December 4th – The BESA Times
Forty-sixth Edition - Monday, 4th
Every week, a complete snapshot of what happened around the world in the past seven days
Despite the Brexit vote, manufacturing activity in the UK has hit a four-year record, with exports having a significant impact on the overall figures. Another set of data showed how foreign direct investment in the country hit a record 145.6bn in 2016, a 25.3bn increase from the previous year. This comes despite a 0.5% downgrade in economic growth spelled out by the country’s finance minister when he presented the year’s budget earlier last month. As the December deadline for Brexit talks gets closer, the EU and the UK seem to have agreed on everything but the Irish border question. Some Irish politicians are calling on the UK at large or at least Northern Ireland to remain in the European Single Market and Customs Union in order to completely avoid any border between the two countries - something that was vehemently rejected by both the British Government and the Irish Unionists, who threatened to bring down the minority Conservative government at Westminster if such a proposal, which would essentially create an economic border between the region and the rest of the UK, was accepted. Meanwhile, it an interview with the BBC, the director general of the World Trade Organization said that a no-deal scenario would not be “the end of the world” but stressed that it would be very damaging to business in the UK and in the rest of the EU.
On Friday, the Republican-led Senate narrowly passed a sweeping tax cut bill, providing a significant legislative victory for President Donald Trump. The current administration had suffered a string of defeats over their attempts to repeal Obamacare. The Republican Senate leader said: “We have an opportunity now to make America more competitive, to keep jobs from being shipped offshore and to provide substantial relief to the middle class”. The plan will cut corporation tax from 35% to 20% while foreign profits of American companies will be mostly exempt from tax altogether. Meanwhile, a Senate committee warned that such a bill would add up to a billion to the country’s deficit. The Senate now has to reconcile its bill with the one the House or Representatives passed last month before it can be signed into law. Meanwhile, Democrats complained that the tax cut would only help big business and corporations.
British bank RBS announced that it would cut a quarter of its branches as well as 680 jobs. RBS claimed that the decision was down to the increasing trend of its costumers of banking online. A bank spokesperson added that "More and more of our customers are choosing to do their everyday banking online or on mobile. Since 2014 the number of customers using our branches across the UK has fallen by 40% and mobile transactions have increased by 73% over the same period. Over 5 million customers now use our mobile banking app and one in five only bank with us digitally”. The bank will now be left with 744 branches. Unions blasted the move as “savage”. Other major banks in the country announced similar moves in recent years.
What to remember of last week's news?
The Commodity Futures Trading Commission, the main US market regulator, gave the green light to CME and rival CBOE to list Bitcoin futures. This step marks the entrance of the now famous crypto-currency in the mainstream of the financial world. The value of the highly volatile crypto-currency broke the $11,000 record this week but then lost almost 20% before recovering. In a statement, CFTC chairman Christopher Giancarlo warned that the emerging crypto-currency markets “remain largely unregulated markets over which the CFTC has limited statutory authority. There are concerns about the price volatility and trading practices of participants in these markets.”
Billabong’s shares rose by 22% when its rival Boardrider, owner of Quiksilver, announced a $150 million takeover bid. The company hasn’t posted a profit in the last five years and suffered a $44 million loss this year. In 2012, the company had rejected a takeover offer by TPG Capital that valued the company at $750 million.
Fiat Chrysler Automobiles and Hyundai Motors Co. are in talks on for a potential technical partnership. Fiat Chrysler Chief Executive Officer Sergio Marchionne said: “There is the potential of a technical partnership with Hyundai, which already supplies some components and transmissions for the U.S.”. He added, “Let’s see if we find a deal to develop transmission and hydrogen.”
Our Homemade Article
US Tax Reform – a Catholicon or a Disaster? by Xintong Li
Understand in pictures
To mark the World’s AIDS day, Nepalese children light candles. An estimated 39,249 people are affected by AIDS each year in the country.
Did you know?
Tesla’s $50 million, 100-megawatt giant battery in southern Australia has been officially switched on. Using energy from a wind farm owned by French energy company Neoen, it aims to make the region’s grid more reliable and support clean energy. While the battery has the potential to power up to 30,000 homes, it will be mostly used support the existing energy supply. Tesla’s boss Elon Musk famously promised he would settle the region’s ongoing electricity problems by building a battery in less than 100 days, a promise that he fulfilled. South Australia’s premier stated: “South Australia is now leading the world in dispatchable renewable energy, delivered to homes and businesses 24/7”. Similar but smaller batteries have already been installed in California, New Zealand, the UK and South Africa.
What to expect for next week
Next week, the US monthly unemployment report will be published. The unemployment rate is expected to remain at 4.1%. Employment in the country has been at a record high for years, with unemployment being below five percent for 26 months. Despite this trend, wage growth is still well smaller than a decade ago, with a forecast increase of 2.4%. Last month, the US unemployment rate had already fallen to a 17-year low.
WRITTEN BY ANDREA S. LIVERANI
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