Commercial Awareness Update – W/C 8th January 2021

The round-up of the stories that a budding Student Lawyer should be aware of this week. Sign up here to get these updates in your inbox every week.

Lockdown 3.0 and the UK Economy

Article by Andrew Dewey (2nd yr LLB student at Reading University) 

On Monday 4^th January 2021, the Prime Minister announced a third national lockdown for the UK. The new provisions were agreed and passed into legislation on the 6^th January with a majority of 508 in the House of Commons. Although the measures will be subject to frequent review, the new restrictions are expected to remain in place until the middle of March 2021 which could be detrimental to the UK economy and its recovery.

According to Deutsche Bank, it is inevitable that the UK will enter its first double dip recession since 1975. In short, recessions are a consequence of an economy shrinking over the course of two consecutive quarters. A ‘double dip’ recession is the term given to a period where the economy drastically shrinks, but with a short-lived recovery, followed by another fall in economic output. As public spending is expected to diminish by £24.75 billion and unemployment expected to grow further than its current 5%, this will result in the overall economy shrinking by 3% in the first quarter of 2021. In turn, this will lead to the country’s worst economic contraction in 300 years.

What are the chances of recovery?

As shown by the sluggish rebound of the FTSE 100, the UK economy is expected to be one of the slowest recovering European economies following the pandemic. This is partially due to the fact that the UK is a service-based economy and with multiple lockdowns and restrictions, the performance of services has significantly reduced with, for example, the hospitality sector losing £53 billion in sales. Additionally, competing European economies such as Germany and Italy are bigger distributors of pharmaceutical equipment which has helped maintain their economic output during the pandemic whilst the UK ground to a halt.

However, the UK economy is robust and has previously shown to bounce back from setbacks. Indeed, businesses are better prepared to adhere to social distancing measures and the prediction that more people will be going into work during the third lockdown – which will reduce businesses’ furlough pay-out. With this in mind, the majority of analysts are remaining confident about the UK recovery with the end of 2022 being the target for the economy to return to pre-pandemic performance. Although this can only be achieved by keeping the virus under control so that public spending can increase which will ultimately contribute to the reduction of the deficit.

There are currently two vaccines being rolled out and therefore the prospect of a quickly fuelled recovery is becoming more attainable. Thus, in spite of the disruption caused by lockdown 3.0 to the economy’s performance within the first quarter of 2021, the vaccine undoubtedly provides more certainty going forward. As a result, the following two quarters of this year are expected to trigger a growth of 3% with the final quarter seeing a more moderate performance.

Twitter Joins Podcasting Battleground by Acquiring Breaker  

Article by Joyce Yiu (LLM student at Queen Mary University of London)

Twitter has recently acquired social broadcasting app Breaker, the companies announced via a combination of blog posts and tweets on 4^th January, 2021. The Breaker’s team will join Twitter to help “improve the health of the public conversation” on the service, as well as work on Twitter’s new audio-based networking project, Twitter Spaces. The Breaker app, will eventually shut down on 15^th January, 2021.

The Breaker acquisition adds to a string of recent podcast M&A activity. The trend started with Spotify, which bought Anchor and Gimlet, Parcast, Megaphone and the future rights to the Joe Rogan Experience. Other podcasts content deals follow in the recent weeks and months, including Amazon’s acquisition of Wondery and Sirius buying Stitcher.

Unlike the deals that involves podcast content, Breakers’ sale is made up of staff and technology, not podcasts themselves. Twitter Engineering lead Micheal Montano confirmed that Erik Berlin (CEO of Breaker), Leah Culver (CTO) and Emma Lundin (designer) will join Twitter as a result of the deal. It matches the general focus of Twitter on collating content from others instead of making its own.

Voice-based social networking will be a booming new market in 2021. While the pandemic is hitting the one-year mark soon and people being stuck at home, many people had gone in search of better ways to connect online, outside of texting. It is crucial that whether Twitter is able to make audio networking a safe place for users to chat, provided that it has publicly struggled with online toxicity.

You can read more here and here.

Storming of the Capitol: Why did it occur and what are the legal repercussions?

Article by Simone Forostkenko (5th year BCrim/LLB student at University of New England)

The 6^th of January 2021 will be a day now forever remembered in the history books.

In one day in America; the Democratic party won one of two seats for the state Georgia which resulted in a Democratic party majority and secured the Senate for Joe Biden. Following this win there was a protest planned on social media due to alleged voter fraud which led to the Capitol being stormed and claims of domestic terrorism due to undetonated pipe bombs (IED) and Molotov cocktails. The protest turned into a riot which resulted in 5 casualties, countless injuries and vandalism of a Government building. President Donald Trump encouraged the protestors which then led to him getting suspended on Twitter for 12 hours as well as an indefinite ban from Facebook and Instagram. The actions of the President and protestors flipped some Republicans which resulted in them withdrawing their objections to Biden becoming the next President of the United States. These additional supporters assisted Joe Biden in being confirmed as the President Elect of the United States of America.

Not only will the 6^th of January be remembered, it also has flow on legal effects. America is now dealing with the legal repercussions of this protest. The U.S. Attorney Michael Sherwin for the District of Columbia has already laid charges on a 70 year old man for the Molotov cocktails and has threatened further charges to the other rioters.

The President Elect Joe Biden will officially become the President of the United States at his inauguration on the 20^th of January 2021. Following from this date, Biden has pledged to make positive changes in America which include focusing on controlling the spread of COVID-19 as well as increasing the minimum wage and reforming immigration policies to reunite families.

Globally, one of Biden’s most encouraging election promises is the assured legislative changes to the United States environmental policies and to re-join the Paris Agreement which globally countries have set plans to lower global warming to below 2° Celsius. On a global scale, it is  important that Biden takes these affirmative actions towards combating climate change as America is one of the highest contributors to the worlds greenhouse gas emissions.

Biden has also made it clear that one of his election promises is to rebuild international connections. Although Donald Trump considered Prime Minister Boris Johnson a friend, it has not taken Johnson long to congratulate or support Biden. It was stressed last year that the United Kingdom requires a ‘special friendship’ with the United States moving forward post-Brexit. A trade deal with the United States has always been a key goal from Brexit and is said to deliver huge gains and strengthen the United Kingdom’s professional services. The general public has expressed scepticism over the trade deal as it will require the United Kingdom to lower their regulatory standards. Despite local concerns regarding trade deals, overall Biden’s presidency appears promising for the future of the United States of America, the United Kingdom and the rest of the world.