Time to wrap up
The UK has ordered a probe into the sale of chip designer Arm by SoftBank to Nvidia, citing concerns over national security. Digital secretary Oliver Dowden issued an intervention notice, saying:
“As a next step and to help me gather the relevant information, the UK’s independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions.
“We want to support our thriving UK tech industry and welcome foreign investment, but it is appropriate that we properly consider the national security implications of a transaction like this.”
The move follows concerns that Nvidia could block Arm from selling its chip designs to rival customers, threatening innovation and jobs in the UK.
New surveys have shown a deep split between employees over home working.
Financial services firm Canada Life reported that “Fear of the Office” has emerged, particularly among those who have suffered from Covid-19.
They say:
Amongst Brits that now work from home, this trend is more prevalent among those who have previously tested positive for Covid-19, with only 34% planning on returning to the office. This compares to 69% of those who haven’t suffered from the virus.
The data highlights that despite the potential for continued immunity, those who have experienced Covid-19 are more reluctant to return to work face-to-face.
Another poll, by Deloitte, shows that one in four workers don’t want to return to the office, while another quarter can’t wait to get back.
The Office for National Statistics reported that employees working from home have been putting in more hours, and not getting as sick as those going to the office in the pandemic.
It also found that home workers were less likely to get bonuses and promotions, although that was before Covid-19 shook up the econony.
Hospitality bosses have launched legal action to try to force the UK government to bring forward the reopening date for pubs and restaurants indoors.
Could Britcoin be the new bitcoin?
Not exactly... but a Bank of England digital currency for the UK has moved a step closer after the chancellor Rishi Sunak announced a top-level taskforce to explore the benefits and risks of the idea.
Sunak said a joint Treasury-Bank of England taskforce was being set up as part of a range of measures designed to boost the City following Britain’s departure from the EU.
Taxpayers face a £120m bill for compensating thousands of people who lost money in the London Capital & Finance (LC&F) investment scandal after they were “let down” by UK regulators.
Shares in Manchester United have surged almost 10% after hugely controversial plans for a European Super League were announced, with Juventus leaping 18%.
But the plans remain uncertain, with the government vowing to do “whatever it takes” to stop English football clubs joining the breakaway.
Rightmove has reported that a frenzy of activity has driven UK property prices to a record high this month, just as the government launches a mortgage guarantee scheme to help people with small deposits on to the housing ladder....
...but Guardian research shows that the new 95% scheme won’t help many single buyers in their 30s on the UK median wage.
The EU is considering introducing new conflict of interest rules after it was criticised for hiring BlackRock, a major manager of oil company and financial shares, to work on new environmental rules for banks.
The UK stock market dipped, with the FTSE 100 dropping by 19 points to just over 7,000 points.
Wall Street is in the red too, with the Dow Jones industrial average down 0.5%.
But the pound had a stron day, jumping a cent and a half to almost $1.40.
Goodnight. GW
EU mulls new conflict of interest rules after BlackRock row
The EU is considering introducing new conflict of interest rules after it was criticised for hiring BlackRock, a major manager of oil company and financial shares, to work on new environmental rules for banks.
The European ombudsman found in November found that the European commission, the EU’s executive arm, had not properly considered conflicts of interest when awarding the contract to BlackRock, the world’s biggest investor.
The ombudsman, Emily O’Reilly, also said the commission should strengthen its conflict of interest rules.
The commission said it was “reflecting on possible clarifications relevant to the procedure to follow when a professional conflicting interest may be at stake in a procurement procedure”, according to its response to the ombudsman, published on Monday.
It said it would include updates to its financial regulation on conflicts of interest in a public consultation.
The campaign group Urgewald raised concerns about BlackRock’s alleged conflict of interest, first reported by the Guardian in April 2020. While BlackRock has taken steps in recent years to tighten its policies on the active allocation of money, its role as the world’s biggest provider of passive investments means it holds shares worth billions of dollars in oil companies and banks.
More here...
Nvidia are also among the top fallers on the Nasdaq, dropping by 3.7%, after the UK government put its takeover of Arm in doubt.
Nvidia’s shares hit a record high last week, after it unveiled a new high-powered chip called Grace.
Grace is an Arm-based data centre CPU designed for giant-scale artificial intelligence (AI) and high-performance computing (HPC) applications (IT Pro have the details...)
The US stock market has started the new week on the back foot.
The Dow Jones industrial average is down 188 points or 0.55% at 34,012 points. Chipmaker Intel led the fallers, down 2.4%, followed by aerospace firm Boeing (-2.2%) and consumer credit group American Express.
The tech-focused Nasdaq Composite is down 1.4%.
Peloton shares are down 9.5% after safety regulators warned people with kids and pets on Saturday to immediately stop using a treadmill made by the company, after one child died and nearly 40 others were injured.
In the City, stocks have ended lower with the stronger pound weighing on multinational firms.
The FTSE 100 fell back from last week’s one-year high, to finish 19 points lower at exactly 7,000.08 points.
Engineering conglomerate Melrose was the top faller, down 4.6% after announcing the sale of its US air conditioning unit for $3.65bn (£2.6bn).
The proceeds of the Nortek Air Management sale will be used to cut Melrose’s debts, with £100m going into the pension fund of its aerospace and car parts unit GKN, plus a payout to shareholders.
Betting firm Flutter fell 3.3%, with hedge fund group Pershing Square down 2.8% and steelmaker Evraz off 2.5%.
UK focused retailers had a stronger day, though, with Sainsbury (+2.4%), Ocado (+2%) and B&M the top risers.
Pound hits one-month high vs US dollar
The pound’s had a good day, gaining ground against other currencies.
Sterling has rallied by a cent and a half against the US dollar, hitting $1.399 for the first time in a month.
Against the euro, the pound’s up 0.5% at €1.1613, the highest in almost two weeks.
Connor Campbell of SpreadEx reckons the pound is benefitting from economic optimism, and US stimulus measures.
The pound went on a tear this Monday, using a quiet session to indulge in some economic optimism following the first weekend under the latest set of eased restrictions in the UK.
Sterling was especially strong against the dollar – but then again, what wasn’t this afternoon. The greenback is having a minor tantrum over the Federal Reserve’s insistence that rising inflation will only be temporary, and therefore that the central bank won’t be taking any action to combat it.
Shares in Manchester United jumped by over 9% in morning trading in New York, following the news of a breakaway European Super League that has gripped football.
Juventus, another ‘founding member’ of the ESL, have surged even higher, and closed almost 18% higher on the Milan exchange a few minutes ago.
The 12 football clubs that signed up to the ESL have each been promised a €200m-€300m “welcome bonus” by JP Morgan Chase, the US investment bank financing the controversial project, my colleague Rupert Neate explains:
Joshua Mahony, senior market analyst at City firm IG, said that Manchester United could be a major benefactor if the ESL goes ahead as planned.
After all, “money is rather predictably the primary driving force behind these proposals.” Mahony says:
“Bought by the Glazer family utilizing debt, they have largely ramped up their borrowing which has invariably meant huge interest repayments each year. However, entry into this competition would finally see the club back in a stable financial footing.
“Whatever the merit of the competition, Manchester United could be a major benefactor if it goes ahead as planned. The prospect of higher guaranteed revenues brings a revaluation for investors, while the reduction of debt also provides another reason for investment.
All the latest reaction here:
Unions: UK must protect cutting-edge companies like Arm
Unions have welcomed the UK government’s decision to probe Nvidia’s purchase of Arm Holdings.
Prospect general secretary Mike Clancy says:
“Prospect has been urging the government to intervene in the sale of ARM and it is welcome that this action has been announced today.
“If the UK is serious about becoming a science superpower, then we need to ensure that the future of our most cutting-edge companies is secure and that high quality jobs are protected for the future.”
UK government to pay compensation to LC&F customers
Around 8,800 investors who lost savings when mini-bond provider London Capital & Finance collapsed in 2019 are to receive some compensation.
The Government has said it will pay out around £120m to about 8,800 LCF bondholders who suffered from the scandal. They’ll receive 80% of their losses, up to a maximum of £68,000 per person.
John Glen, economic secretary to the Treasury, says:
“The situation regarding LCF is unique and exceptional and the government has decided to establish a compensation scheme for LCF bondholders in this instance.”
While LC&F was a regulated company, the mini-bonds it sold were not. Those bonds promised stellar returns to investors of up to 8% a year, but the money invested actually went into risky speculative assets.
A report in January 2020 warned that 11,400 investors had lost around £230m in savings...
...while a subsequent inquiry found that the financial watchdog, the FCA, had failed to properly supervise and regulate the firm.
Reuters has more details:
Britain’s Financial Services Compensation Scheme, which has a limited scope and is generally restricted to bank deposits, has already paid out 57 million pounds to 2,800 LCF bondholders.
An attempt by some LCF bondholders to force the FSCS to pay further compensation for their losses was rejected by a court last month, piling pressure on the government to step in
Nvidia says it does not believe the Arm deal is a threat to UK national security.
A spokesperson for Nvidia says (via CNBC):
“We do not believe that this transaction poses any material national security issues. We will continue to work closely with the British authorities, as we have done since the announcement of this deal.”
UK intervenes in Nvidia's purchase of ARM on national security grounds
The UK government is intervening in the sale of Cambridge-based chip designer ARM to US tech giant Nvidia, on the grounds of national security.
Nvidia, best known for its high-powered graphics processing units used on graphics cards, and its ‘system on a chip’ units, agreed a $40bn deal to buy Arm Holdings from Japan’s SoftBank last September.
But Oliver Dowden, Secretary of State for Digital, Culture, Media and Sport, has now issued a public interest intervention notice (PIIN), confirming that he is intervening in the sale on national security grounds.
In reaching this decision, he considered advice received from officials across the investment security community, the government says. The Competition and Markets Authority (CMA) will now prepare a report on the competition and national security aspects of the deal, by midnight 30 July.
Dowden said:
“Following careful consideration of the proposed takeover of ARM, I have today issued an intervention notice on national security grounds.
“As a next step and to help me gather the relevant information, the UK’s independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions.
“We want to support our thriving UK tech industry and welcome foreign investment, but it is appropriate that we properly consider the national security implications of a transaction like this.”
The CMA, Britain’s competition watchdog, began looking into into the Arm Holdings deal back in January, amid concerns that it would hurt competition.
ARM’s chip designs are licenced by hundreds of technology companies around the world, making it one of the most glittering ‘crown jewels’ in the UK IT sector.
It was acquired by SoftBank in 2016 (when the post-Brexit referendum slump in the pound’s value made UK companies cheaper).
Nvidia’s interest, though, has caused more concern - as the US firm could potentially block ARM from dealing with its competitors (such as Apple, Samsung and Qualcomm).
ARM’s co-founder Hermann Hauser described the deal as “an absolute disaster for Cambridge, the UK, and Europe”.
He said Nvidia would “destroy” ARM’s business model, which involves licensing chip designs to hundreds of companies around the world - some of which compete with Nvidia.
Updated
Home workers fared badly, before pandemic....
Before the pandemic, working from home may not have been a great career move.
People who mainly worked from home were less than half as likely to be promoted than all other workers between 2012 and 2017, when controlling for other factors, according to new figures from the ONS show.
They were also 38% less likely to receive a bonus, compared with those who never worked from home between 2013 and 2020, it adds.
But more recently, things have changed. The ONS also found that 35.9% of employees said they did some work at home in 2020, an increase of 9.4 percentage points compared with 2019.
Those workers were better paid too: The average gross weekly pay of workers who had recently worked from home was about 20% higher in 2020 than those who never worked from home in their main job.
The report also backs up the theory that homeworkers end up working longer, into the evenings. People who completed any work from home did 6.0 hours of unpaid overtime on average per week in 2020, compared with 3.6 hours for those that never work from home.
They also got ill less: The sickness absence rate for workers doing any work from home was 0.9% on average in 2020, compared with 2.2% for those who never worked from home in their main job.
Josh Martin of the ONS has tweeted the key points:
This morning @ONS published new analysis on working from home. We explore the connection between homeworking and various measures of labour market success, like pay, promotions, bonuses, etc. Full article here: https://t.co/DRou8EIVSx
— Josh Martin (@JoshMartin_ONS) April 19, 2021
A short thread 1/9
Bottom line:
— Josh Martin (@JoshMartin_ONS) April 19, 2021
People who worked mainly at home fared worse than average before the pandemic – they were paid less and were less likely to receive a promotion or bonus.
But people who combined some WFH with some working away from home fared better.
In 2020, things converge.
2/9
People who WFH work more hours on average than people who never work from home, although they tend to be more varied and spread out – less 9-to-5. They also report doing more unpaid overtime.
— Josh Martin (@JoshMartin_ONS) April 19, 2021
However, only people who work ‘mainly’ at home increased their hours in 2020.
3/9 pic.twitter.com/0fSrpVyTPw
Sickness absence fell in 2020 amongst those who could work from home and increased amongst those who couldn’t. This continues a longer running trend that homeworkers take less sick leave.
— Josh Martin (@JoshMartin_ONS) April 19, 2021
4/9 pic.twitter.com/lwI2MUinNM
People who combine homeworking with non-homeworking (recently and occasionally groups) are paid more than those who never work from home. This is true even after controlling for a range of factors in regression analysis (e.g. industry, occupation, full-time/part-time, etc.)
— Josh Martin (@JoshMartin_ONS) April 19, 2021
5/9 pic.twitter.com/zXaDxbv1dD
People who worked mainly from home were paid less than average pre-pandemic, but more during 2020. This reflects the fact that these people were less likely to be furloughed and more able to continue working as normal. The composition of the group also changed substantially.
— Josh Martin (@JoshMartin_ONS) April 19, 2021
6/9
Those who mix homeworking with non-homeworking were more likely to receive a bonus and receive training, than those who never work from home. Those who worked mainly at home were less likely on both metrics, and less likely to get promoted.
— Josh Martin (@JoshMartin_ONS) April 19, 2021
7/9 pic.twitter.com/c54GLxoI8X
The proportion of people working from home varies substantially across the country, which is partly (both not completely) explained by the types of industry in each region. Working from home was most common in and around London.
— Josh Martin (@JoshMartin_ONS) April 19, 2021
8/9 pic.twitter.com/pYMGVhZPbN
All of this is tentative evidence that those who combine homeworking with non-homeworking are more productive than those who never work from home. However, there may be selection effects and biases, and the future may not look like the past! 9/9
— Josh Martin (@JoshMartin_ONS) April 19, 2021
The pandemic has also left UK households with a huge pot of savings which could drive the recovery this year.
The Office for National Satistics reports that the total currency and deposits held by UK households surged by £186.1bn in 2020.
That was due to a record increase in savings, as people were unable to spend in the shops during lockdown, with government support protecting the wages of furloughed emplyees and some self-employed workers, it explains.
As this chart shows, consumption slumped much faster than income during the pandemic:
Household saving (classed as ‘net lending’) jumped, just as government borrowing also swelled to cover the cost of the pandemic:
Outgoing Bank of England chief economist Andy Haldane has argued that these savings mean the economy is poised like a ‘coiled spring’ to rebound rapidly this year.
Credit rating agency Moody’s has estimated that consumers around the world have stockpiled an extra $5.4tn of savings since the coronavirus pandemic began, the Financial Times reports today.
Mark Zandi, chief economist at Moody’s Analytics, said:
“The combination of an unleashing of significant pent-up demand and overflowing excess saving will drive a surge in consumer spending across the globe as countries approach herd immunity and open up.”
But, of course, not every family is sitting on a pot of savings, ready to splash the cash.
As the ONS points out, last November’s Bank of England NMG Survey found that high- and middle-income households were more likely to have seen a rise in savings, whereas low-income, unemployed and furloughed respondents were more likely to have seen a decrease.
Around 42% of high-income employed households saved more during the pandemic, compared with 22% of low-income employed households.
The most dramatic action in the market so far today is in football club shares.
Juventus shares have soared over 10% so far today, after they and 11 other ‘founder clubs’ launched a breakaway European Super League backed by JP Morgan that has enraged fans and been widely condemned.
Manchester United’s shares are set to jump when Wall Street opens (currently up over 7% in pre-market).
⚽️ Juventus’ share price is up more than 12% this morning on the back of The Super League’s announcement.
— Tom Boadle (@TomBoadle) April 19, 2021
Man Utd shares are also up in pre-market trading.
Whether just a negotiating ruse or the real thing, investors think there’s value in it.
Neil Wilson of Markets.com writes:
The financial incentive for the clubs is plain to see, with a multi-billion dollar package at the heart of the scheme, albeit it would forever break the integrity of the club game. The sort of additional revenues the ESL will deliver would need to be offset by a potential material decline or total loss of existing earnings from media deals through national leagues and UEFA.
Our Football liveblog has all the latest reaction:
Rishi Sunak launches taskforce on Bank of England digital currency
A Bank of England digital currency for the UK has moved a step closer after the chancellor Rishi Sunak announced a top-level taskforce to explore the benefits and risks of the idea.
Sunak said a joint Treasury-Bank of England taskforce was being set up as part of a range of measures designed to boost the City following Britain’s departure from the EU.
Speaking at a financial industry conference, the chancellor said a taskforce jointly led by the Bank’s deputy governor for financial stability, Jon Cunliffe, and the Treasury’s director general of financial services, Katharine Braddick, would “coordinate exploratory work”.
Sunak said he wanted the City to be at the forefront of innovation and to take advantage of regulatory freedom after Brexit. The Treasury said two new forums would be established to engage technical experts and key stakeholders including financial institutions, retailers, businesses, civil society groups and consumers.
Here’s the full story:
A “David versus Goliath” legal action gets under way at the high court on Monday as hospitality bosses try to force the UK government to bring forward the reopening date for pubs and restaurants indoors.
A judge will this week consider evidence in the case brought by Sacha Lord, the night-time economy adviser for Greater Manchester and a co-founder of Parklife festival, and Hugh Osmond, the founder of Punch Taverns and a former boss at Pizza Express. The case has been expedited.
Pubs and restaurants in England were allowed to welcome customers again from 12 April after a national lockdown, but only in outdoor areas. Non-essential shops were allowed to reopen on the same day.
The government has set out a timetable aiming to allow hospitality customers indoors in England no earlier than 17 May, although still with restrictions. Other nations of the UK have varying timetables for reopening....
Changing working patterns due to the pandemic are also helping to push UK property prices higher.
The average UK asking price jumped almost £7,000 this month, Rightmove reports, as some families try to find properties with more space for homeworking away from the office.
Here’s the story:
Tomer Aboody, director of property lender MT Finance, explains:
‘A combination of lowest-ever interest rates, high loan-to-value mortgages, stamp duty relief and government stimulus, along with a year of on-and-off lockdown, has pushed demand for property to record levels.
If now isn’t the time to buy, then when is? Will we have such an appealing time to buy again, who knows? But with so many positive reasons to buy and people simply needing more space, this trend is set to continue in the short term at least.
Updated
Retailers lead FTSE 100 risers
In the City, the FTSE 100 index has opened higher.
It’s up 12 points at 7031, having hit the 7,000 point mark for the first time in over a year on Friday.
Online grocery business Ocado is the top riser, up 3%, followed by discount retailer B&M (+1.8%) and jet engine maker Rolls-Royce (+1.7%).
Supermarket chain Sainsbury (+1.3%) is also in the risers, along with software developer Aveva (1.4%) and internet security firm Avast (1.2%), and engineering firm Renishaw (+1.5%).
European stock markets nudged a fresh peak in early trading.
The Europe-wide Stoxx 600 gained another 0.1%, with carmakers among the risers.
Reuters has the details:
Automakers were the top gainers, up 0.7%, followed by miners and travel stocks.
French car parts maker Faurecia rose 1% after its first-quarter sales beat market expectations, helped by particularly strong growth in China.
Deloitte: Almost one in four want to work from home forever
Another survey, by Deloitte, has also found that almost one in four UK workers hope never to set foot in the office again.
Thats suggests that 7.5m people keen to permanently work from home every day of the week, even once the pandemic is over. Some say home working is more efficient, or relaxing, while others enjoy the break from commuting (avoiding cost, stress and lost time).
But even more (28%) are desperate to escape home working -- and would much rather be back in the office, rather than toiling at the kitchen table, bedroom (or even garden office).
The Telegraph has the details:
It underlines the stark split in the nation’s workforce, divided by their experiences of lockdown and their hopes for the future.
Just over two-fifths (42pc) want a balance between the extremes, with at least two days at home each week.
Most under-35s find home working challenging, indicating the difficulties involved in a short-term pandemic measure becoming a permanent state of affairs.
Will Gosling of Deloitte said: “Those coming into the workforce, in their early careers, are sponges. They can learn technical stuff anywhere, but what gives them the edge and what makes work interesting and exciting is the stuff you cannot learn in a textbook or an online course.
TELEGRAPH BUSINESS: 7.5m staff never want to return to the office again #TomorrowsPapersToday pic.twitter.com/ZGaoKqYZm1
— Neil Henderson (@hendopolis) April 18, 2021
The split between workers keen to return to the office, and those reluctant, means that employers need to be flexible.
Canada Life’s survey of current home-workers* found that 70% of those who plan on returning to the office are happy to adapt their working practices.
Several measures would help support mental health, staff say, including:
- Mental wellness days (54%)
- Diarised screen breaks (48%)
- Daily mental health check ins (44%)
- Better access to mental health services (42%)
- Flexible working hours (40%)
[* the survey covered 592 UK adults that are full time workers who now work from home because of the pandemic, and took place back in January during the current lockdown]
Introduction: Investors confident, but 'fear of the office' emerges
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Hopes of a return to economic normality have lifted stock markets to record levels... but some workers are concerned about returning to the office after more than a year of working from home.
Stocks across the Asia-Pacific region have hit one-month highs today, as investors antipate economic recovery driven by government spending and central bank stimulus packages.
MSCI’s broadest index of Asia-Pacific shares outside Japan hit its highest level since March 18 this morning, taking its gains in 2021 to over 5%.
European and US stocks also hit record highs last week, with Britain’s FTSE 100 at its highest level since the pandemic began. Strong economic data from the US, in particularly, have created a very bullish feeling in the markets.
As Kyle Rodda of IG puts it:
Global stocks ran higher into the end of the week to clock-up fresh record highs on Friday. Market sentiment is undoubtedly bullish right now, with the VIX [volatility index] hitting new post-pandemic lows, and investors surveys and indicators like the put-call ratio and AAII investor sentiment reading indicating a market increasingly willing to load-up on risk.
At the moment, it seems like markets are in that goldilocks zone: policy is accommodative and economic fundamentals improving – but not so much to increase expectations of an unsustainable recovery, inflationary pressures and tighter monetary policy.
Covid-19 vaccination programme have also lifted economic optimism. But after more than a year of lockdowns, some workers are hesitant about returning to the office, though.
A new report from financial services firm Canada Life this morning has found that “Fear of the Office” has emerged, particularly among those who have suffered from Covid-19.
They say:
Amongst Brits that now work from home, this trend is more prevalent among those who have previously tested positive for Covid-19, with only 34% planning on returning to the office. This compares to 69% of those who haven’t suffered from the virus.
The data highlights that despite the potential for continued immunity, those who have experienced Covid-19 are more reluctant to return to work face-to-face.
Dan Crook, Protection Sales Director, Canada Life, explains that employers are likely to have three cohorts of employees: one group that cannot wait to return to the office, another that would happily work from home forever and a third that would like a hybrid-model of both.
Crook adds:
Ultimately, it’s going to be very hard for employers to please everyone. In reality, the return to the office should be a phased approach which is sensitive to the needs of employees.
Plans should be flexible as they are likely to evolve over time.”
The agenda
- 10am BST: Eurozone construction output for February
- 11am BST: Bundesbank Monthly Report
Updated
