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:
Do stock market performances reflect national economies? Some analysts argue that this is the case for London. Click here for more
Many firms complain of skills shortage amongst new employees. Should corporations re-evaluate their hiring process to deal with this issue? Click here for the debate.
Saudi Arabia is considering floating shares of its multi-trillion dollar state-run oil monopoly Saudi Aramco but some analysts claim that investors should steer clear of this stock. Click here for the reasons why.
1. GOOGLE TAX PAY OUT
Google has agreed to pay £130m in back taxes after an “open audit” of its accounts by the UK tax authorities. The payment covers money owed since 2005 and follows a six year inquiry by Her Majesty’s Revenue and Customs. Despite the UK being one of Google’s biggest markets, it paid £20.4m in taxes in 2013. The value of its sales in Britain that year was £3.8bn. Google makes most of its UK profits through online advertising here.
The firm has now agreed to change its accounting system so that a higher proportion of sales activity is registered in Britain rather than Ireland. It has pledged to pay more tax on those sales in the future. Google is one of several multinational companies to be have been accused of avoiding tax, in spite of making billions of pounds of sales in Britain. (BBC News)
Google also announced this week that it paid tech rival Apple $1bn in 2014 to keep its search function the default option on iOS devices. The alleged agreement involves Google paying Apple a percentage of revenue – as much as 34% – gained through iOS devices (BBC News)
2. APPLE WOES
Apple, the world’s biggest public company, has lost more than $200bn in value in six months as the slump deepens for US technology stocks. Shares in the iPhone maker have fallen from $132.97 in July to $94.95 today, meaning its stock market value has shrunk by a staggering $210 billion in value.
Technology stocks held up relatively well last year amid the global stock market rout, but have come under severe pressure in the last few weeks. Since the start of the year, the Nasdaq Composite, the index composed mainly of tech firms, has crashed 11.9 per cent. (The Independent)
Analysts claim the reason for this decline is investors’ concerns about Apple’s overreliance on the iPhone, fearing their gigantic profits are not sustainable. For more on Apple’s decline, have a look at The Financial Times’ analysis on the issues facing Apple. It’s free to read!
3. BIG BANKS WARN AGAINST BREXIT
This week, big banks have announced their support in the campaign to keep Britain in the EU. Some major US banks have donated hundreds of thousands of pounds and senior chief executives publicly endorsing the prime minister’s stance.
The financial support is led by Goldman Sachs, which has its European head office in London. Goldman Sachs announced that it is paying £500,000 to the Britain Stronger in Europe campaign. Morgan Stanley, JP Morgan and Bank of America also plan to donate significant sums to the campaign. (Financial Times)
4. OIL PRICES – SCHLUMBERGER LOSSES
The world’s largest oilfield services company Schlumberger has lost more than $1bn and cut a further 10,000 jobs. Schlumberger’s fourth-quarter results were hurt by a 39% drop in revenue and huge accounting charges, producing a loss of $1.02bn.
Like others in the industry, Schlumberger has been hard hit by the fall in energy prices and the downturn in the sector. It warned on Thursday that it does not expect a turnaround in the near future.
Amid an oil glut, crude prices are down about 38%, with natural gas prices down about 27% from a year ago. The downturn has led energy companies to cut thousands of jobs over the past year. Earlier on Thursday, Southwestern Energy, the third-largest natural gas producer in the US, said it would cut 1,100 jobs, about 44% of its workforce. (The Guardian)
5. AMAZON CREATES UK JOBS
Amazon is creating more than 2,500 permanent jobs in the UK this year as it expands across the country. This will take the online retailer’s workforce in Britain to more than 14,500 by the end of 2016. Amazon, which overtook Walmart as the most valuable retailer in the world last year, said it had invested more than £4.6bn in the UK since 2010. (The Guardian)
Amazon has big plans to expand in Europe, click here for the Financial Times’ analysis of their plans.
6. NESTLE LOSE KITKAT TRADEMARK CASE
Confectionery giant Nestle will appeal against a High Court decision that denies it the right to trademark its four-fingered KitKat in the UK. It is the latest ruling in a long running battle with Cadbury.
Nestle wants to stop rivals producing a similar shaped bar. But the court agreed with Cadbury that the shape was not distinctive enough for consumers to identify all such bars as KitKats. Nestle first tried to trademark the shape of the four-fingered chocolate bar in 2010, but its attempts were opposed by Cadbury. The two have also battled over other trademarks. In 2013 Nestle blocked Cadbury’s attempts to register the shade of purple used in the packaging of Dairy Milk.
7. TFL SCRAP RESTRICTIVE TAXI-HAILING PROPOSALS
Proposals to severely restrict how taxi-hailing apps like Uber operate in London have been rejected.
Transport for London has ditched a number of options, including forcing operators to delay passenger pickups by five minutes. A proposal to require operators to allow passengers to pre-book cabs up to seven days in advance was also dropped, as well as a ban on showing vehicle locations inside apps. However, new regulations introducing a formal English language requirement for drivers will go ahead.
An Uber spokesman said: “We’re pleased that Transport for London has listened to the views of passengers and drivers, dropping the bonkers ideas proposed last year like compulsory five-minute wait times and banning showing cars in apps.” (Sky News)
8. 02 ARENA
Lloyds Banking Group is backing the owners of the O2 arena in Greenwich with a £185m loan to finance the building of a new designer shopping outlet to rival Bicester Village and Wembley.
The loan by Lloyds’ commercial banking arm will allow the O2’s owners AEG and Crosstree Real Estate, to push ahead with the 204,000 square feet shopping destination at the venue alongside its existing shops and restaurants.
The pair hope to attract luxury as well as high street brands which, like at Wembley’s London Designer Outlet and Bicester Village in Oxfordshire, would offer product ranges at a discount to their original price. Work is expected to get underway this year, with the scheme expected to complete in late 2017. (City A.M)
9. BARCLAYS JOB CUTS
Barclays Plc Chief Executive Officer Jes Staley unleashed a fresh round of cuts at the investment bank that will eliminate 1,200 jobs worldwide and shut securities operations across Asia. The biggest cuts will fall in the Asia-Pacific region including winding up the cash equities business.
European investment banks have been hurt by a slump in revenues, tougher financial regulation and rising costs tied to compliance, forcing them to focus on the most profitable units. Deutsche Bank AG said late Wednesday that “challenging market conditions” hurt fourth-quarter earnings at its investment bank, when predicting a loss for the group both in that period and for 2015. (Bloomberg)
10. CITY AIRPORT TAKEOVER
A Chinese conglomerate is lining up financing for a £2bn takeover of London’s City Airport amid continuing uncertainty about the expansion of the capital’s aviation capacity. HNA Group, the owner of China’s Hainan Airlines, is working with Barclays on a bid for City Airport that could be tabled as early as next week.
City Airport has seen its passenger numbers soar from two million in 2005 to more than double that figure last year and it makes more than £70m in annual profit. (Sky News)