next year. Sephora will offer in-store beauty experiences and also bring its brands which are currently unavailable in the UK. Sephora will now offer, Sephora Collection, Tarte Cosmetics and One/Size by Patrick Starrr. It hopes to build upon its growing success after it posted a huge 181% spike in profits last year. It also purchased UK based Feelunique for £135 million.