Tusk EU deal branded a ‘joke’: key points
Yesterday the head of the European Council, Donald Tusk, revealed the highly-anticipated draft of a possible reform of Britain’s membership of the EU – to the scorn of the British press and Eurosceptics, who branded it a “farce”.
The deal, drafted after weeks of meetings between Prime Minister David Cameron and top EU officials, aimed to renegotiate in four key areas; safeguards for Sterling, more power to reject legislation made in Brussels and enhanced economic competitiveness and, most controversially, Cameron’s desire to limit benefit payments to European migrants.
So what did the draft deal contain?
The EU needed to offer a deal that was safe from legal challenges and could be applied to all 28 member states, without the complex and time-consuming amendment of treaties. If the leaders of all 28 states agree on this proposal, a referendum could be held on the subject in the UK as early as June.
Euro vs. Sterling
One of Cameron’s four aims was the continued safeguarding of the Sterling, and assurance that not being part of the Euro will not adversely affect Britain with the introduction of EU-written economic legislation. The EU confirmed that British citizens ors companies would not be discriminated against for not being in the Euro Zone.
Devolution of power from Brussels
Eurosceptics fear that Central European policymakers have too much control over member states national legislation, and wish to see the devolution of power. To counter this, the reform package states:
“It is recognised that the United Kingdom, in the light of the specific situation it has under the Treaties, is not committed to further integration into the European Union.”
Competitiveness
David Cameron has consistently called for less ‘red tape’ and an increase in competition. Effectively, the Tusk reform package does little but nod its approval to this idea.
Welfare payments for migrants
Cameron’s desire is to exclude European migrants from tax credits, child allowances and other non-contributory social benefits for at least four years. However, this controversial move arguably goes against free movement of people, one of the key pillars of European membership.
On this topic, the EU proposed an “emergency brake”, effectively allowing countries to limit these rights in the face of national security or economic difficulties. Legislation drawn up to this effect would need the consent other member states with a significant influx of EU migrants.
Reactions
Many have dubbed the deal a “joke”, saying that Tusk has made very few real concessions in Camerons’s four main areas and that the deal is largely rhetoric designed to give the impression of action. Britain’s right wing press took the opportunity to criticise, with The Sun calling it a “stinking pile of manure”. Even the largely centrist Financial Times admitted that Cameron could have a tough time selling it to his party.
Miranda Wadham on 03/02/2016
Hargreaves Lansdown shares fall, despite growing customer base
Retail investment group Hargreaves Lansdown reported disappointing first-half results on Wednesday, sending shares down over 4 percent.
Higher costs and a lower operating margin led to earnings, profit and dividend all coming in at lower than expected. Net revenue was up 10 percent on last year, but pre-tax profit missed analysts expectations by 3 percent.
However the company’s assets under administration grew by 7 percent in the six months to December, with new business inflows growing 23 percent to £2.8 billion. Since its last half-yearly results, Hargreaves added 47,000 clients to its portfolio. In a statement, CEO Ian Gorham said the company was pleased with its performance, adding that: “these results were achieved against a backdrop of continuing volatility in world stock markets.”
Hargreaves Lansdown (LON:HL) are currently trading down 4.4 percent at 1259.00 per share.
03/02/2016
Yahoo struggles to compete, cuts workforce to 9000
Internet company Yahoo has announced plans to cut 15 percent of its workforce, after reporting a $4.3 billion loss for the year.
The job cuts are part of CEO Marissa Meyer’s attempts to turn the struggling company around, and would reduce its workforce to just 9000. Yahoo, once a pioneer in the Internet world, is now struggling to compete with fast moving companies such as Google and Apple. In a statement, Meyer said:
“This is a strong plan calling for bold shifts in products and resources,” continuing that it will “dramatically brighten [Yahoo’s] future and improve competitiveness”.
Meyer has so far been pursuing a plan to spin off its core Internet business, but first needs to get the company back in the black with a series of cost cutting measures. However, this announcement is a further sign that Meyer may be willing to sell the business as shareholders grow impatient at the slow pace of its turnaround.
Shares in Yahoo (NASDAQ:YHOO) have fallen 36 percent over the last 12 months, and slipped a further 1.72 percent on the news in after hours trading.
03/02/2016
ChemChina nearing to close $43bn Syngenta deal
The Chinese National Chemical Corp. is nearing a deal to buy the pesticide company Syngenta AG, valuing the company at an estimated $43 billion and will represent the largest foreign acquisition taken place by a Chinese company.
Following The Wall Street Journal’s first report on the deal, shares in Syngenta have risen sharply, up 5.7% at 399.90 franks on Tuesday afternoon in Zurich.
If the deal is completed, which may be announced as early as Wednesday when Syngenta is scheduled to release its 2015 results, it would illustrate how China’s slowing economy hasn’t dampened its huge ambitions.
This deal is predicted to be welcomed by shareholders, due to the expectation of an all-cash offer, as opposed to Monsanto’s ix of cash and shares.
Martin Lehmann, a fun manager at 3V Asset Management, which holds a stake in Syngenta has said;
“ChemChina would be the perfect solution for shareholders, especially if it was all cash. It would have much less regulatory issues than a link with Monsanto, and there would likely to be less jobs lost in Switzerland,”
France has ruled out any negotiation with Google over back taxes
Unlike British tax authorities, who allowed Google to pay £130m in back taxes, France has ruled out any similar deals with the internet giant.
Michel Sapin, the French Finance Minister has said;
“French tax authorities do not negotiate the amount of taxes owed, there is a discussion underway about which rules apply, that’s perfectly legitimate,”
The tax deal made with Google in Britain was subject to controversy, with the director of the campaign group Tax Research, Richard Murphy saying;
“We are claiming back a tiny extra proportion [of what Google has underpaid], way short of any reasonable amount of tax. It looks as though Google has got a great deal, it must be laughing all the way to its Bermudan bank.”
Margaret Hodgean, an ardent critic of tax avoiding firms during her time as chair of the public accounts committee, has called this tax deal as “devious, calculated and, in my view, unethical”.
Gaza Sky Geeks: Gaza’s first and only startup accelerator
Described as “the world’s largest open air prison” and with 80% of its 1.8 million population living in poverty, Gaza is not the first place that springs to mind when thinking of places to invest in for startups.
Funded $900,000 by Google, the US charity Mercy Corps was able to set up Gaza Sky Geeks in 2011, which was able to connect top teams to global resources to transform Gaza’s most talented youth into the Middle East’s business leaders. Through Gaza Sky Geeks, investors around the World have invested in startups and have provided expertise and mentorship.
Gaza Sky Geeks have provided help and investment to many different companies. One of which is the taxi and carpooling app, ‘Wasselni’, described by the Gaza Sky Geeks manager as “the Uber for the Middle East”.
So why are startups in Gaza important?
Gaza has a very highly-educated population, with a literacy rate of 99% and high levels of tertiary education, the population of Gaza hold a lot of potential to make the most out of a startup movement.
The startups campaign has already proved to be very successful, where in just three years they have hosted training days and hosted over 100 competitions reaching 1,500 of Gaza’s youth.
Gaza Sky Geeks have also proved to be very popular with investors. When the funding from Google ran out, a crowdfunding campaign raised $250,000 from 800 people to cover the basic salaries such as internet, rent and salaries.
In a region where locals need express permission to cross borders, it is very difficult to find foreign investment. Hassan, the manager however remains hopeful;
“We are still in the beginning and are not big like Silicon Valley, but many young Gazans have the essence of entrepreneurs.”
To find out more and make a contribution, visit www.gazaskygeeks.com
Safiya Bashir - 02/02/2016
Boris Johnson expresses concerns over ‘red card’ deal
Boris Johnson, the London Mayor, said on Tuesday that he did not believe that the new proposals designed to keep Britain within the EU went far enough.
Commenting on ‘red card’ system, which will allow national parliaments to join forces to veto the new laws from Brussels.
Despite making it clear that he thinks David Cameron has “been doing a very, very good job of getting people to see things his way”, he went on to comment;
“I think there’s much, much more, however, that needs to be done.”
Nigel Farage, the leader of Ukip, has also commented on the ‘red card’ deal offered to Brtain saying;
“The idea we are being sold that a joint ‘red card’ is some sort of victory is frankly ludicrous.”
02/02/2016
Sainsbury’s to takeover Argos in £1.3bn deal
Sainsbury’s said the takeover would boost earnings per share (EPS) in the first full year following completion, rising to over 10 percent in the third year.
The British Supermarket Sainsbury’s (SBRY.L) has agreed to buy Argos Home Retail (HOME.L) for £1.3bn, creating a group bigger than Britain’s biggest retailer, Tesco (TSCO.L).
Purchasing Argos will allow Sainsbury’s to widen its range of non-food products such as toys and electronics. Important in a market where the grocery sector is being hammered by the growth of discount groups such as Germany’ Aldi and Lidl.
Analysts have not been so optimistic, fearing that Sainsbury’s will focus too much on the merger, when the supermarket sector is already under pressure.
Head of equities research at Hargreaves Lansdown, Steve Clayton, has described the offer as “bold play”. He commented;
“It is looking to buy a struggling business when the supermarket itself is fighting strong headwinds,”
Sainsbury’s have said that the takeover will boost the earnings per share in the first year, which will then rise to over 10% by the third year.
EU to present proposals for negotiated British membership
The UK has reached a deal with the EU which allows member states to block unwanted European legislation, which may pave the way for Britain to stay in the EU with a renegotiated membership.
According to Reuters’ sources, the document is said to include a legally binding provision allowing a group of 55 percent or more member states to either stop EU legislation or demand changes, and may even include a clause allowing Britain to suspend benefit payments to migrants – one of David Cameron’s most controversial aims.
The European Council President Donald Tusk is due to present proposals later today that focus on keeping Britain in the EU, but altering its terms of participation. The deal reached on Monday covers just one of David Cameron’s aims for reform, and has been hailed a “breakthrough” negotiation. However, many are sceptical that Cameron’s aims will come to fruition, with Foreign Secretary Philip Hammond saying of the proposals due to be presented later:
“It may be that the document is so good that we say ‘brilliant’ – but I rather doubt it. I suspect that the document will be the basis of further work.”
02/02/2016
UK construction off to weak start in 2016, German unemployment falls
Britain’s construction sector grew at its slowest pace for nine months in January, according to the latest figures from financial data analysts Markit.
The UK Construction PMI figure fell from 57.8 in December to 55.0 in January, well below the 57.5 forecast by analysts. According to Markit, housebuilders were one of the biggest influences on the slowdown:
“UK construction firms struggled for momentum at the start of this year, with heightened economic uncertainty acting as a brake on new orders”, said Markit economist Tim Moore.
The index showed falling optimism amongst construction companies, to its lowest since December 2014, indicating that construction companies are heading for a relatively weak first quarter in 2015.
German unemployment falls to record low
German unemployment saw a larger-than-expected drop in Janary, signalling a positive start to 2016 in Europe’s biggest economy and providing hope for many.
According to Germany’s Federal Labour Office, seasonally adjusted unemployment declined by 20,000 to 2.732 million, compared to a 7000 drop forecast by analysts.
02/02/2016