IMF: UK public finances are ‘vulnerable to recession’
An assessment from the International Monetary Fund (IMF) has found that the UK’s public finances are among the weakest in the world.
The UK was in the second weakest position in the health check on the wealth of 31 nations, with only Portugal in a worse state.
According to the assessment, which includes wealth and stress tests, the UK did poorly largely thanks to the bailout of UK banks after the financial crisis.
“The United Kingdom balance sheet expanded massively during the crisis. Most of the expansion in the balance sheet was the result of large-scale financial sector rescue operations that resulted in reclassification of the rescued private banks into the public sector. [This] increased (non–central bank) public financial corporation liabilities from zero in 2007 to 189% of GDP in 2008, with similar [falls] in financial assets,” said the report.
Top of the list was Norway, who holds most of its wealth in oil. Countries including the Gambia, Uganda and Kenya also ranked above the UK due to their higher net wealth relative to GDP.
Italy, Barbados and Greece were excluded from the broader tests and therefore would have had a lower rating than the UK.
The IMF said: “Better balance sheet management enables countries to increase revenues, reduce risks and improve fiscal policymaking. Countries with stronger balance sheets pay lower interest on their debt. Evidence also shows that countries with strong balance sheets experience shallower and shorter recessions.”
The IMF added that publishing a public sector balance sheet will help to “avoid the fiscal illusion that arises when governments on face value improve the fiscal position by lowering the immediate debt and deficits, but reduce net worth over time”.
ITV to sell South Bank studio
ITV has put its South Bank studios up for sale, axing plans to move back after its five-year development.
The site in South Bank has previously been the broadcaster’s headquarters for over 40 years and is home to the show Upstairs Downstairs.
ITV vacated the building last year in what was supposed to be a temporary move and relocated in offices in Holborn.
The move comes after plans unveiled in July by the new chief executive Carolyn McCall, who planned to cut costs as part of a strategy overhaul in July.
“ITV needs to ensure that its property portfolio in London supports the new strategy by giving flexibility to continue to grow, while supporting our ambition to be an agile and increasingly digital organisation,” said a spokesperson.
“By remaining in our current London office and studio spaces we can focus more time and resource on the areas of the business which will deliver greatest value.”
Analysts at Liberum have estimated that the sale of the South Bank location could net ITV as much as £245 million. ITV bought the South Bank studios for £56 million in 2013 from Coal Pension Nominees.
Shares in the group (LON: ITV) are trading at 159,30 (0911GMT).
MySale shares plunge on CFO resignation
Shares in MySale tumbled 16% this morning on the news of the chief financial officer’s resignation.
Andrew Dingle announced his resignation on Tuesday and said he will leave the group in October following a handover process.
Loss before tax grew from A$1.6 million to A$1.7 million as the online retailer was hit with an A$1.4 million charge regarding the purchase and reorganisation of personalised product retailer Identity Direct.
The group was also faced with an A$20million hit for abandoned acquisitions.
MySale said: “Whilst it is disappointing to incur costs on projects which do not conclude the group has identified key strategic and commercial benefits that can be derived from increasing the scale of the business and continues to evaluate acquisition opportunities.”
The group’s CEO, Carl Jackson, remained confident in the retailer’s future and said:
“While it is early in the current year, and our peak trading period lies ahead, trading to date has been in line with expectations and the board expects that underlying earnings before interest, taxation, depreciation, and amortization for the year will be in line with market forecast.”
Tuesday also saw the resignation of Aviva’s CEO, Mark Wilson.
Wilson left Britain’s biggest insurance company and said it was “time for new leadership to take the group to the next phase of its development”.
Shares in MySale (LON: MYSL) are currently trading down 15.47% at 41,80 (1541GMT).
Amazon experiences over 440 health and safety incidents
Since 2015, Amazon has experienced over 440 health and safety incidents at its UK warehouses. This is according to Freedom of Information (FoI) requests.
It has been revealed that workers suffered fractures, head injuries, contusions, and collisions with heavy equipment. This is following the GMB union’s request of data from local authorities.
Earlier this year, Amazon raised its minimum wage for US and UK employees.
But, as the data collected reveals, in 2015-2016 there were 80 health and safety incidents. This increased to 114 in 2016-2017 and then to 149 in 2017-2018. Up until now in 2018-2019, 99 health and safety incidents have been reported.
The data reveals a variety of injuries sustained by warehouse workers. For example, staff worked in extremely low temperatures of 3 degrees Celsius at a warehouse in Dundee. Moreover, one worker was injured using their hand to remove a label that was trapped in a conveyor belt. Equally, another worker was injured after being knocked over and trapped underneath a reversing heavy goods vehicle. Not to mention a forklift driver who crashed into a column at a warehouse, almost causing a floor to collapse.
It has also become apparent that Amazon workers had complained to local authorities regarding their working conditions.
Amazon has denied these claims, insisting that it fosters a safe working environment. A spokes person for the company said: “Amazon is a safe place to work and reports to the contrary are simply wrong,” “Amazon has created more than 25,000 good jobs with good pay and benefits across Britain and we are proud of the work they do on behalf of customers every day.” However, a spokesman from GMB has commented: “Amazon’s claims over its health and safety record have not been independently verified, and there are good reasons to doubt that they are accurate,” “GMB’s investigations at the Rugeley warehouse in Staffordshire suggests that the serious injury rate may be significantly higher than the sector average. “If it wants to be taken seriously, Amazon should publish its own health and safety data and recognise GMB so workers have an independent voice through which to raise their serious concerns.” Earlier this month, Bloomberg claimed that Amazon was among a handful of companies that had been hacked by Chinese spies.FTSE 100 hits 6-month lows as Italian budget pressure builds
The FTSE 100 (INDEXFTSE: UKX) hit the lowest levels for six months on Tuesday as fears over the Italian budget stand-off sucked the confidence out of European equity markets.
The FTSE 100 fell beneath 7,200 on Tuesday, the lowest level since mid-April.
Italy has set out a budget plan that equates to 2.4% of GDP, something that has been met by fierce resistance from Brussels and raised concerns among investors about the long term financial health of Europe’s 4th largest economy.
Despite pressure in Italian bonds and condemnation from European leaders, Italy have been unwavering in there commitment to the plan.
“We go ahead calm and responsible.”
“There are no plan B or backtracks. We are convinced that the planned budget measures will create jobs and wealth,” said Italian deputy Prime Minister Matteo Salvini.
The market has met the Italian resistance with the selling of Italian bonds. Yields in 10-year Italian bonds closed at their highest level since 2014 yesterday, yet the Italian administration seems unperturbed, heightening the risk of a financial shock.
“A spread at 400, 500? We are committed to making the spread reflect the fundamentals. If it goes to 500, the government will do what it needs to do.”
“If everyone sells, we will have capital outflows and we will have to face the situation. Faced with a financial crisis, the government will do what it must do, as Draghi did,” said economy minister Giovanni Tria.
Global rates are rising
Italy and their rising rates are not the only country causing angst among investors. US rates have soared above 3% in recent weeks leading to volatility in global equities, particularly emerging markets who are suffering capital outflows as investor reallocate to US treasuries. In the UK, gilts are at the highest level for a year after recent BoE rate hikes and the promise of the UK government to halt years of austerity.Italy’s budget: shares suffer as EU clash prevails
Italy’s budget has prompted EU backlash because its three year deficit plans breach rules on government borrowing. As a result, Italian shares and bonds have experienced a sharp sell-off. This has been caused by the concerns of investors regarding the deepening tensions between the Italian government and the European Union.
At the end of September, the Italian government set a budget deficit next year equaling 2.4% of Italian GDP.
Despite this figure being below the EU’s deficit limit of 3% of GDP, the news was not well received. This is because Italy is the third-largest economy in the Euro zone, and yet has a debt second to Greece. Equally, under the current budget plan the structural deficit would rise which goes against EU regulations.
But, the Italian government’s initial response was to not back down. They refused to revise Italy’s budget despite growing pressure from Brussels and Italy’s Euro zone partners. Italy’s economy minister, Giovanni Tria, attempted to ease tensions by claiming the country will try to cut its deficit in 2020 and 2021.
But, Italy’s budget is still harming the financial markets.
The euro reached a seven-week low against the US dollar. This is following Italy’s deputy prime minister’s, Matteo Salvini’s, claim that EU leaders were “enemies of Europe”. Milan’s FTSE MIB was at its weakest level in 18 months at 2.4%. Equally, yields on ten-year Italian bonds rose to the highest they have been in four and a half years. As a result, it has become even more expensive for Rome to borrow money. Yesterday, Matteo Salvini continued to criticise the European Commission President Jean-Claude Juncker and European Commissioner Pierre Moscovici. “The enemies of Europe are those sealed in the bunker of Brussels.” “It’s Juncker and Moscovici who have brought fear and job insecurity to Europe.” Bannockburn Global Forex’s chief market strategist, Marc Chandler, has expressed the fears of many investors. “This confrontation is set to escalate, and this is hurting Italian assets”, he said.Uber drivers to take part in strike action
Uber drivers will strike from 1 pm across UK cities today.
Protesting over pay and working conditions, hundreds of drivers will turn off their apps this afternoon.
Organised by The United Private Hire Drivers (UPHD) branch of the Independent Workers Union of Great Britain (IWGB), there will also be protests outside the offices in London, Nottingham and Birmingham.
James Farrar, who is the head of the UPHD branch, said “hundreds” are expected to join the strikes on Tuesday.
“If you look at social media feeds its viral at the moment. In the history of our union, I’ve never seen anything quite like it,” he said.
The unions are demanding an end to what it describes as the unfair deactivation of drivers. There is also a push for the increase in fares from £1.25 per mile to £2 per mile and a 10% reduction in commissions paid by drivers.
Labour deputy leader John McDonnell has supported the strike. He retweeted the UPHD’s announcement of the strike and protests and wrote: “I support this strike for better employment rights and urge others to respect the app picket line.”
Uber said: “We are always looking to make improvements to ensure drivers have the best possible experience and can make the most of their time driving on the app.”
“That’s why over the last few months we’ve introduced dozens of new features, including sickness, injury, maternity and paternity protections. An academic study last month found that drivers in London make an average of £11 an hour, after accounting for all of their costs and Uber’s service fee.”
“We continue to look at ways to help drivers increase their earnings and our door is always open if anyone wants to speak to us about any issues they’re having.”
This is the latest action taken by employees in the gig economy. Last week, employees from McDonald’s (NYSE: MCD), Wetherspoons (LON: JDW) and TGI Fridays (CNSX: TGIF) took part in a joint national strike.
Norwegian Air Shuttle becomes biggest non-U.S. airline to New York
Norwegian Air Shuttle has surpassed British Airways as the biggest non-U.S. airline on transatlantic flights to and from New York, Reuters reports.
It has been reported that Norwegian Air Shuttle took 1.67 million flyers to or from airports around New York. This figure is just above that of British Airways, which comes in at 1.63 million passengers. Indeed, Norwegian Air Shuttle has surpassed British Airways in the year long period from July 2017 to July 2018.
Over the last five years, Norwegian Air Shuttle has rapidly expanded in the transatlantic market.
In fact, the owner of British Airways was prompted to buy the company earlier this year. The data has emerged from the Port Authority of New York and New Jersey. Additionally, four U.S airlines are the largest to fly international passengers out of New York. The New York airports include John F. Kennedy International, Newark Liberty International and LaGuardia. But, the biggest non-U.S. flyer of international passengers is Air Canada. The majority of these flights are, however, between the US and Canada. As for Europe’s long haul flight market, new contenders have disrupted the market. Norwegian Air Shuttle and Wow Air are just a few companies revolutionising low-cost long haul travel. A British Airways spokeswoman commented: “Our commitment to New York is as strong as ever,” “We fly up to 70 times a week from all three of our London airports,” “We recently announced a $55 million (£49.7 million) investment on new lounges, improved food, seating and shops at JFK Terminal 7”. Moreover, a spokesman from Norwegian Air Shuttle said: “Transatlantic routes have been long dominated by carriers with outdated legacies running on fumes,” “Norwegian will continue to spread its wings to the Big Apple with a third-daily service between London and New York JFK”. Last month, British Airways reported that its customer data had been stolen. At 12:26 GMT +1 today, shares in British Airways Owner IAG (LON:IAG) were trading at +0.23%. At 16:00 GMT -4 yesterday, shares in Norwegian Air Shuttle (OTCMKTS:NWARF) were trading at -4.24%Wealthsimple: Investing on AutoPilot
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Dutch King shares Brexit concerns before UK trip
The Dutch King has disapproved the UK’s departure for the EU on Monday.
Speaking from the Hague, King Willem-Alexander of the Netherlands said that whilst the Dutch/UK trading relationship would survive Brexit, it would have been better for the UK to remain in the EU.
Speaking ahead of his state visit to the UK, the Dutch King said he had not seen any evidence of success by the UK government in its attempts to seek a better deal from member states.
However, he said the trading partnership between the countries would remain strong, with agreements becoming more bi-lateral following Brexit.
Trade between the UK and the Netherlands is worth over €60 billion.
During the state trip, King Willem-Alexander will meet the Lord Mayor of the City of London. They will discuss Dutch-British co-operation on sustainable production.
The Dutch King and Queen will also meet Dutch citizens in the UK, who are concerned about their business prospects in the UK.
A Dutch palace official said: “They will talk with Dutch entrepreneurs, academics and creatives, volunteers from the Dutch community, and Dutch nationals who are concerned about the consequences of Brexit.”
Whilst the Netherlands have said trading remaining positive post-Brexit, earlier this year the chief executive of the Port of Rotterdam, Allard Castelein, said the trading hub was “preparing for the worst” in regards to a no-deal scenario.
Until recently, the Dutch king co-piloted commercial KLM flights twice a month, many of these flying to the UK.