The week’s news included; Adidas loses trademark legal battle, Twitter facing lawsuit over firing UK staff, Bank of England makes profit on mini-budget gilts, Rental rates see highest increase on record.
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. – Let’s be honest, making our own microchips won’t solve our China woes
- Charged Retail – Evri rebrand: a success or “putting lipstick on a pig?”
- Sports Pro Media – 23 questions for the sports industry in 2023
- BBC News – Why it is becoming easier to sue Big Tech in the UK
1. ADIDAS LOSES TRADEMARK LEGAL BATTLE
Adidas has lost a legal battle to prevent Thom Browne Inc from using a four-stripe design on its products. Luxury fashion brand Thom Browne Inc has designs featuring four horizontal, parallel stripes. Adidas claimed that this was too similar to its own three stripe design. They argued that customers could confuse the brands. They sought $7.8 million in damages from Thom Browne Inc for their use of the design.
Thom Browne’s defence said that customers would not get confused as they use a different number of stripes. They also argued they have different customer bases who would not confuse the brands. Thom Browne is a high-end brand and products such as a polo shirt retail for £270. A New York Court ultimately sided with Thom Browne Inc and deemed that customers would not be confused. Adidas is considering an appeal.
Adidas has been aggressively fighting smaller companies which use logos that remotely resemble its own. Since 2008, the retailer has launched over 90 lawsuits and secured 200 settlements over its trademarks.
2. TWITTER FACING LAWSUIT OVER FIRING STAFF
Twitter is facing legal action in the UK over its decision to sack staff upon Elon Musk’s takeover. Former workers are claiming they were unfairly sacked in a “sham” redundancy process. Law firm Winckworth Sherwood has raised the prospect of taking Twitter to an employment tribunal. The firm represents 43 former Twitter workers. Over 180 UK staff are thought to have been affected.
Twitter immediately cut off employees’ access to internal systems and premises when Musk decided to sack 50% of the workforce during his first week of ownership. The redundancy process however, began on 18 November, nearly three weeks after they lost access to systems. Furthermore, a number of jobs cut were not genuine redundancies, according to the firm. Winckworth Sherwood claims that this breaches the 1992 Trade Union and Labour Relations Act. Employees must be consulted for a minimum of 45 days before being made redundant. The firm says Twitter had no right to cut employees off and is confident a tribunal will agree with these findings. These findings were emailed to Twitter executives last week. Twitter is yet to respond.
3. BANK OF ENGLAND GILT SALE PROFIT
The Bank of England made £3.8 billion in profit from selling off bonds purchased to shore up financial markets after Liz Truss’ disastrous mini-budget. Over £19 billion of UK government bonds (gilts) were purchased in September. This was due to Truss’ £45 billion of unfunded tax cuts which ultimately posed a material risk to financial markets. In total, a £60 billion programme was announced but £45 billion of this was not required as the damage was controlled. The Bank of England has now sold off these gilts for a £3.8 billion profit. This profit will go to the Treasury.
4. BANKS FACING CLASS ACTIONS
Top UK banks are facing an increasing number of class-action lawsuits around the world. Litigation funders are pumping more money into claims against banks, seeking huge paydays. FTSE 100 banks are currently dealing with 109 class action lawsuits globally. Barclays is facing the lion share of these, handling over 40 claims. HSBC and Natwest are facing 31 and 28 class action lawsuits respectively. The data is according to analysis by law firm RPC. They predict that class action lawsuits will become even more common and pose a significant risk to big banks.
Litigation funders are often backed by hedge funds and investment firms and get a percentage of payouts from cases they bankroll. There is concern that these firms are exploiting claimants who cannot take on corporate giants without support. The EU is considering new rules to limit the percentage of payouts they can receive. Check out our previous top 10 exploring this matter.
5. UK ECONOMY GROWS
The UK economy grew by 0.1% in November, marking a surprise uptick. Analysts had predicted a 0.2% contraction. The UK is on track to narrowly avoid a recession as growth was also noted in October. A recession is defined as two consecutive quarters of economic contraction. The economy saw a welcome boost during the Qatar World Cup. The impact of strikes in December is however, likely to have had a negative impact on growth. Although inflation seems to be steadying, high interest rates and 10% inflation rates are still a concern for the UK economy.
6. GOLDMAN JOB CUTS
Goldman Sachs is set to slash 3200 jobs as business activity slows. This amounts to roughly 6.5% of its workforce. The investment bank is experiencing reduced growth due to the wider global economic slowdown. Rising inflation and interest rates have hammered businesses, and investment banks are not exempt. Due to higher borrowing costs, fewer companies are undertaking mergers and many are postponing IPO plans until the economic outlook strengthens. Goldman Sachs saw its investment banking division revenues halve to $1.57 billion this year. Most cuts will be targeted at the investment banking division. While the cuts at Goldman will not see the worst case scenario cull of 3900 job cuts, it still indicates concern about the short term economic outlook.
Firing of under-performers is an annual tradition at investment banks such as Goldman Sachs, so the cuts themselves are no surprise but the size of the cuts is significant. Goldman did however, skip its annual cull of under-performers during the pandemic.
7. BLACKROCK JOB CUTS
The world’s largest asset manager BlackRock is set to cut 500 jobs. These cuts will amount to around 2.5% of its 19,900 employees as of 30 September. The move has been sparked by the wider economic downturn and a bleak economic outlook. High interest rates have made borrowing more expensive and global financial demand has waned. BlackRock’s shares tumbled 23% in 2022, its worst year since 2008. It has not been announced whether workers in the UK will be affected.
8. FTX FUND RECOVERY
Collapsed cryptocurrency exchange FTX has found over $5 billion in assets. These include cash, cryptocurrencies and securities. A huge $8 billion of customer funds was missing and the exchange and its management are accused of defrauding investors. Founder and former CEO Sam Bankman-Fried allegedly misappropriated funds to pay debts at his other company, Alameda Research. The full extent of customer losses is not known. Bankman-Fried was hit with 8 criminal charges, is currently released on a $250 million bail and is facing over 100 years in prison. See our previous article explaining the collapse of FTX.
9. TESLA REDUCES PRICE
Tesla has announced that it will reduce the price of some vehicle models to boost demand. In the UK, some prices will be cut by up to 15% while in the US prices will fall by up to 20%. With rising interest rates and economic downturn on the horizon, Tesla is fighting to keep demand for its products steady. Many customers may opt for cheaper car brands during a downturn which would acutely affect Tesla as a high end electric car maker.
This comes as Tesla hit record delivery stats last year. Tesla delivered 1.3 million cars last year, a 40% increase on 2021. While this fell short of analysts’ estimates, Tesla remained positive, citing Covid and supply chain issues as the reason for the shortfall. Investors were not satisfied as Tesla’s share price plunged 12%. The automaker’s shares suffered their worst year in 2022, falling 65%.
10. RENTAL RATES
Rental rates have seen the highest increase since comparable ONS records began in 2015. Rates rose by 4% on average last year. While most media bandwidth has been centred on homeowners and potential buyers, renters have been acutely affected by rising interest rates. Many landlords are passing rising costs directly onto tenants, putting a huge squeeze on finances. Furthermore, renters typically shell out 24% of their weekly spending on housing costs, compared to just 16% for homeowners with mortgages, according to the ONS. Many renters have reported increases of over 20% in their monthly payments and nearly a third of people say they are struggling to afford their housing costs. The Bank of England has said interest rates will fall again once inflation is under control. Homeowners and renters alike will breathe a sigh of relief once this day comes.