Eurozone inflation sticks at 0.2%
The Eurozone’s annual inflation rate stayed at 0.2% for July according to estimate today by Eurostat, with the unemployment rate remaining flat.
The figures suggesting that Europe’s economy maintained only modest growth for the last quarter.
However, these figures are an improvement on earlier in the year when inflation fell into negative territory. The target for inflation is 2% and the ECB has just begun a programme of quantative easing in order to reach it, aiming to pump one trillion euros into the economy before September 2016.
James Howat, European Economist at Capital Economics, said the figures were worrying: “Surveys of employment intentions have weakened recently, suggesting that the labour market recovery will remain pretty weak.”
He also pointed out that the ECB still has a lot of work to do to hit its inflation target.
Slow wage growth impacts the dollar
Figure released today showed wage growth in America was lower than predicted, questioning the proximity of a rate hike by the Federal Reserve and causing a weakening in the dollar.
Wage growth is a key factor that the Fed takes into account when considering raising rates; these figures may well might knock a rate increase back to December or even the beginning of next year.
Wages grew by 0.2% in the second quarter according to the latest employment cost index. Expectations were for the report to show wages rise to 0.6% in the second quarter, after a 0.7% increase in the first.
These figures show wages growing at their slowest pace in 33 years, clear evidence that stronger hiring isn’t generating higher incomes for most Americans.
2015 is the year for London’s small businesses
While there’s plenty of interest in technology, small business start-ups in other industries tend to be overlooked; however, they are going from strength to strength, and it’s London that is leading the way.
The figures speak for themselves; despite the economic downturn and the difficulty in getting loans from banks, more and more people are seeing starting a business as a viable option. In 2014, company registrations at Companies House hit a record high. with London alone registering 184,671 new businesses.
According to entrepreneur Luke Johnson, Chairman of the Centre for Entrepreneurs: “Starting a business is easier, quicker and cheaper than ever thanks to new technology. Entrepreneurs have higher profiles than in the past and are seen as role models. Traditional jobs for life have largely disappeared, as have occupational pensions.”
Interestingly, statistics from startups.co.uk show that there’s a vast difference in the numbers dependent on which borough they’re based in. Barking and Dagenham had just 330 small business start-ups registered in 2014, compared with Westminster at 5650. Unsurprisingly, small businesses made up most of the numbers; in Lewisham, 97% of startups were micro businesses.
One such business is The London Beer Factory, based in Gipsy Hill in South London. Brothers Sim and Ed Cotton started the business just over a year ago, and now brew 10,000L of beer a week. As beer lovers, for them it doesn’t get much better than that!
The growth in small businesses could well be attributed to the rise of crowdfunding, making it easier for entrepreneurs to raise the capital needed to get started. The London Beer Factory have so far managed to set the business up with money raised from friends, family and private investors, but do see crowdfunding as an option in the near future, saying that “it’s on our radar and pretty soon we’ll need to expand the business – grow the production line, grow the team and so on, so Crowdfunding will most probably feature in our decision making process.”
Like the fintech sector, craft beer is another industry that has really taken off over the past few years. When asked about whether they believed the market was becoming too saturated, they admitted that the industry is getting a little competitive:
“There must be at least a few hundred people doing what we’re doing in the UK which undoubtedly dials up the heat. But I welcome the strong competition: it’s forced us to really focus our business and to create a great tasting brew that stands out from the rest. From a beer lovers perspective, It’s great to see the cultural shift.”
According to Barclays Managing Director Rebecca McNeil, 2015 is set to be a great year for small businesses. The economy has picked up and confidence is returning to the industry and “there will be many exciting opportunities, for firms that want to, to grow.”
Consumer demand is increasing, and social media is working wonders for the marketing and networking of small businesses. Several companies have started online initiatives to support them, including Amazon, who launched their LaunchPad marketplace a few days ago, and the City of London Corporation who offer schemes and incentives for small businesses. Small businesses are great for the economy and provide healthy competition for big multinational corporations – and it seems there has never been a better time to start one.
Tsipras defends Varoufakis’ taste in shirts – and his ‘Plan B’
Greek Prime Minister Alexis Tsipras has acknowledged that his government made contingency plans in case they did not receive a third IMF bailout.
In a question time this morning, Tsipras spoke about Varoufakis’ infamous ‘Plan B’, portrayed by the media as an underhand attempt to take Greece back to the drachma.
The plan was revealed earlier this week by ex-finance minister Yanis Varoufakis, and involved hacking into citizens’ tax codes to create a parallel payment system that could easily be transposed back to Greece’s former currency. The plan prompted shock and outrage in Greece as people accused him of ‘plotting’ to take Greece out of the euro.
Tsipras told Parliament this morning:
“We didn’t design or have a plan to pull the country out of the euro, but we did have emergency plans. If our partners and lenders had prepared a Grexit plan, shouldn’t we as a government have prepared our defence?”
He argued that the idea of a database giving Greeks passwords to make payments to settle arrears was hardly “a covert and satanic plan to take the country out of the euro”.
“Mr. Varoufakis might have made mistakes, as all of us have … You can blame him as much as you want for his political plan, his statements, for his taste in shirts, for vacations in Aegina,” Tsipras said.
“But you cannot accuse him of stealing the money of Greek people or having a covert plan to take Greece to the precipice.”
Tsipras’s comments came as final talks begin with creditors to receive an 86 billion euro bailout, as Greece passed the measures needed for it to go ahead.
Creative site Pinterest reveals goals to increase diversity
Creative social media site Pinterest has announced plans to diversify its workforce by publishing clear targets. Founder Evan Sharp set out the company’s goals in a blog post, stating the need to increase diversity in technology start-ups.
He said: “We’ve made some modest progress over the past year, with our number of female employees growing from 40% to 42%, engineering interns increasing from 32% to 36% female, and women engineers hired out of school increasing from 28% to 33%.”
He admitted that Pinterest had only seen “modest change” over the past year, but said that the reason it’s so hard to get numbers to change in the industry is that companies haven’t stated specific goals. With a formal statement of the company’s diversity goals, Sharp believes that they are “holding ourselves accountable to make meaningful changes to how we approach diversity at Pinterest.”
The goals include increasing hiring rates for full-time engineering roles to 30% female and 8% underrepresented ethnic backgrounds, and implementing a Rooney Rule-type requirement where at least one person from an underrepresented background and one female candidate is interviewed for every open leadership position. They also plan to have every employee participate in training to prevent unconscious bias and support the creation of a training and mentorship program to maximize the impact of Black software engineers and students, led by one of our engineers.
Diversity goals are becoming more prominent in made led industries such as tech: in 2014, Google, Apple and Facebook released formal diversity reports about the internal makeup of their workforces.
Pinterest also plan to launch Inclusion Labs, a new initiative in partnership with consultancy firm Paradigm. Paradigm have been working with Pinterest for seven months on unconscious bias training, data collection, diversity recruitment and company culture. Inclusion Labs will be the continuation of these efforts:
“We’re interested in designing and testing ideas that have potential to impact the tech industry at large,” wrote Emerson in a Medium post on Thursday.
“Pinterest shares our passion for impact, and has expressed to us their belief that by cultivating a more diverse and inclusive tech community, every company within that community will be better off.”
Uber plans expansion in India
Controversial taxi app Uber has announced that it will invest $1bn to expand its business in India.
Uber is currently banned there after rape accusations against one of its drivers. The company has applied for licenses in other Indian cities and continues to operate its service whilst the decisions are pending; estimates put the number of current Uber journeys in India at 200,000 per day.
The decision comes after the firm in June said it wanted to invest the same amount in China, also to expand to more cities in the country.
Uber’s reputation has recently taken a hit in several countries, including the UK and France.
In the UK Uber has had several problems including recent claims that their app misleads users by displaying taxis nearby – which don’t exist. It is also facing facing legal action from drivers who claim the taxi-booking firm does not provide them with basic workers’ rights, including the minimum wage and paid holiday.
It says Uber does not provide its drivers with the rights normally afforded to employees, claiming instead that they are “partners”, or self-employed.
Similarly in France, their app UberPOP has been banned by the government after its introduction provoked protests in the capital. French taxi drivers argues that they were being unfairly undercut by Uber; cab drivers in France must pay thousands of pounds a year in licence fees, and say that they have lost between 30% and 40% of their income over two years because of the growth of UberPOP.
Perhaps further investment in Asia and India is a sign that they are considering relocating the bulk of their business there in the wake of disruption and litigation in Europe.
British Airways owner IAG releases positive results
British Airways owner IAG (LON:IAG) has reported a 25% rise in pre-tax profits to €449m for the three months to 30 June.
The carrier’s operating profit shot up 141 percent to 555 million euros, up from 230 million the year before. Revenue for the quarter was also up 11.2 per cent to €5,656 million.
Willie Walsh, IAG Chief Executive Officer, said in a company statement:
“We said previously that profit improvement would be slower in the second quarter and we are on track to reach our full year targets. “We continue to take cost out of the business, with both employee and supplier unit costs down at constant currency, and improvements in productivity levels
The company also stated that at current fuel prices, their outlook for the year remains the same and they expect to generate an operating profit of 2.2 billion euros.
IAG is in the process of buying Irish carrier Aer Lingus, but is waiting for approval from stakeholder Ryanair. However, Mr Walsh is confident that it will be approved.
IAG is currently trading down 1.29 percent, at 534.6 pence per share.
Airbus shares up three percent after profit rise
Airbus Group (EPA:AIR) reported a 6 percent rise in first-half core operating profit and revenue this morning, with a 34 percent rise in net income to 1.52 billion euros.
The company confirmed its full-year financial forecasts, despite problems with their A400M military transporters, one of which crashed during a test flight in May. Airbus aims to deliver around 15 of the new cargo carriers to at an initial cost of 20 billion euors each. Seven NATO nations have been promised the aircraft, but its development has been slowed by delays and cost overruns.
However, bad news related to the A400M has been offset by sales of passenger jets and helicopters, including an $18 billion deal with Chine for 75 planes.
Airbus shares are currently trading up 3% this morning on the news.
Lloyds report profit rise, despite PPI fine
Lloyds Bank (LON:LLOY) reported its half year results this morning, seeing a 38% rise in pre-tax profits.
The results showed an underlying profit of £4,383 million, an increase of 15 per cent on the first half of 2014 but still below analysts forecasts. Profits for the six months to the end of June were £1.19bn, compared with £863m a year earlier.
In a statement in October, the bank set itself several targets in areas including sustainable growth and improving efficiency. The report this morning highlighted progress in these areas, with Lloyds remaining the largest provider of mortgages to first-time buyers and helping 1 in 4 customers to get on the housing ladder in the first half of the year.
The statement said showed progress in the efficiency of the running of the bank: “In the first six months of the year we have delivered run-rate savings of £225 million through our new Simplification programme as we continue to work towards our target of achieving a further £1 billion of savings by the end of 2017. These reductions, together with our strong underlying financial performance have resulted in further strengthening of our already market-leading cost:income ratio, which is now 48.3 per cent.”
However, Lloyds have had to set aside more than £13bn in compensation, after the FCA found the bank mis-handled complaints between March 2012 and May 2013. The bank was fined a record £117m by the Financial Conduct Authority (FCA) over the mis-sold PPI.
Lloyds’ chief executive Antonio Horta-Osorio said: “Today’s results demonstrate the strong progress we have made in the first half of the year.
“We remain focused on our aim to become the best bank for customer sand shareholders, while at the same time supporting the UK economy.”
Amazon launches ‘LaunchPad’ for start-ups
Never one to be left behind, Amazon’s latest venture will once again put them at the forefront of internet trade; they have recently added a new storefront on their website, a platform for hardware and physical goods startups to “launch, market and distribute” new products on Amazon.
It has a similar theme to their Amazon Exclusives page, which launched in March and sold products exclusively from “up and coming” brands. With Amazon’s Launchpad, they are promising to “curate the cutting edge so you can discover unexpected and fresh new products.”
Essentially, this is Amazon hoping to muscle in on the growing start-up sector. With crowdfunding platforms making these young businesses ever easier to set up, Amazon is now hoping to get in on this by offering start-ups a platform to market and promote their products.
They have teamed up with 25 crowdfunding platforms, venture capital firms and startup accelerators, including Andreessen Horowitz, Y Combinator and Indiegogo, to bring together the set of products made by new businesses who will have access to 10 of its international portals for distribution.
In a statement, Jim Adkins, Amazon’s Vice President, said: “As the pace of innovation continues to increase within the startup community, we want to help customers discover these unique products and learn the inspiration behind them. We also know from talking to startups that bringing a new product to market successfully can be just as challenging as building it.”
“Amazon Launchpad gives customers access to a dedicated storefront featuring a variety of innovative new products from emerging brands. For startups, we handle inventory management, order fulfillment, customer service, and more, allowing them to focus their efforts on the innovation that results in more cool products.”
One of the new platform’s first businesses is Pavlok, a brand who produce a bracelet that sends an electric shock to wearers when they engage in a bad habit. Their marketing manager Sims McGrath III said Launchpad provided an opportunity to tell the company’s story.
“We were able to share details about our company, our mission, our CEO, and some of the success stories that have come from early users of Pavlok,” McGrath said. The company, which has made 3,000 sales through its own website, is “mentally preparing for an influx of orders, based on Amazon’s global reach,” he said.