Live Blog

Amazon computer screens
October 5, 2015, 12:57am

The world's biggest companies face a rising threat over the next decade, as new technologies and innovations open the way for agile start-ups and entrepreneurs to steal market share.

The digital economy is set to become a £3.2 trillion market by 2025, according to research from consultancy Ovum, a 29 per cent climb on today’s figure.

The rise in tech spending will come as part of what Ovum has dubbed “the second tech revolution” that it expects to unfold over the next decade as firms in a wide range of industries rush to utilise greater connectivity and technologies such as cloud computing, artificial intelligence and 3D printing.

Read more: The UK has the sixth best digital economy in Europe

The new revolution will see producers making use of new technologies along supply chains.

The report also warns periods of disruption caused by new technologies will become more frequent. Companies that do not keep up with the more rapid pace of innovation risk falling behind.

“I think it’s inherently more difficult for larger, more complex organisations to innovate. I believe the more successful ones will collaborate with smaller, agile firms either as suppliers, partners or potential acquisitions - and the others will become disrupted,” tech guru Eileen Burbidge told City A.M.

Failure to meet transformational challenge has resulted in 74 per cent of companies leaving the Fortune 500 over the past twenty years, Ovum said, as they were overtaken by the likes of Amazon, Facebook and Ebay. 

Lord Adonis
October 5, 2015, 12:48am
In a major blow to Labour, one of its most influential peers has left the parliamentary party to chair a new infrastructure commission spearheaded by chancellor George Osborne.
Osborne will use his speech at the Conservative party conference in Manchester today to announce that Lord Andrew Adonis, a former minister under Prime Minister Tony Blair, has resigned the Labour whip and will now sit as a cross bench peer in the House of Lords.
Osborne will say that Lord Adonis -- who also served as Gordon Brown’s transport secretary and later chaired the New Labour pressure group Progress -- will lead the new, independent National Infrastructure Commission (NIC) to work out “calmly and dispassionately what the country needs to build for its future and hold any government’s feet to the fire if it fails to deliver”.
Lord Adonis is expected to take up his post on the commission immediately, with his work being overseen by a board whose members will be appointed by the chancellor.
While Lord Adonis is not defecting or joining the ranks of the Conservatives, his move marks the first high-profile departure from the Labour establishment since the election of radical socialist Jeremy Corbyn as the party’s leader last month - and a significant coup for the Tories on the first full day of their annual conference.
Labour sought to downplay Lord Adonis’s move last night, with a spokesperson for the Labour Lords frontbench tweeting that it is “not unusual” for a party-affiliated peer to resign the whip “while doing sensitive work”. 
A spokesperson for Corbyn, meanwhile, did not offer comment on Lord Adonis, but instead attacked the Tory proposals, saying: “We have heard it all before from Osborne and the Conservatives on infrastructure and their record is one of ­complete failure to deliver.”
The spokesperson added: “There is still nothing to indicate that the Tories understand the desperate need for serious long-
George Osborne
October 5, 2015, 12:39am
Small firms expect to slow their hiring and raise prices as the newly announced national living wage is introduced.
A negative impact on business is expected by 38 per cent of small employers, according to survey data released today by the Federation of Small Businesses (FSB). 
Half of firms said they would lift prices and 52 per cent said they would put of taking on new recruits.
The national living wage will start at £7.20 for over-25s in April and rise to £9 by 2020.
Firms in the wholesale and retail sector and those in accommodation and food services were most likely to say the national living wage will have a negative impact.
The FSB estimates that for a small retail business with six full time staff aged 25 or over and earning the current adult minimum wage, the national living wage will cost an extra £5,900 a year from April 2016.
“Over half of our members already pay their staff above the voluntary living wage, but those that don’t are often operating in highly competitive sectors with very tight margins,” said John Allan, FSB national chairman. 
“In many of these industries, the only sustainable way to deliver real long term wage growth is to improve productivity. Without improved productivity there is a real risk that higher enforced statutory wages will lead to fewer jobs being created, fewer hours for existing staff and, unfortunately in some cases, to job losses.”
October 5, 2015, 12:27am

British business groups are raising a red flag over the London mayoral race, after Zac Goldsmith, a noted opponent to Heathrow expansion, was selected as the Conservative candidate.

Goldsmith won the party’s nomination on Friday, commanding more than 70 per cent of the vote in an open primary contest. He will square off next May against Labour candidate Sadiq Khan, who previously backed Heathrow but later took a U-turn to support expansion at Gatwick, instead, citing air quality concerns.

British Chambers of Commerce (BCC) director general John Longworth said that British businesses will be “alarmed” by the candidates’ positions.

Read more: Conservatives name Zac Goldsmith as candidate for London mayoral election 2016

"Although the candidates' opposition is unsurprising, it is depressing, as the need for expansion at Heathrow and other key airports grows more pressing and more obvious by the day," Longworth said. "Ministers must not join the mayoral candidates in burying their heads in the sand on this critical issue."

"We need a green light for a new runway, and we need it fast," he added. "The national interest - growth and prosperity - must be put ahead of petty politicking."

Earlier this year, the Confederation of British Industry (CBI) said that a lack of airport capacity in London could cost the UK economy up to £31bn by 2030, and an additional £5.3bn each year after that.

CBI deputy director-general Katja Hall would not comment specifically on the mayoral candidates yesterday, but said: “We cannot afford to wait any longer and we look forward to the government delivering on the PM's pledge to make a decision by 2016.”

The Airports Commission recommended building a third runway at Heathrow in July. Prime Minister David Cameron has said that the government will respond to the commission’s recommendation by the end of the year.

Chinese stocks crash
October 5, 2015, 12:15am
The UK’S biggest companies are scaling back investment plans as a slowdown in emerging markets and swings in financial markets temper their appetite to take on risk, according to survey figures published this morning.
The research, conducted by Deloitte, showed that 73 per cent of chief financial officers (CFOs) said the current level of financial and economic uncertainty is above normal, high or very high. The figure is up from 55 per cent three months ago and is the highest level of company uncertainty since 2013.
Greater uncertainty is impacting investment plans, with 47 per cent of CFOs saying now is a good time to take risk, down from 59 per cent three months ago. 
The survey reveals that firms are now taking a more defensive stance by focusing more on cutting costs and plan to spend less on investment.
A slowdown in China, the world’s second biggest economy was a major concern with 60 per cent of CFOs expecting it to harm their business. But top of the list of worries was a rate rise by the Bank of England, with stability in Greece quelling fears over a renewed Eurozone crisis.
Deloitte chief executive David Sproul said there were still many reasons for firms to be optimistic at the moment.
“The UK economy is in pretty good shape. Low inflation and rising pay have rebooted consumer incomes. Boosted by cheap credit, consumer spending, which accounts for more than 60 per cent of the economy, has risen 3.1 per cent in the last year, the fastest rate in eight years,” Sproul said.
 “Nor should we overdo the gloom on the external environment. The outlook for emerging market economies has softened, but the US is seeing a decent recovery, the Eurozone is growing again and the pace of activity seems likely to quicken into 2016.”
October 4, 2015, 8:28pm

After five years of negotiations the Trans Pacific Partnership (TPP) between the US and 11 other countries is finally nearing competition following a key breakthrough.

The US and Australia made major progress on a conflict over how long a monopoly pharmaceutical companies should be given on new biotech drugs. However officials said that this still needs to receive backing from other nations such as Chile and Peru.

Negotiators were increasingly confident about completing the deal which has been in the works since 2010. Japan's economic minister, Akira Amari, said he had called Prime Minister Shinzo Abe to tell him that a deal was within sight.

Read more: Obama’s free trade grand strategy is now perilously close to total failure

The TPP would lower tariffs and set common standards for the 12 participating economies, which together account for around 40 per cent of global output. Some of the trickier negotiating points, ranging from market access to monopoly periods for medicine, have been left until the end of the negotiations.

A similar agreement - the Transatlantic Trade and Investment Partnership, or TTIP - is being negotiated between the United States and Europe.

October 4, 2015, 7:03pm

German chancellor Angela Merkel has said that the emissions scandal engulfing German carmaker Volkswagen is "drastic" but shouldn't damage the country's reputation as a good place to do business.

"I believe the reputation of the German economy and the trust in the German economy has not been shaken by this to the extent that we are no longer considered a good business location," she told German radio station Deutschlandfunk, according to the text of an interview due to be broadcast later on Sunday.

Read more: Are VW shares untouchable?

VW sparked the biggest crisis in the company's 78-year history after admitting it had cheated diesel emissions tests in the US. The Wolfsburg-based company has since said it will recall up to 11m vehicles worldwide, and around 1.2m of these - including Audi, Seat, and Skoda cars - are in the UK.

The British government is investigating the extent of emissions-rigging and whether the software is being used by other manufacturers. At the same time, it has said there hasn't yet been any evidence of this.

Last week the government said that British owners of Volkswagen diesel cars fitted with emissions-cheating software will not face a higher annual vehicle tax.

Royal Courts of Justice
October 4, 2015, 6:23pm

Uber and Transport for London face another showdown when they pull up at the high court this week, to settle a long-running dispute over whether the smartphone app breaks the law.

TfL last week revealed proposals for fresh laws which would curb Uber in London. Now, the UK courts will decide on the legality of the Uber app, making a final decision on whether it’s considered a taximeter - a device used by London’s black cabs but which is illegal in other vehicles.

Black cab drivers argue the app’s calculation of fares constitutes metering, and is therefore illegal. TfL believes the app is not considered a meter under current laws and has deferred a final decision on interpreting legislation to the high courts and which is due to begin hearing the case on Monday.

Read more: Uber at risk as Transport for London bows to pressure from taxi drivers and minicab firms

TfL’s surface transport managing director Leon Daniels said ahead of the hearing that “it’s in everyone's interest to bring legal clarity to the issue of taximeters and to review the current regulations that were written well before smartphones were invented.”

Rival Addison Lee claims the ruling could leave thousands of Uber drivers open to fines and a criminal record if the ruling goes against Uber. TfL said it would consider the implications of the verdict when a final ruling was made.

Uber said the outcome of the case “would not affect Uber’s license in London, or its ability to operate here," and it’s understood that technical changes to the way the app works to display fares could be made so it did not fall under taximeter rules.

An Uber spokesperson said: “We believe the Uber app on a partner’s [driver's] phone is not a taximeter, and TfL - the regulator - shares this view. We are looking forward to getting binding clarity on this issue in the high court.”

The case is due to be heard on Monday and Tuesday in London.

October 4, 2015, 4:32pm

One of the UK's largest insurers is reportedly mulling upping sticks in favour of Hong Kong or Singapore ahead of European Union regulations which are set to be introduced next year.

Prudential is dusting off plans drawn up over three years ago to move its corporate base out of Britain and into Asia, according to the Sunday Times.

Chancellor George Osborne recently bowed to pressure from banks such as HSBC which were threatening to move their operations out of the UK over the bank levy 

Read more: Bye-bye HSBC? The British bank is eyeing a move abroad

Prudential's pivot eastwards would be part of a bid to avoid tough new European Union rules for insurers known as "Solvency II" which are scheduled to come into force in January.

The FTSE 100-listed company is worried that the official body responsible for implementing the new rules, the Prudential Regulation Authority, won't take kindly to its large US and Asian operations.

Prudential's operations in Asia made £632m pre-tax profit in the first half of 2015, while its US business made £846m. This compares to £711m made by its UK arm.

October 4, 2015, 3:40pm

England will take their time before deciding whether to end Stuart Lancaster’s reign as head coach five years earlier than planned, says Rugby Football Union (RFU) chief executive Ian Ritchie.

Ritchie, who appointed Lancaster in one of his first major decisions after moving from the All England Lawn Tennis Club, said the RFU’s response would be “calm, rational and considered”.

“Clearly it doesn’t feel any better this morning. We all share a sense of deep disappointment and there’s no other way of looking at it,” he said of Saturday’s tournament-ending defeat to Australia.

“We’ve been most grateful for the support that we’ve had from everybody. That sense of deep disappointment is because, no question, we haven’t reflected that support in terms of winning the games.”

Read more: Lancaster on England defeat: I'm responsible, but I won't quit

World Cup hosts England face Uruguay in Manchester on Saturday in their final Pool A fixture, but are already condemned to an early exit.

“The first thing that happens next is that there’s a game next week against Uruguay and we need to focus on that,” Ritchie added.

“This isn’t a time for any knee-jerk reaction. This isn’t a time to rush into things, it’s a time for calm, rational, considered reflection about what can we learn, how can we move forward, what can we do to improve, and we’ll only do that in a calm, considered and rational manner.”

Ritchie said England chiefs stood by their controversial policy of omitting foreign-based stars such as Toulon flanker Steffon Armitage and Clermont Auvergne full-back Nick Abendanon – the last two recipients of the European Player of the Year award.

“We all felt that was the right policy; we continue to feel that’s the right policy,” he said. “It’s the right policy for rugby in this country.”