Tuesday 28/02/23

1. In MACRO NEWS, we see a new Brexit agreement and bickering over funding
2. In CONSUMER & RETAIL NEWS, consumers face higher bills and weaker house prices while Lidl rations salad and Primark expects higher profits
3. In TECH NEWS, Canada bans TikTok from government devices, UK cities are to host fintech hubs and Stripe takes a pasting
4. In INDIVIDUAL COMPANY NEWS, Recharge takes on Britishvolt, Bunzl passes on costs, Begbies Traynor gets a boost and Altria is in talks to buy NJOY
5. AND FINALLY, I bring you the day-to-day life of Gary the Stormtrooper…

So we get a new Brexit deal and the kerfuffle continues over the IRA…

📢 I’ll shortly be publishing my annual P/Review where I roundup the news of the year in 2022 and then outline predictions for themes in 2023. Because it’s such a big report 😱, I will be publishing it in stages. There is nothing like this anywhere else, and it will help your understanding of what’s going on enormously so keep an eye out for it! In the meantime, I’ve recorded a special podcast where Ralph Hebgen and I talk through some key themes to watch out for this year. You can listen to it HERE or watch it HERE.

Did you know that there is a podcast to go with Watson’s Daily? In this podcast, I discuss two stories from the day’s edition in a bit more depth with a Watson’s Daily Ambassador, my mate Ralph (on the Weekly podcast) or a special guest. The idea of this is to help to give you more of an idea of what talking about this stuff could sound like 👍 You can find the podcasts on the buttons below:

EU and UK strike Brexit deal on Northern Ireland (Financial Times, George Parker, Sam Fleming and Jude Webber) heralds a new divorce settlement between Britain and the EU that has finally resolved the dispute over trading rules in Northern Ireland. The deal was signed by PM Rishi Sunak and EC president Ursula von der Leyen next to Windsor Castle (which is why the new rules are referred to as “the Windsor Framework”). The idea is that this will reduce trade Bureaucracy and the role of EU law and the European Court of Justice in Northern Ireland and give Stormont powers to shape new EU rules. Other benefits will flow from this: the re-start of the €95bn Horizon science project and more co-operation between Britain and France on cross-Channel migration.

📢 *** I will be doing my monthly roundup TODAY at 5pm with Jake Schogger of the Commercial Law Academy. It’s FREE – so why not come along and join us for a fun look back on the month where AI went a bit crazy 🤣?!? You must register HERE to attend 👍 ***

How the ‘Windsor Framework’ changes Northern Ireland’s trading arrangements (Financial Times, Peter Foster, Andy Bounds and Jim Pickard) does a great overview of what the Framework entails, identifying a few key areas: the flow of goods will be divided into red lanes (destination: Ireland and the EU) and green lanes (destination: Northern Ireland), which will reduce red tape and delays; the removal of 98% of subsidy referrals (which slowed stuff down a lot) and the ability of VAT changes made in Westminster to apply in Northern Ireland; more power to Stormont to block the adoption of updated EU single market rules (called the “Stormont brake”); bringing Northern Ireland closer to the Union by reducing the number of bureaucratic hurdles (e.g. in pet travel, the provision of medicines as well as the transfer of seed potatoes and plants). Northern Ireland deal gives Rishi Sunak a much needed change of mood music (Financial Times, Stephen Bush) observes that Sunak is enjoying policy wins and political wins from this new agreement against a depressing economic backdrop and the war in Ukraine which may prove to be useful come election time and  ‘Stability and certainty are big ticks’: Northern Ireland firms on protocol deal (The Guardian, Richard Partington) shows that some businesses at least are giving the deal an initial thumbs-up. * SO WHAT? * This is good news, but I’d also say that it may take time for the UK economy overall to see much in the way of a boost as a result of this. Hopefully, this will mean that Rishi Sunak can take more time to concentrate on other things.

Meanwhile, the debate rages on in Inflation Reduction Act: US seeks to ease fears on energy rules (The Times, Emily Gosden) as America tries to address concerns expressed by Britain and the European Union who accuse it of being protectionist while Britain risks being sidelined in funding war (The Times, Mehreen Khan and Emily Gosden) cites examples of the risks posed specifically to Britain as Drax, the power company, said its £2bn project to build the world’s biggest carbon capture power station in Britain said that this investment might instead go to America given the IRA’s attractive terms. The government has been criticised in some quarters for being too slow to do anything concrete to make the UK more attractive as a place to invest in green technologies. The debate rages on.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Consumers face more challenges, Lidl wilts on salad and Primark has high expectations…

Pressure on Hunt as energy bills will rise despite fall in price cap (The Guardian, Alex Lawson) shows Hunt in a pickle as the price cap that suppliers can charge for energy is due to fall, but customers will have to pay more because the government’s energy price guarantee will become less generous from April and the £400 discount will be withdrawn. He is facing renewed pressure to extend the support and Why are UK energy bills going up and what help will you get? (The Guardian, Rupert Jones) does a good job of explaining this in more depth. * SO WHAT? * My takeaway from all this is that it looks like we may have to pay higher bills, putting further pressure on household budgets. However, I would say that this will depend in part, at least, on what the weather holds! If we have a mild and not-too-hot spring and summer I would have thought that will have a major effect. However, it’s never a good idea to rely on the weather!

Another thing that will be on the minds of consumers is the value of their homes! UK home sellers having to cut average of £14,000 from asking price (The Guardian, Rupert Jones) cites findings from property website Zoopla which show that 40% of home sellers are having to knock off a chunk of the original asking price to shift them although it added that demand from homebuyers had rebounded in the first two months of this year after the disastrous end to last year. * SO WHAT? * Separately, Nationwide said that UK house prices have fallen for four months straight while rival Halifax said that although they had stabilised in January, they had fallen for the previous four months. Interestingly, the supply of houses now seems to be improving as the average estate agent office now has 24 homes for sale rather than the 15 just a year ago. The rise in supply and fall in mortgage rates has given buyers more bargaining power, hence the ability to knock money off the asking price. It’ll be interesting to see how the peak selling season of spring goes!

The salad nightmare continues in Lidl becomes latest retailer to ration sales of salad ingredients (The Guardian, Mark Sweney) as the German discounter is now a full member of the salad pity party, joining up with the likes of Tesco, Aldi, Asda and Morrisons in limiting customers to certain numbers of peppers, tomatoes and cucumbers. Supermarkets should consider their role in the great British salad crunch (Financial Times, Judith Evans) reckons that supermarkets should take their share of the blame for our current salad-starved state. They have kept UK food prices among the lowest in the world – did you know that, according to Our World In Data, food took up 8.7% of our budgets in 2021 – which is the third-lowest level globally! In other developed economies, it accounts for 16.7% of Japanese household budgets and 15.5% of Italians’. * SO WHAT? * Competition between our supermarkets continues to be fierce – and this is what’s driven prices down, meaning that our shelves are empty while those in other countries are still full as producers just can’t justify falling prices and rising production costs. Something clearly has to give here otherwise there may be shortages of more foodstuffs. The government needs to do something about this pronto, particularly if it wants to get re-elected next year.

Meanwhile, Primark expects higher profits as people shop early for summer (The Guardian, Jasper Jolly) shows that parent company Associated British Foods (ABF) was generally positive about the outlook as Britons have started shopping early for the summer and that trading at Primark has continued to be strong. Primark has not seen a big fall-off in spending, but it has seen a big rise in footfall! That said, ABF is keen to say that it is possible that consumers will spend less in the coming months while interest rates continues to rise. Interestingly, it did say that it noticed smaller average basket sizes and customers buying more of Primark’s cheaper items.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Canada follows suit on TikTok and fintech sees some action…

Canada joins EU and US in banning TikTok from government devices (Daily Telegraph, Adam Mawardi) shows that the Canadian government has ordered the removal of TikTok from all government-issued devices and has banned users from downloading it in a move echoing recent moves in the US and EU, which will put even more pressure on PM Sunak to do the same. The Chief Information Officer of Canada judged TikTok to present an “unacceptable risk to privacy and security”. * SO WHAT? * It’s like Huawei all over again, isn’t it! I do wonder whether we are going to see a backlash against TikTok more broadly as a result of this. You do wonder whether this banning will spread from governments to private companies who want to keep their data secure – something we are already seeing with things like ChatGPT. At the moment, that seems unlikely, but if users really do think that their data is under threat it is possible that we could see a cooling towards this highly popular app.

UK cities set to host fintech hubs to help drive innovation (Financial Times, Daniel Thomas and Siddharth Venkataramakrishnan) cites hopes for some government-backed plans to encourage innovation via a new Centre for Finance, Innovation and Technology (CFIT), whose job it will be to encourage investment in fintech and to give people the tools to

work effectively in the industry. It’ll get £5m in seed funding from the government plus £500,000 from the City of London Corporation to spend on encouraging growth by creating cross-sector “collusions” break down barriers to growth. It will announce the establishment of financial innovation hubs and offer student placements to top UK companies in the financial services sector. * SO WHAT? * Sounds lovely, but it’ll take ages before we know whether it works! A paltry £500,000 from the City of London Corporation doesn’t exactly sound like a ringing endorsement either!

Meanwhile, Stripe: how rates are hammering one of the most valuable private groups (Financial Times, Lex) highlights the travails of Stripe, the fintech that was once valued at $120bn, most recently valued at $95bn and potentially heading for $55bn and the postponement of listing plans. The cooling of sentiment could be at least partly down to the general tech sector sell-off (which will be made worse by the prospect of more interest rate increases) and a loss in momentum for e-commerce more broadly. * SO WHAT? * This doesn’t sound like a great time for the company to list, but there will be pressure at least from within as employees have been rewarded with Restricted Stock Units (RSUs) that will expire. A listing has been widely expected (and hyped) and so if it decides to delay it, global IPO action could be as stagnant as it was last year. Bad news for bankers and advisers.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Britishvolt gets a saviour, Bunzl passes costs on, Begbies Traynor benefits from the failure of others and Atria is looking to buy NJOY…

In a quick scoot around some of today’s other interesting stories, Australian startup Recharge finalises deal to take over UK battery maker Britishvolt (The Guardian, Jonathan Barrett) shows that Aussie-based company Recharge Industries is going to take over collapsed battery maker Britishvolt, which might revive hopes for the “gigafactory” and Bunzl passes higher costs to customers and reaps the benefit (The Times, Robert Lea) shows that the business supplies distributor has managed to successfully pass on higher costs to customers, meaning that it will continue with its 30-year unbroken record of delivering dividend growth.

Begbies Traynor lifted by Paperchase collapse (The Times, Isabella Fish) shows that the restructuring specialist profited

handsomely from the downfall of Paperchase after being appointed its administrator but it also said that is seeing decent levels of new insolvency appointments in the three months to January 31st. * SO WHAT? * Unfortunately, what is good for this company is not good news for other companies (because it means that more companies are failing) and it must be pretty confident about its business pipeline as it has left its full year guidance untouched. Good for Begbies, bad for everyone else!

Then in Altria in Talks to Buy Vaping Startup NJOY for at Least $2.75 Billion, Divest Its Stake in Juul (Wall Street Journal, Jennifer Maloney, Juliet Chung and Lauren Thomas) we see that the tobacco company that owns Malborough is in advanced talks to buy e-cigarette start-up NJOY for at least $2.75bn and sell its stake in Juul (for which it paid $12.8bn for a 35% stake back in 2018!). No doubt we’ll hear soon whether this all goes ahead!

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

…in other news…

Baddies in films are given a bad rap. However, I am sure that at least some of them are just trying to get by and have mortgages to pay, mouths to feed etc. Take this guy, for instance – Gary the Stormtrooper. He has a stressful job and a notorious boss. Mild adult humour and a small amount of blood – so if you don’t like this sort of thing, don’t watch! It is hilarious IMHO though 😁