The week’s news included; Law firms see billable hours drop, Citibank wins case against employee who lied about lunch expenses, X trials charge for all new users, Amazon to start UK drone deliveries.
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:
- The Guardian – Sky’s not the limit: is the drone delivery age finally taking off?
- BBC News – Is AI about to transform the legal profession?
- City A.M. – Record rent rises are an existential challenge for London’s future
- CNBC – What to make of the UAW’s shifting strike tactics after the latest escalation
- City A.M. – Tech founders are turning away from the Tories, and into Labour’s open arms
1. UK’S OUTLOOK RAISED
The UK has seen its outlook from credit rating agencies improve as the economic forecast looks more positive. Rating agency Moody’s removed its negative outlook on the UK last week. S&P had already done so in April. Liz Truss’ disastrous mini-budget last September, which saw £45 billion of unfunded tax cuts, damaged the perception of the UK’s economic stability. Chancellor Jeremy Hunt has since reversed most of the cuts, improving the economic outlook. Moody’s currently gives the UK an Aa3 rating, its fourth highest. S&P gives the UK an AA rating, its third highest. Fitch however, still maintains a negative outlook on the UK. Credit ratings affect the cost of and ability to borrow money.
2. LAW FIRMS SEE BILLABLE HOURS DROP
UK law firms are experiencing a notable fall in billable hours as clients scale back on spending. Partners at the largest law firms saw their billable hours fall by 8.3%. Furthermore, a slowdown in merger and acquisition activity this year has dried up legal work. A survey by PwC found that law firms are increasingly concerned about the slowdown and rising inflation has compounded the issue. The cost of living crisis has seen wages increase but staff and support wage costs are rising faster than income. Almost all top UK firms have increased their billable hour targets to help stem the issues. Many firms could however, take more drastic action in the coming months if the situation does not improve.
3. CRYPTO FIRMS NAMED IN $1BN FRAUD LAWSUIT
Three major cryptocurrency firms have been named in a $1 billion fraud lawsuit. Lender, Genesis, its parent company Digital Currency Group, and crypto exchange Gemini are all involved. Gemini is accused of lying to customers about risks of one of its investment accounts, Gemini Earn. Users received up to 7% interest on deposited funds. Genesis and DCG collaborated with Gemini to run the account. Genesis subsequently collapsed after the collapse of FTX, leaving the firm with $1 billion in losses. Gemini Earn was halted and users were then unable to access funds. Now, US prosecutors have said that they defrauded investors in the lawsuit.
4. CITIBANK WINS EMPLOYMENT TRIBUNAL CASE
Investment bank Citibank has won an employment tribunal case for its sacking of a worker who lied about expenses. The worker claimed two sandwiches, two coffees and two pasta dishes in expenses as part of a business trip. He claimed that he consumed all of this himself. In the submission he said “the coffees…were very small” and he skipped breakfast hence why he needed two of everything. It transpired that his spouse had travelled with him and he attempted to claim their food as a business expense, without disclosing her presence.
Although the claim was within the €100 spending limit, the worker had lied to Citibank in his expense claim, breaching conduct rules. Citibank ultimately dismissed him. The worker then sued Citibank for wrongful and unfair dismissal. Last week however, the employment tribunal found Citibank was justified to dismiss him based on his conduct.
5. X TRIALS CHARGE FOR ALL USERS
New users of X, formerly known as Twitter, in New Zealand and the Philippines now face a charge to use key features. Users will have to pay $1 (£0.82) per year to tweet, retweet, reply to and like posts. This forms part of a trial that could be rolled out globally. Musk claims that this small charge could help combat bot accounts on the platform. Users will still be able to have read-only access to X free of charge. X has 550 million monthly users so even a small charge to each user could provide a welcome revenue boost. That being said, many users have said they may leave the platform entirely if its put behind a pay wall. How successful this trial will be remains to be seen.
Musk also announced the introduction of two premium tiers. X currently charges $8 per month for its premium account in the US. A cheaper tier will have all features but ads whereas the more expensive tier will not have ads. More details are yet to come.
6. WAGES RISE FASTER THAN INFLATION
Wages in the UK have risen faster than inflation for the first time in two years. Between June and August average wages rose at an annual rate of 7.8%, slightly above inflation which remained steady at 6.7%. Financial and business services saw the fastest wage growth. Public sector saw pay increases of 6.8% in the period compared to an average of 8% in the private sector. Despite this, public sector pay increased by the largest amount since records began in 2001. This news is encouraging as for many it will see an easing of the cost of living pressures. Inflation is still well above the target rate of 2% but we could soon be on our way to reduced interest rates if this trend continues.
7. AMAZON TO START UK DRONE DELIVERIES
Amazon has unveiled plans to start using drones to deliver parcels in the UK using drones. By the end of next year, a town in the UK will get the service. Some items weighing less than 2.2kg are already delivered by drone in the US. Only two US states have Amazon Air deliveries, California and Texas. There are ongoing discussions with the UK Civil Aviation Authority on how items can be delivered safely. Drone deliveries will take place in under 1 hour but houses must be pre-approved to receive the deliveries. The drones drop parcels from 12 feet in the air and require a lot of space. Amazon expects drone deliveries to be commonplace by 2030.
8. NOKIA CUTS 14000 JOBS
Telecoms firm Nokia is to slash up to 14000 jobs over the next three years. The company is on a cost cutting drive after it posted a significant drop in sales. Demand for 5G equipment has waned amid a weak global economic outlook. Spending on new 5G gear has been shrinking particularly in the US and EU. Nokia posted a 20% fall in sales and now aims to make €1.2 billion in savings by 2026 . While Nokia is most famous for its mobile phones, it sold its handset business to Microsoft. Telecoms is now its main source of revenue. Despite this, it has been cutting back its workforce steadily since 2015 and now has 86000 employees globally.
9. ROLLS ROYCE CUTS 2500 JOBS
Rolls Royce is set to cut up to 2500 jobs to improve efficiency. As well as being a luxury car maker, Rolls Royce also produces aircraft engines. Like most in the aerospace sector, Rolls Royce was hit hard by the pandemic as flights were grounded. Around 9000 jobs were cut during the pandemic and the company secured £2 billion in funding to stay afloat. These latest cuts are designed to make the company “fit for the future”. The company currently employs 42,000 people globally. No details on which areas the cuts will affect have been provided yet.
10. SEAGREEN WIND FARM RUNNING AT MAX CAPACITY
The largest offshore wind farm in Scotland is now operating at full capacity. The £3 billion Seagreen wind farm could significantly aid the UK in reaching its net zero targets. Seagreen can generate two-thirds of Scotland’s entire household electricity needs. The 114 wind turbines will displace two million tonnes of CO2 per year. Wind farms have lengthy approval processes and experts claim this process must be shortened if the UK is to meet its net zero targets. Seagreen has created 700 jobs and has been in the works for over 10 years.