The week’s news included; EU agrees new AI regulation, BAT says US cigarette business is dying, Starbucks loses $12bn in market value amid boycott, Record number of students enrol on Bar training courses.
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:
- BBC News – Will curbs to migration hit the UK economy?
- City A.M. – Consistency, not speed is more important to save the City from stagnation
- CNBC – The ‘relatively simple’ reason why these tech experts say AI won’t replace humans any time soon
1. NEW UK RULES ON IMMIGRATION
The UK government has unveiled new restrictions on immigration to bring down net migration. Net migration is the difference between people entering and leaving the UK. This reached a record high of 745,000 in 2022. Even after Brexit and an end to free movement from the EU, migration numbers increased. The government has previously pledged to bring down net migration but has failed to do so. Now, the government has said legal migration is too high and must be reduced. They argue the high levels of migration has put pressure on public services and is unsustainable.
Under the new measures, the minimum salary required for overseas skilled workers to obtain a Visa will be £38,700. The minimum salary required to bring dependents to the UK will also be £38,700, up from £18,600. Foreign workers must pay £1035 annually to use the NHS, up by roughly 40%. Many have criticised the announcements as despite record net migration, there is a severe shortage of workers in many key sectors. Although there will be some exemptions for certain sectors there is concern that potentially crucial workers could be deterred from migrating to the UK, harming the wider economy.
2. EU DELAYS TARIFFS ON FOREIGN-MADE EVS
The EU has proposed to delay the introduction of tariffs on foreign electric vehicles until 2027. Tariffs on electric vehicles were due to be introduced in 2024. Electric vehicles will face a 10% tariff if the majority of the value of their parts do not derive from Europe. This disproportionately affects electric vehicles as their value largely derives from their batteries. Most car makers get their batteries from China and the far-East. EU lawmakers voted for these “rules of origin” tariffs to prevent foreign countries, like China, from undercutting EU companies in the frontier electric car space. European car makers however, have staunchly criticised the 2024 deadline and pushed for an extension. They argued the deadline was far too close for them to alter their supply chains. As it stands, there simply aren’t enough battery factories with sufficient capacity in Europe to meet the demands of car makers. The new tariffs would have cost European automakers £3.75 billion per year. Now, their pleas have been heard by the EU Commission. EU member states will now vote on the proposals but this is no doubt welcome news for the industry.
3. BAT SAYS CIGARETTES DYING OUT IN THE US
British American Tobacco (BAT) has said that its US cigarettes business is dying. BAT owns cigarette brands including Camel and Newport but has written down the value of its US cigarette business by $31.5 billion. This represents a cut of more than 30% in its valuation. There are a declining number of smokers in the US and BAT’s brands are not the cheapest in the market. This has hit sales hard and now BAT expects its US cigarette brands to have a 30 year life span before dying out. Many new smokers exclusively use vapes and avoid cigarettes. This is why the company is now pivoting towards vapes and other “non-combustible” products. BAT aims to generate 50% of its turnover from such products by 2035. Many other US rivals will likely follow suit and look to move away from cigarettes.
4. EU AGREES AI REGULATION
EU lawmakers have provisionally agreed on a plan to regulate artificial intelligence. The AI Act will be voted on in 2024 and covers tech such as facial recognition and generative AI systems like ChatGPT. There will be limits on the use of AI by law enforcement and safeguards to protect people’s rights. There will also be an enforcement regime where fines can be issued to those who breach rules as well as a complaints framework for consumers. This deal fundamentally sets the regulatory foundation for the use of AI within the EU. With the use of and investment in AI tech increasing exponentially, regulators must move quickly to prevent adverse consequences of unfettered growth in this area. After voting takes place, the AI Act would come into force in 2025 at the earliest.
5. STARBUCKS LOSES $12BN IN MARKET VALUE AMID BOYCOTT
Starbucks has lost $12 billion in market value in the past month alone amid an ongoing boycott over its stance on the Israel-Palestine conflict. The company is also tackling a dispute with workers. Staff with the Workers United union have been striking over working conditions. The company also clamped down on pro-Palestinian content on social media posted by a Workers United Union page. This led to widespread calls to boycott Starbucks amid Israel’s assault on Gaza. This cocktail of issues has led to 11 straight days of stock price drops, its worst performance since going public in 1992. In this time, Starbucks has lost 9.4% of its market value, $12 billion.
This comes as McDonald’s unveiled plans to launch a new retro-style restaurant to compete with Starbucks. CosMc’s will open in 10 US locations by the end of 2024. It will focus on hot and cold speciality drinks.
6. ENTAIN SETTLES BRIBERY ALLEGATION
Gambling firm Entain, which owns Ladbrokes and Coral, has settled a bribery case for £585 million. A Turkish company was sold by Entain in 2017 and evidence of bribery by employees and suppliers was found. Entain was accused of having improper procedures to prevent bribery. Entain has now struck a Deferred Prosecution Agreement (DPA) with HMRC, protecting them from prosecution if they meet stipulated conditions. The company will pay £585 million over four years as part of this DPA. This includes a £20 million charitable donation and £10 million to cover HMRC’s costs. Entain says it has significantly improved its policies and procedures and has changed as a firm since the 2017 sale. While a hefty sum, Entain’s DPA settlement figure was significantly less than Airbus’. In 2020, Airbus agreed to pay a record €991m as part of its own deferred prosecution agreement over bribery allegations.
7. RECORD NUMBER OF STUDENTS ENROL ON BAR TRAINING
A record number of aspiring barristers have enrolled on Bar training courses according to the Bar Standards Board. Unfortunately for these students however, pupillage numbers have not risen significantly. Just 544 pupillage positions are available for a record number of students enrolled on Bar training courses. 2360 students enrolled this year, up from 2308 in 2022. They are also competing with those who previously completed the Bar course but failed to obtain a pupillage. The Bar training course is notoriously challenging with roughly a third of those who begin the course fail to complete it. Although roughly 42% of UK domiciled students who completed the Bar Course in 2020/21 have gained pupillage.
8. JOHN LEWIS FILES TRADEMARKS FOR PROPERTY BUSINESS
Retail giant John Lewis Partnership is venturing into the property business and has trademarked new names. John Lewis has registered three trademarks relating to property, ‘The Fold by John Lewis’, ‘The Fold’ and ‘The Fold by JLP’. This could potentially be the new name of John Lewis’ venture into property. The retailer however, did note that it “regularly registers trademarks and not all are used.” John Lewis had already announced plans to build 10,000 homes in a significant move to diversify its income. Properties will be furnished with John Lewis products. Chairperson Sharon White aims to generate 40% of John Lewis’ profits from outside retail.
9. SKY SPORTS SECURES PL BROADCASTING RIGHTS
Sky Sports has obtained the rights to broadcast 100 extra Premier League, beating rivals Amazon and TNT. The channel will broadcast 215 games per season including Boxing Day fixtures which are currently shown by Amazon Prime. TNT Sport, formerly BT Sport, has secured 52 games. Sky Sport’s deal is worth a huge £6.7 billion and kicks in for three seasons from the 2025-2026 season. This is £1.6 billion more costly than the current three year package.
10. SPOTIFY JOB CUTS
Spotify is cutting 1500 jobs as part of a cost cutting plan. In Q3, the streaming giant reported its first quarterly profit since 2022. This was driven by price rises and an increase in subscribers. The company is, however, striving to improve its underlying finances. These cuts represent 17% of its 9000 strong workforce, making it one of its largest cuts to date. Spotify hopes to reach 1 billion users by 2030. It currently has 601 million users.