Below are our top 10 stories that you need to know about. Be sure to check our twitter page for regular posts of important headlines. Click on the links for full stories.
Opinion articles of the week:
Will the EU lose more from Brexit than the UK? Click here for the debate.
The governor of the Bank of England, Mark Carney claims that the UK is not ready for a rise in interest rates as the market conditions for a rate rises aren’t yet in place. Click here for more information.
Uber has cleverly controlled its stocks so it will not have to trade publicly like Facebook, Twitter and Google. Click here for more information on how Uber has done this and why companies trade publicly.
1. US FED RATE RISE
The Federal Reserve, the US central bank, said on Wednesday that it would raise short-term interest rates for the first time since the financial crisis, a decision it described as a vote of confidence in the American economy. The Fed announced that it would raise rates to a range between 0.25 percent and 0.5 percent signals the beginning of the end for the central bank’s stimulus program. Interest rates on mortgages and other kinds of loans…are likely to remain low. (NY Times)
Click here for Reuters guide to the impact of interest rate rises on consumers.
Some analysts claim that this rise may be bad for the US economy. Click here for Bloomberg’s 5 minute video on this issue.
There has also been criticism of the decision regarding potential effects on emerging economies but some investors believe that this actually positive for emerging economies. Click here for more.
2. UK INFLATION FIGURES
In November inflation, the rise in general prices of goods and services, in the UK was positive for the first time since July. The consumer price index grew by 0.1 per cent year on year last month, up from a 0.1 per cent decline in October. Analysts are warning however that “lowflation” is likely to remain for some time to come. (Independent)
3. US LIFTS OIL EXPORT BAN
US politicians have approved a measure to lift the 40-year ban on crude oil exports. The move is part of a $1.1 trillion (£738bn) spending bill approved by the Senate on Friday that will fund the US government until 2016. US oil producers will now be able to sell crude to the already saturated international market.
The bulk of US oil comes from shale producers. Production and exploration companies argued the ban – imposed during the Arab oil embargo in the mid-1970s – was outdated and unnecessary. Opponents claimed that lifting the ban would lead to the loss of oil refining jobs and would be bad for the environment. (BBC News)
There has been significant concern about this decision serving to exacerbate the issue of global oversupply and the glut in the US oil reserves. Following the decision, Brent crude prices have fallen close to $36 per barrel, their lowest level since 2004. (RT)
4. SHELL-BG MERGER GETS THE ALL CLEAR
BG Group has said its takeover by Shell has been given the green light by the Chinese regulatory authorities. China’s approval was the last piece in the regulatory puzzle for Shell, which must now be cleared by shareholders. The takeover is on track for completion by early next year. The deal was reported to be worth $70 billion when it was first announced. The combined companies will be the largest natural gas trader in the world and rival Exxon Mobil as the world’s biggest natural oil company. Some analysts have questioned the wisdom of the deal as oil prices continue to slide. (Independent)
5. ASTRAZENECA ACQUISITION
AstraZeneca has agreed to buy a majority stake of biopharma company Acerta for $4bn (£2.7bn), with the hope of expanding and improving its portfolio of medicines. Once the transaction goes ahead, the British pharmaceutical giant will take over 55 per cent of the private-owned company, which is based in the US and Netherlands.
AstraZeneca is on the verge of losing patents on some of its biggest-selling medicines. At this point other companies will be able to make cheaper spin-offs. As a result, it is trying to increase its portfolio of new medicines by acquiring other companies. Last month, it agreed to pay $2.7bn for California-based biotech firm ZS Pharma. (City A.M)
6. GSK DEALS
GSK is spending up to $1.5bn on new medicines for its HIV business ViiV Healthcare. ViiV Healthcare is a joint venture between GSK, Pfizer in the US and Shionogi in Japan. GSK is the main player, owning 80 per cent of the business. It also happens to be GSK’s best performing business unit at the moment.
The pharmaceutical giant announced a deal to buy up to $1.5bn (£1bn) worth of research assets from American company Bristol-Myers Squibb, in a series of deals due to take place next year. GSK is planning to pay a further $33m up-front next year on assets in the experimental, pre-clinical stage. Up to $587m more could be spent as long as commercial requirements are met. The two initial transactions are expected to be completed during the first half of next year. (City A.M)
7. STORM DESMOND INSURANCE COSTS
British insurers say they are expecting to pay out more than £520m to help victims recover after Storm Desmond. Emergency payouts of £2.6m have already been made to people and businesses for immediate needs such as food, clothing, staff salaries, domestic appliances and Christmas gifts, says the Association of British Insurers. (Sky News)
8. NATIONAL LIVING WAGE COSTS
The National Living Wage will set private sector employers back £804m in direct costs alone, according to findings released today by the Regulatory Policy Committee. The independent verification body discovered that National Living Wage, which will be introduced in April 2016 at an initial rate of £7.20 an hour for those aged 25 and over, found that private sector businesses could find themselves shelling out an additional £672m in wages and £132m in other associated costs, such as National Insurance contributions. (City A.M)
9. SOLAR SUBSIDY CUTS
Subsidies for small scale solar electricity panels on homes are to be cut, the government has announced, although by less than expected. The subsidies will be cut by 64%, although this is less than the previous proposal of an 87% reduction. The cuts have been softened following a storm of criticism. The government says large-scale solar farms are cost-competitive, but the sector says it is being forced to stand on its own feet before it is ready.
Domestic solar subsidies were said to be costing households about £7 a year. The industry said the planned cuts announced in the summer have already cost 6,500 jobs. The government estimates that between 9,700 and 18,700 solar jobs could be lost as a result of the changes to subsidies. (BBC News)
10. DOMINO’S ACQUISITION
The companies that own Domino’s Pizza in the UK and Australia have set up a joint venture to buy Germany’s biggest pizza chain. Joey’s Pizza has 212 stores across Germany with annual sales of £103.9m. Germany is the world’s fourth-biggest pizza market and the deal is worth up to $86m. The Joey’s Pizza deal is expected to be completed early next year, subject to regulatory approval. Shares in Domino’s Pizza Group have risen by 38% this year and the company is valued at £1.6bn. (BBC News)