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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Lawyers and unions hail 'landmark ruling' against Uber; FTSE 100 hits six-week low - as it happened

The City of London seen from from Hampstead Heath.
The City of London seen from from Hampstead Heath. Photograph: Dan Kitwood/Getty Images

FTSE hits six-week low

And finally....European stock markets have closed for the week, in the red.

The FTSE100 closed down 51 points, or 0.7%, at 7432. That’s its lowest level since the start of October, despite this morning’s better-than-expected trade figures.

Packaging firm Bunzl shed 6%, after Morgan Stanley warned that it could be threatened by Amazon’s business-to-business distribution project.

Here’s the damage:

European stock markets
European stock markets Photograph: Thomson Reuters

This means the FTSE 100 has had its worst week in two months, dragged down by retail stocks (amid signs that consumers are cutting back).

David Madden of CMC Markets says:

European equity markets are in the red today as traders feel uneasy about being long going into the weekend in light on the sharp correction yesterday. The rapid move lower yesterday got traders thinking about how much markets have come in recent months, and that prompted some profit taking.

And on that note, it’s time to wrap up. Hope you have a great weekend. GW

Some late news before the weekend; US consumers have become a little gloomier.

The University of Michigan’s monthly gauge of morale fell to 97.8 in October, a big fall from September.

Updated

Summary

Former Uber drivers James Farrar and Yaseen Aslam addressing the media as they left the Employment Appeals Tribunal in central London.
Former Uber drivers James Farrar and Yaseen Aslam addressing the media as they left the Employment Appeals Tribunal in central London. Photograph: Tolga Akmen/AFP/Getty Images

Time for a quick recap.

Uber drivers are celebrating after the company failed to overturn a ruling that they are actually workers, not self-employed contractors.

Lawyers say it is a landmark ruling, that means Uber faces liabilities for national minimum wage, sick pay and holiday pay. However, the taxi app company could appeal again.

Kevin Charles, consulting barrister at Crossland Employment Solicitors, argues that the UK’s gig economy faces a major shake-up.

“The decision signals what may be viewed as a curtailment of the use, or misuse, of thousands of ‘workers’ within the rapidly growing modern business phenomenon, known as the ‘gig economy’. Whilst each case will have to be decided on its own facts the EAT’s decision will no doubt make it easier for many people working in the ‘gig economy’ to argue that you have to look at the reality of the situation and not just the contract and that they now fall within the definition of ‘worker’ where previously they had been treated as ‘self-employed’ and denied access to any employment rights.

“The EAT’s decision will no doubt be welcomed and celebrated by the 40,000 Uber drivers working in the UK and many others in a similar position. However, they may wish to leave the champagne on ice pending any appeal by Uber to the Court of Appeal which will undoubtedly follow.”

But... free-market thinktank the Adam Smith Institute argues that the law needs to catch up with the 21st Century:

Sam Dumitriu, the ASI’s Head of Projects, says:

“Uber drivers choose to use the app because they want the freedom to pick when they work and which trips to take. Granting drivers worker status may force Uber to schedule shifts and cut pay at peak times, leading to less choice for drivers and longer wait-times for consumers.

“It may also discourage rivals to Uber, like Lyft and Taxify, from coming to the UK hurting competition.

“Today’s ruling reveals the problem of relying on employment legislation written before the word ‘app’ even existed. Minicab drivers have been traditionally classified as self-employed, but drivers who are able to choose their own hours, trips and simultaneously use a rival app are now classified as workers. We should update the law to take into account the added flexibility that gig economy platforms like Uber bring.”

The ruling came amid a flurry of economic news from the UK, including...

UK data today

Here’s Larry Elliott’s take:

NIESR: UK growth has picked up

Britain’s economic growth rate rose to 0.5% in the last three months, according to a new report.

NIESR, the think tank, estimates that the UK growth rate picked up last month.

That pushed growth in the August-October period up to 0.5%, they believe, from 0.4% in July-September.

That’s up from 0.3% in the first and second quarters of 2017, suggesting the economy is recovering from its early slowdown.

Amit Kara, Head of UK Macroeconomic Forecasting at NIESR, says:

Although economic growth is likely to be stronger in the second half of this year compared with the first, it is important to note that activity has slowed since last year and this at a time when growth in other OECD countries has strengthened.

Looking ahead, we expect the pattern of demand in the UK economy to rebalance towards international trade in response to strengthening global growth and weaker sterling and away from domestic demand.

NIESR also predict that the Bank of England will have raised interest rates to 2% by 2021

Updated

Former Uber drivers James Farrar (L) and Yaseen Aslam (R) following today’s judgement.
Former Uber drivers James Farrar (L) and Yaseen Aslam (R) following today’s judgment. Photograph: Tolga Akmen/AFP/Getty Images

My colleague Rob Davies was at the Employment Appeal Tribunal this morning.

Here’s his take:

The ride-hailing firm Uber has lost an appeal against a ruling that its drivers be classed as workers with minimum-wage rights rather than as self-employed.

The landmark Employment Appeal Tribunal (EAT) ruling could have major ramifications for labour rights in Britain’s growing gig economy. The US company said it would launch a further appeal against the EAT decision.

Drivers James Farrar and Yaseen Aslam, backed by the GMB union, won an employment tribunal case last year after arguing they should be classified as workers with rights such as minimum wage and holiday pay, rather than self-employed as Uber claimed.

Uber challenged the ruling at the EAT in central London, saying it could deprive drivers of the “personal flexibility they value”.

The Independent Workers’ Union of Great Britain (IWGB), which backed the drivers during the appeal, said the decision showed that firms were choosing to deprive workers of their rights.

Aslam said: “I have been campaigning against Uber since 2014 and, although I always knew I was on the right side, it has always been a struggle that has brought enormous pressure on us.

“I am glad that the judge today confirmed what I and thousands of drivers have known all along: that Uber is not only exploiting drivers, but also acting unlawfully.”

Farrar said: “Uber cannot go on flouting UK law with impunity and depriving people of their minimum-wage rights. We have done everything we can, now it is time for the mayor of London, Transport for London and the transport secretary to step up and use their leverage to defend worker rights rather than turn a blind eye to sweatshop conditions.”

More here:

Updated

Expert: Uber can't have its cake and eat it

Today’s ruling is a hammer-blow to the argument that Uber was merely providing a service to drivers who used its app to find customers.

Tim Goodwin, associate at Winckworth Sherwood, says it also shows that companies can’t simply declare that workers are “self-employed”, if the evidence doesn’t back it up.

He explains:

Rather unsurprisingly, the appeal tribunal has agreed with the employment tribunal’s findings – specifically that the drivers are not self-employed, and that Uber is not some sort of technological middle-man but essentially a transportation service.

“This is a hugely significant decision for Uber, and also the gig economy more generally. Increasingly, we are seeing that courts and tribunals are reluctant to allow businesses to have their cake and eat it, by exercising enormous control over their workforce whilst also denying them basic rights like paid holiday, sick leave and protection from discrimination.

“The test appears to remain the same. If a business wants to have significant control over its workforce, it has to be prepared to treat its workers fairly. If the business is prepared to allow the worker a significant degree of latitude in his or her dealings, then it will be more likely that it can get away with calling them a self-employed contractor. Either way, self-employed status cannot be imposed from the top down – it has to reflect the reality of the arrangement between the worker and the business.”

Updated

Carolyn Brown, employment partner and head of RSM Legal, believes today’s ruling has a significant impact on Uber’s business model.

She suggests that the company could now find itself facing claims for national insurance payments, and backdated VAT too.

Brown explains:

With control being a critical factor in the assessment of the taxi drivers’ working status but a key requirement for the service Uber provides, something may have to give.

‘Probably a more pressing concern for Uber though is the possible consequences it may have on their exposure to tax and National Insurance Contribution liabilities. As it stands, Uber would not be obliged to pay employer NIC in respect of their drivers if they are self-employed. If they are workers though, they may be exposed to a significant NIC liability.

There may also be a substantial VAT liability.’

Updated

Frank Field MP.

Frank Field MP, who chairs the House of Commons work and pensions committee, says today’s ruling is a ‘huge success for workers’.

He adds:

[Labour MP] Rachel Reeves and I will next week be proposing to our select committees a draft bill which would make these individual, but important, skirmishes a thing of the past as legislation would protect all workers in similar situations.’

Updated

Oxford law professor Jeremias Prassl is tweeting the key points from today’s ruling:

Uber drivers' lawyers hail appeal verdict

UK law firm Bates Wells Braithwaite, which represented Uber’s drivers, are understandably delighted to have won today’s ruling.

They argue that it is a critical moment in ending exploitation of workers in the gig economy.

Paul Jennings, partner at Bates Wells Braithwaite, sums up the mood:

“We are delighted with today’s judgment which is ethically and legally the right outcome. The ruling will have significant implications for approximately 40,000 Uber drivers and, more broadly, individuals engaged across the so called ‘gig economy’. We anticipate that tens of thousands drivers will now seek to make substantial back-dated claims.

“Our clients have fought tirelessly to gain the rights that they clearly should have been afforded from the outset.”

Updated

Uber could continue its battle, by appealing to the court of appeal or even the supreme court.

Nick Elwell-Sutton, partner at Clyde & Co, warns that this will mean more uncertainty for UK companies and workers.

“The final outcome of this case will provide employers with much needed clarity in this area. But uncertainty is likely to linger until the supreme court has and possibly beyond that, if the government commits to legislative changes.”

“The cloud of uncertainty looming over the gig economy has undoubtedly made new businesses in the UK cautious about building a business model around a self-employed ad-hoc workforce, which may be further stagnating growth and therefore damaging the UK economy.”

“This is particularly concerning as the Brexit clock keeps on ticking – the UK needs to ensure it is demonstrating that it is open for business and at the very least showing business that there is legal clarity around alternative employment practices.”

Jamie Jenkins, barrister at St John’s Buildings, predicts that Uber will appeal again.

Ruth Kennedy, barrister at 2 Temple Gardens, tweets:

Updated

Crowley Woodford, employment partner at law firm Ashurst, believes Judge Eady’s ruling has massive consequences for other companies, as well as Uber.

“The implications of this appeal decision reach far beyond the price of a taxi journey home. Uber’s business model for its workforce has again been found to be fatally flawed; the so-called “self-employed” drivers are in fact workers entitled to basic rights such as holiday and sick pay.

This decision has re-opened a can of worms which will have a ripple effect on the financial viability of the gig economy in its current form and beyond that into mainstream industries.”

Unions are urging Uber to accept today’s ruling and “throw in the towel”, rather than continuing its fight.

TUC general secretary Frances O’Grady said:

No company, however big or well connected, is above the law.

“Uber must play by the rules and stop denying its drivers basic rights at work.

“This ruling should put gig economy employers on notice. Unions will expose nasty schemes that try and cheat workers out of the minimum wage and holiday pay.

“Sham self-employment exploits people and scams the taxman. The Uber drivers’ union GMB deserve huge credit for their work on this case.”

Updated

You can read the full ruling in the Uber case, here.

In it, her honour Judge Eady QC explains that the Employment Tribunal was correct to conclude that an Uber driver who had the Uber app switched on, was within London, and willing and able to accept assignments was working for Uber London Ltd (ULL) under a “worker” contract.

As she puts it:

If the reality is that Uber’s market share in London is such that its drivers are, in practical terms, unable to hold themselves out as available to any other PHV operator, then, as a matter of fact, they are working at ULL’s disposal as part of the pool of drivers it requires to be available within the territory at any one time.

Why the Uber ruling matters

Today’s ruling confirms that Uber’s drivers in the UK are entitled to various workers’ rights such as holiday pay and the national minimum wage.

It’s another victory for the two Uber drivers, James Farrar and Yaseen Aslam, who argued successfully that they and fellow drivers were effectively employees.

The ruling has significant ramifications for the gig economy, and firms whose business model is based on flexible working patterns.

Legal firm Leigh Day say it’s a landmark ruling.

Updated

Uber loses appeal over drivers' employment status

Newsflash: Uber has lost its appeal against a court ruling that its drivers are actually workers.

An employment tribunal in London has backed the original ruling, last year, that Uber drivers are not self-employed.

More to follow....

UK construction output slide amid Brexit angst

Britain’s construction industry, though, had a bad September.

Construction output slumped by 1.6% during the month, the biggest fall since March 2016.

Michael Thirkettle, chief executive of construction consulting and design agency McBains, says Britain’s exit from the EU is hurting the building sector:

“Today’s figures indicate the shadow of Brexit still looms large over the industry – the fall in the value of the pound since the EU referendum causing imported building materials costs to rise, while company and UK investors caution is holding back investment in new projects, so many contractors’ margins are shrinking.

“Commercial and industrial sectors that rely on ambitious multi-million pound construction projects are the hardest hit, and only new builds in the private house sector, propped up by the likes of Help to Buy loans, are offering any glimmer of hope at the moment.

Noble Francis, economics director at the Construction Products Association, points out that the construction sector is now in recession:

Yael Selfin, chief economist at HSBC UK, reckons UK exporters should be doing better...

Britain’s economy may finally be benefitting from stronger global growth and the effect of the weaker pound, says James Smith of ING.

He’s encouraged by the jump in manufacturing growth in September, saying:

One of the big ‘good news’ stories of 2017 is the global pick-up in growth. That, along with the weaker pound, has seen UK manufacturing sentiment rise noticeably. But for much of this year, you wouldn’t know it by looking at the production numbers.

But a sharp 0.7% month-on-month rise in production during September, following some better readings over the summer, suggests these positive drivers may finally be being reflected in higher output

Capital Economics have stripped out oil and ‘erratic’ factors from today’s UK trade figures to show how the underlying picture is improving.

Despite September’s decent figures, Britain’s total trade deficit actually widened over the last quarter to £9.5bn.

UK manufacturing growth accelerates

More good news! Britain’s factories were running full steam ahead in September.

Manufacturing output rose by 0.7% over the month, easily beating expectations of a 0.3% increase.

A stronger-than-expected manufacturing performance benefited the broader measure of industrial production, which also beat forecasts with a 0.7% increase according to the ONS data.

The figures mean that the production sectors - which include mining and utilities as well as manufacturing - made a stronger contribution to the economy in the third quarter than previously thought, growing by 1.1% between July and September.

A rise in factory activity over the three months was largely driven by the production of cars and medical equipment, the ONS said.

UK exported more cars to Europe over the summer

Here’s the official explanation of how Britain grew its exports to the EU in the last quarter:

Exports of goods to non-EU countries decreased by £1.7 billion (3.8%) between the three months to June 2017 and the three months to September 2017. As shown in Figure 2, this was due to decreases in exports of fuels (£1.6 billion) and chemicals (£1.0 billion), which offset increases in exports to non-EU countries of other commodities over the same period.

Exports of goods to EU countries increased by £0.9 billion (2.2%) between the three months to June 2017 and the three months to September 2017. The main contributor was increases in exports of transport equipment (predominately cars), which increased by £0.7 billion.

UK trade deficit narrows

Breaking: Britain’s trade deficit has narrowed by £700m, partly due to a rise in exports to European countries.

The gap between what Britain imports and exports fell to £2.75bn in September, a better result than expected.

August’s trade gap has been revised lower, too, to £3.45bn.

The Office for National Statistics says the improvement is “ primarily due to increased exports of unspecified goods (including non-monetary gold)”.

The trade in goods deficit is also better than expected, coming in at £11.2bn. August’s dire figure has been upgraded to £12.3bn, not the £14.25bn initially reported.

The report also shows that the UK exported £900m more goods to European countries in the three months to September, but sold £1.7bn LESS to non-EU countries.

Imports of goods from both EU and non-EU countries increased, by £1.7bn and £1.5bn respectively over the last quarter.

UK tade figures
UK trade figures Photograph: ONS

The ONS says:

The increase in imports of unspecified goods (including non-monetary gold) and fuels from non-EU countries represents the largest increase in import commodities, alongside increases of mechanical and electrical machinery, material manufactures and fuel imports from EU countries.

Updated

German firms: Hard Brexit looks very likely

German business leaders have weighed in on the tricky issue of Brexit, warning that time is running out to agree a comprehensive deal between the two sides.

Reuters has the details:

The European Union and Britain will not be able to reach a comprehensive deal on their future economic relations by the March 29, 2019, exit deadline, Germany’s largest industry group BDI warned on Friday, adding that a hard Brexit was very likely.

The two sides will need many years to complete a comprehensive deal on trade and investments, BDI managing director Joachim Lang told Reuters.

The comments come ahead of showdown talks between prime minister Theresa May and business leaders from the UK and Europe, on Monday.

UK and EU negotiators are due to wrap up the latest round of talks in Brussels later today.

The latest rumour is that Northern Ireland could remain inside the European customs union and single market after Brexit.

This would avoid “a hard border on the island of Ireland”, reports the Financial Times. It offers the intriguing prospect that City banks could move operations to Belfast rather than, say, Frankfurt to retain passporting rights in the EU....

City workers reflected in a puddle.
City workers reflected in a puddle. Photograph: Mary Turner/Reuters

It’s a dank, grotty morning in the City of London, as traders await today’s trade figures.

The FTSE 100 is bobbing around the 7485 mark, up one meagre point. The French CAC and German DAX are equally subdued, as the markets slope towards the weekend.

Connor Campbell of SpreadEx is hoping that this morning’s trade data will provide some intrigue.

The FTSE has struggled in the last couple of days, with a volatile commodity sector and a flagging set of retail stocks dragging the UK index back below 7500. As for the pound, while its seen some progress in recovering last week’s post-Bank of England losses, it’s still nowhere near its pre-hike highs. Against the dollar sterling’s the wrong side of $1.315, while against the euro the currency is straining to keep its ahead above €1.13.

We’ll see whether the latest manufacturing and industrial production figures can make anything better a bit later. The former is forecast to fall from 0.4% to 0.3% month-on-month, while the latter is expected to nudge higher, from 0.2% to 0.3%. There’s also the goods trade balance reading, with analysts estimating the deficit to have shrunk from £14.2bn in August to £12.9bn in September.

The agenda: UK trade and growth figures

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It’s known as Britain’s ‘other’ deficit problem -- the gap between what Britain buys from the rest of the world, and what it sells back.

New trade figures due out today may show that the UK managed to narrow this gap, a little.

Economists predict that the trade deficit dropped to around £4.5bn in September, from August’s disappointingly large £5.6bn. That would be a welcome sign, but frankly the broad picture is that Britain is still struggling to rebalance its economy.

There’s also been no sign, yet, that the weak pound is boosting exports. In August, the trade in goods deficit expanded to an alarming £14.2bn -- dwarfing Britain’s surplus in service.

This goods deficit is expected to drop to £12.8bn in September - still a yawning gap in historical terms.

Britain’s trade in goods deficit
Britain’s trade in goods deficit Photograph: Bloomberg TV

In a flurry of data, the Office for National Statistics will also publish new UK industrial production figure. UK manufacturing output is expected to have grown by 0.3% in September, down from 0.4% in August.

Then at lunchtime the National Institute of Economic and Social Research will estimate how fast the UK’s economy grew between August and October. We know that the UK grew by 0.4% in July to September, so these figures will show if growth slowed last month.

Also coming up today...

World stock markets seem a little edgy today after yesterday’s selloff.

Some traders blame uncertainty over US tax ‘reform’ plans, amid complaints that the richest Americans will benefit the most.

Hussein Sayed, Chief Market Strategist at FXTM, explains:

President Donald Trump and corporate America may not be satisfied with the revised Senate Republican tax plan. The dollar and global equities received a hit on news that Republican senators are likely to delay the introduction of corporate tax cuts until 2019. The reaction in markets wasn’t a surprise, given that investors have been pricing in a lot of good news and further pullback may continue for a couple of days or weeks, as many stocks look overbought at the moment.

The Senate wants to maintain the seven tax brackets, rather than the four proposed by the house. They also want to tax foreign profits held by offshore U.S. companies at a different rate. However, the timing of the corporate tax cuts will likely determine how markets move for the remainder of 2017.

Meanwhile in London, Uber will discover whether its appeal against a court ruling that its drivers are employees has been successful.

And finally (as they say on the TV news), John Lewis are launching their Christmas advert, starring a large and cuddly creature named Moz who lives under the bed. A damning indictment of Britain’s housing crisis, no doubt, but can he match the success of Monty the Penguin?....

The agenda

  • 9.30am GMT: UK industrial production and construction figures for September
  • 9.30am GMT: UK trade balance for September
  • 1pm GMT: The NIESR thinktank publishes its estimate of UK growth over the last three months

Updated

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