The week’s news included; Hunt unveils Autumn Budget, Google settles US privacy lawsuit for $391im, Estee Lauder buys Tom Ford, Paris stock exchange overtakes London.
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:
- City A.M – One-size-fits-all’ UK crypto rules won’t prevent an FTX repeat, Ripple warns
- Retail Gazette – World Cup 2022: How big will it be for retail and who will win?
- BBC News – Is this really the end of Twitter?
1. AUTUMN BUDGET
Jeremy Hunt has unveiled his first budget as Chancellor. Hunt’s fiscal plans were measured and calculated, aiming to steady the ship after a tumultuous summer. Hunt had been laying the ground for his announcement all week, warning of tax rises for all and support for the most vulnerable. Here were the key announcements:
- National minimum wage for over 23’s set to rise to £10.42 from April 2023
- Local councils will be able to increase council tax by up to 5% per year without a vote. Income tax and National Insurance thresholds to remain frozen until April 2028, meaning as salaries rise, more people enter higher tax bands.
- State pension payments, disability and means-tested benefits to rise by 10.1%, in line with inflation. NHS budget to increase by £3.3 billion per year for two years and schools spending will increase by £2.3 billion.
- Household energy price cap extended until April 2024, but an average household will pay £3000 instead of £2500.
- A windfall tax on profits of oil and gas firms will increase from 25% to 35% until March 2028. A new 45% tax on electricity generating companies will be levied from January.
The announcements have been largely welcomed although opposition parties claim the support measures for the NHS, schools and local councils do not go far enough. Sir Keir Starmer accepted that the £55 billion blackhole in public finances needed to be plugged by spending cuts or tax rises and argued Labour would repair the economic damage caused by the Tories.
2. GOOGLE PRIVACY SETTLEMENT
Google has agreed to pay $391 million to settle a data privacy lawsuit in the US. The tech giant tracked users’ locations despite them opting out of location services. The class action lawsuit was brought forward by 40 US states and is the largest multistate privacy lawsuit in US legal history. In addition to the pay out, Google must improve the transparency of its data collection policies and give users proper control over their location services. A web page must also be set up to inform US users of the data they collect.
3. QATAR BANS WORLD CUP ALCOHOL SALES
Qatar has banned the sale of alcohol within the World Cup stadium just two days before the start of the tournament. Alcohol was due to be served in “select areas within stadiums” available to all attendees but will now not be served inside or around the perimeter of World Cup stadiums. Alcohol will now only be available in corporate hospitality boxes. Such boxes cost around £20,000 per match. Fan zones will also be set up where alcohol can be purchased after 7pm. The last-minute decision to ban alcohol has significant contractual implications. Beer maker Budweiser is a large sponsor of FIFA and paid $75 million for exclusive rights to sell beer at the World Cup. While Budweiser can sell its non-alcohol beer, the decision by Qatar is almost certainly a breach of contract. As Qatar is a Muslim country, the sale of alcohol is heavily restricted. Commentators have been critical not of the decision itself but of the timing. This will undoubtedly cause problems for FIFA and a legal dispute will certainly ensue.
4. ESTEE LAUDER BUYS TOM FORD
Estee Lauder has bought luxury fashion house Tom Ford for $2.8 billion. The deal will see Tom Ford join the French cosmetic giant’s group. Founder and CEO, Tom Ford, will remain as creative visionary for the fashion brand after completion. The deal will mark the largest cosmetic acquisition in history. The luxury fashion industry is on a path of consolidation as it saw a slowdown due to the pandemic. Furthermore, China accounts for 35% of global demand of luxury goods but remains partly in lockdown due to the government’s zero-COVID policy.
5. TWITTER HQ SHUT DOWN
Twitter is in chaos as the company’s headquarters has been shut down due to an exodus of staff. Last week, Musk told employees to work for longer hours at high intensity or leave. Many employees chose the latter. Ex-staff complained that they were already working 60–70-hour weeks and reject claims that Twitter’s problems are due to unproductive staff. It is thought that hundreds of staff resigned yesterday including payroll staff and engineers. Some commentators estimate that fewer than 2000 of its 7500 staff remain. Twitter then moved to shut its office buildings until November 21, without formally giving a reason.
With the Qatar World Cup commencing there is concern that the platform will be overwhelmed with traffic if there are not enough staff. Musk has already fired over 3000 people since buying Twitter. He has however, backtracked on plans to get all staff in the office full-time after staunch backlash from the remaining workforce. In person meetings with colleagues will be expected just once a month.
6. PARIS OVERTAKES LONDON STOCK EXCHANGE
London has been usurped by Paris as the holder of Europe’s most valuable stock market. Data from Bloomberg shows that France’s stock exchange is now more valuable than Britain’s. Shares on London’s exchange are worth $2.821 trillion while Paris’s exchange has risen to $2.823 trillion. This marks the first time Paris has overtaken London since 2003 and indicates declining confidence in the UK economy. Paris has also been boosted by its luxury fashion industry which has been booming. Hermes and LVMH have seen their share prices rise 37% and 22% respectively over the past six months. By contrast, the UK is facing a deep recession, huge inflation rates and sinking consumer demand. Brexit among other factors have hit the economy and the stock market is reflecting this. Since the Brexit vote, the CAC-40 exchange in Paris has risen 47% to date. The FTSE 100 has risen just 16% over the same six-year period.
7. AMAZON SLASHES JOBS
Amazon is reportedly planning to cut roughly 10,000 jobs globally as the global economic slowdown begins to bite. Workers in Amazon’s personal device and e-commerce divisions are expected to be affected. Although Amazon’s revenue grew by 15% last quarter, there are concerns about these declining divisions. These areas have been most acutely affected by the decline in consumer spending. Amazon enjoyed a bumper period during the pandemic as consumers flocked to online retailers. Now that demand is starting to wane Amazon has already implemented a hiring freeze and paused warehouse expansions that were announced to deal with the increased demand during the pandemic. This round of cuts could see around 10% of Amazon’s workforce lose their jobs.
This follows an announcement by Meta who said they would slash 11,000 jobs two weeks ago. We are likely to see more large companies cut jobs as we enter the new year.
8. UK INFLATION
UK inflation has risen to a staggering 11.1% in October, the highest figure since 1982. The figures exceeded initial estimates of 10.7%, meaning prices are rising faster than expected. The main driver of the price rises were energy bills which increased due to the energy price cap hike. Although the government’s guarantee to cap average household energy bills to £2500, many households still saw notable increases. Prices crept up from 10.1% in September. There is hope however, that inflation will not rise much more significantly, and we will see decreasing rates as household and business spending wanes.
9. MUSK DEFENDS TESLA PAY PACKAGE
Elon Musk testified in court to defend his huge $56 billion Tesla pay packet. A shareholder of Tesla seeks to rescind his 2018 compensation plan due to the terms of the arrangement. The lawsuit was filed just 3 months after the deal was approved by the board of directors. The shareholder claims that both the board and Musk breached their fiduciary duties. Under the deal, Musk was not required to work full time under the pay packet agreement made in 2018 but the shareholder believes that he should have been. Furthermore, they argue that Musk has not helped Tesla become more sustainable and the pay deal constitutes unjust enrichment as the incentive was unreasonably high.
Musk’s payment was not in cash but in Tesla shares. His payout was dependent on the company meeting its performance goals. Since the compensation plan was agreed by the board, Tesla’s shares have risen over 1000%. Musk and his directors refute the claims and argue that the world’s richest man helped steer the company through challenging times. CNN looks closer at the lawsuit.
10. DELIVEROO PULLS OUT OF AUSTRALIA
Deliveroo is pulling out of Australia as it faces strong competition and a difficult economic environment. The service has now been shut down and no new orders are being taken. Deliveroo Australia has also been placed into voluntary administration. Australia has a host of food delivery firms including Uber Eats, DoorDash and Menulog. Deliveroo has struggled to get a foothold in the country and with a global downturn looming, there is little chance of a recovery. Deliveroo recognised that “achieving a sustainable position of leadership in the market is not possible without a disproportionate level of investment which would have highly uncertain returns”. Globally, Deliveroo posted a £147 million loss in the first half of 2022.