Here are this week’s headlines, brought to you by our Student Commercial Awareness Team:
- Growth slows by 0.6% for US GDP
Reported by Dan Petch
This news comes as a result of the first official report since President Trump’s Tax overhaul.
Recently released figures show that the growth for the US GDP has slowed by 0.6% in the first three months of 2018. The current growth of 2.3% is down from the last quarter in 2017 where GDP growth was pinned at 2.9%.
These figures are the first to be released since President Trump endorsed the US Congress Tax Bill, which slashed income and corporate tax rates. Corporate tax was reduced from 35% down to 21%, whilst other cuts were seen across the board for most Americans, including the rich.
Although the growth has slowed, due to several factors, such as the US’ recent joint involvement in Syria, the figure is not as low as Wall Street Economists had predicted, who pinned 2018’s first quarter figures at 2%.
Reasons for a higher figure of growth in the last quarter of 2017 were also explained to be because of the intense hurricane season the US experienced. Many were left scrambling to repair damaged property, leading to an increase in house-hold spending, Ian Shepherdson at Pantheon Macroeconomics suggested.
It is likely that the tax cuts from the Tax Bill, implemented before Christmas, have not yet taken full affect and so the actual spending of cash has not yet increased. Earnings are said to have stabilised since the cuts however, according to Ms Curtin, the Chief Investment Officer at Close Brothers Asset Management.
Figures from the second quarter of 2018 will be more reflective due to having allowed the Tax Bill to take full effect.
- New deal with Boeing to bolster UK defence
Reported by Anna-Mei Harvey
As politics and international affairs feature more in the news more than ever before, the British government has forged new deals to bolster British defences.
As part of their commitment to re-enforce the armed forces, the Ministry of Defence (MOD) has struck up further deals with Boeing. The two have been working closely for over 75 years. The aim is to synchronise the US and UK forces, making it easier for the allies to train and, if necessary, go to war together.
The latest in a long list of investments is the agreement between the MOD and Boeing to build a £100m facility at RAF Lossiemouth in Scotland. The base is set to become the centre for maintenance and training for the newly commissioned P-8A maritime patrol aircraft to be built by Boeing.
This is good news in terms of strengthening the relationship between the US and the UK’s forces, and also for the British economy and job prospects. The building of a new base and commissioning of new aircraft will give rise to job opportunities for engineers, factory and supply workers, and construction workers to name a few.
As of 2015, Boeing spent £1.8bn within the UK supply chain, across 250 suppliers, supporting more than 3,000 British jobs. Given this, the benefits of this and future MOD deals with Boeing seem multifaceted.
- Deutsche Bank abandons hope of being a global investment bank
Reported by Spencer Yap
Following 3 years of losses and continued poor performance from Deutsche Bank, Germany’s leading lender, ousted their CEO (former CEO to be accurate), John Cryan. His successor, Christian Sewing, now faces the uphill battle of bringing the bank back on track, after the most recent gloomy results from the first quarter. It showed that Deutsche’s net profit is currently down 79% year on year, to only €120 million.
Sewing now plans to shift his sights from Asia and America, back to the European market. The bank’s aim is to now concentrate on issues of raising finance and managing payments and currencies for big European firms. Although this will lead to a cut in Deutsche’s total projected revenue from 50% to 54% by the year 2021, Sewing argues will lead to more stable earnings.
The new CEO is also boosting cost cuts, aiming to keep operating costs under €23 billion this year, an increase by €1 billion since February. However, some are sceptical about this. Andrew Coombs from Citigroup, ‘worries that restructuring may cost far more than Deutsche is allowing for.’
Admittedly, the regulatory rules resulting from the financial crisis hit European banks harder, allowing American banks to take the forefront. This allowed for banks, like Bank of America Merrill Lynch, to garner ‘vast balance-sheets and huge domestic market give them scale that Europeans, with smaller markets and minuscule rates and margins, cannot match.’
Furthermore, American banks were recovering faster after the 2007/08 crisis whilst the European banks chose to follow new models. ‘Switzerland’s UBS tacked from investment banking towards wealth management; Credit Suisse may have pivoted to Asia just in time; Barclays styles itself as a transatlantic bank; BNP Paribas was never a true swashbuckler anyway.’ Despite this yardstick, Deutsche’s performance is still lagging. However, some are of the belief that as other European bank shifts their focus, Deutsche is laying in wait for business to pick up, and to then swoop up deals.
Read more here.
- Ryanair loses legal battle concerning carriers' liability
Reported by Jutha Cheewat
In Ryanair v Secretary of State for the Home Department  EWCA Civ 899, the budget airline challenged the secretary of state, as they were imposed a £2000 fine for transporting a man, who failed to provide required documents according to the Home Office, from Germany to the UK.
Under section 40 of the Immigration and Asylum Act 1999, if an individual requiring leave to enter the UK arrives by ship or aircraft and, on being required to do so by an immigration officer, fails to produce:
1) an immigration document which is in force and which satisfactorily establishes his identity and his nationality or citizenship, and
2) if the individual requires a visa, a visa of the required kind,
then the Secretary of State may charge the owner of the ship or aircraft the sum of £2,000.
Mevludin Alibegovic, a citizen of Bosnia and Herzegovina was the man in question. He had in his possession a document issued by the Austrian authorities bearing the legend “daueraufenthalt-familienangehöriger” (“permanent residence, family member”), but not a visa.
The court ruled against the airline and stated that, in accordance with article 5(2), a permanent residence card which was issued under article 20 (rather than article 10), would not serve to exempt family members from the visa requirement.
Having said that, the judges did recognise that it was unlikely that a person coming on a day trip would be carrying the requisite proof with him. Nevertheless, it was not acceptable.
This suggests that airlines will now be less flexible when it comes to checking free movement documents, despite that fact that it has been technically possible to travel with a range of documentation before.
Read more here.