29th January 2020

Written by Adam Shaw, Associate Partner

Edited by Harriet Moll, Creative Director

Good morning, I never bought into the “Global Britain” strapline that emerged in the aftermath of the UK’s decision to leave the European Union. To me, the idea that the UK was going to become a buccaneering trade pioneer by leaving the world’s largest free trade bloc, with the loss of clout that entailed, was farcical. However, with the general election having settled the issue, and just two days to go until we cease to be EU citizens, attention is firmly on how this vision might be achieved. With that in mind, news of the UK’s continued ambivalence towards learning foreign languages in an increasingly interconnected world should be a concern. According to research from the British Council, only 38% of boys and 50.3% of girls sat a foreign language GSCE in 2018 (£). In addition, there continues to be uncertainty regarding the UK’s participation in the Erasmus scheme, which allows students to work and study in other countries – helping them learn languages, embrace new cultures and, ultimately, build links abroad. Full disclosure: I studied languages and was fortunate enough to experience the Erasmus programme, so view this subject through a very biased lens. But, I also understand the amazing opportunities to be gained and the wider value. Native English speakers are lucky. Our mother tongue is the world’s dominant language – a result of consecutive periods of British and American hegemony. As a result, we are renowned for our inability (or unwillingness?) to learn other languages, beyond “une biere, s’il vous plait”. As the global economy pivots, we should surely be making more effort to learn the language and cultures of the markets where we want to do business. It’s difficult to quantify the benefits this would bring, however, in 2014, the All-Party Parliamentary Group on Modern Languages estimated that the UK economy was already losing £50 billion a year in lost contracts because of a lack of language skills in the workforce. If the UK truly wants to have a more global outlook, shedding this reputation and gaining a better understanding of other languages and cultures can only help.

News

The Foreign Office has warned against all but essential travel to mainland China and is arranging to evacuate UK citizens from the city of Wuhan and the surrounding Hubei province – the epicentre of the coronavirus outbreak. In its updated advice, the FCO highlighted that the Chinese government is imposing further restrictions on movement and that it may become harder over the coming weeks for those who wish to leave China to do so. The number of deaths from the virus has risen to 132 in China. In related news, Starbucks has closed half its outlets in China to protect staff and support government efforts to contain the coronavirus, Hong Kong’s Hang Seng stock market was down three per cent in early trading today, and British Airways has suspended all flights to mainland China until March at the earliest. Boris Johnson’s decision to allow Huawei to build “non-core” parts of the UK’s 5G network has prompted a backlash in the US and from members of the prime minister’s own party. Senior Conservatives, including David Davis, Iain Duncan Smith and Penny Mordaunt were among those to criticise the decision. The White House and US lawmakers from both main parties have also expressed concern. Senate Republican leaders are putting pressure on colleagues amid reports that the party does not have enough votes to block witnesses appearing at President Trump’s impeachment trial. There are indications that a small group of moderate Republicans want to hear from John Bolton, the former national security adviser, meaning Democrats would have the 51-49 majority required to call witnesses. (£)

Business and economy

Apple has reported a rise in iPhone sales for the first time in a year, as the company delivered better than expected results during Q4 2019. The company also saw increased demand for add-ons such as AirPods wireless headphones as revenues for the three months to the end of December rose nine percent compared with the same period a year ago to $91.8bn. Profits were up 11% to $22.2bn, prompting a two per cent increase in the share price during after-hours trading. Airbus is to pay €3.6 billion in fines and penalties to the UK, France and US after settling claims against it of bribery and corruption. This follows a three-and-a-half-year investigation into the use of middlemen to facilitate lucrative deals by the Serious Fraud Office and other agencies. The settlement will wipe out Airbus’ profits for the year and the company said it would take a charge in its 2019 accounts. (£) Ryanair yesterday warned that it may need to close bases and cut jobs after the delivery of its first 10 Boeing 727 Max aircraft – which is still grounded – was delayed until the autumn. The budget airline said Boeing would not deliver the first aircraft until September or October at the earliest. On the same day, Ryanair further escalated its row with the government over assistance given to Flybe, with chief executive Michael O’Leary restating claims that the government had breached state aid rules with the rescue deal.

Columns of note

In the Financial Times Big Read, Patrick McGee and Guy Chazan examine German fears about being left behind by big tech. They highlight that Apple is now more valuable than Germany’s 30 leading companies and, despite the Dax 30 increasing 22% overall in the last 12 months and strong profits among its constituents, German executives are concerned that the country has missed the technology train and the new industrial era based on software and data is passing them by. (£) Writing in City AM, Adrian Barrett predicts that more data regulation will follow GDPR. He is an advocate for the legislation but highlights that every great innovation wave needs regulated to protect users from harm, and that this evolves over time. Barrett concludes by offering advice on how companies can meet the demands of “Generation Privacy”.

Source: The Times

Markets

What happened yesterday?

US and European stocks rebounded yesterday after suffering their biggest losses in four months the day before due to concerns about coronavirus. In London, the FTSE 100 ended the session up 0.93% at 7,480.69. Intercontinental Hotels Group (IHG) was the day’s biggest riser on the leading index, climbing 3.05% and recovering the heavy losses it saw the previous day. According to a research note from Citi, IHG is the European hotel chain with the greatest exposure to China. Wealth managers St James’s Place and Hargreaves Lansdown followed closely, ending the day up 2.96% and 2.92% respectively. However, Diageo fell 1.44% due to a downgrade to 'underweight' by JPMorgan. Meanwhile, the FTSE 250 gained 0.61% to close at 21,433.06. AG Barr led the way, gaining 15.26% after a trading update in which the company said profit before tax for the year ended 25 January 2020 is expected to be at the top end of current market expectations. Housebuilder Crest Nicholson also performed strongly, despite reporting full-year results that showed a fall in sales and profit before tax at the bottom end of the previously guided range. However, the company did maintain its dividend payment. At the other end of the spectrum, Avast, the security software company, fell 9.01% after Peel Hunt initiated coverage with a sell investment rating. In the US, the S&P 500 was up 1.14% to 3,280.45, the Dow Jones Industrial Average gained 0.86% to 28,781.98, and the Nasdaq climbed 1.49% to 9,275.68. On the currency markets, the pound was down 0.42% on the dollar at $1.30 and 0.35% weaker against the euro at €1.18.

What's happening today

Interims Hargreaves Serv

AGMs

Proactis

Red Rock Resources

Renew Holdings

Tharisa

Virgin Money UK

UK Economic Announcements

(00:01) BRC Shop Price Index (07:00) Nationwide House Price Index

Source: Financial Times

Did you know?

In 1875, a fire broke out at Malone’s malt house and store house on Chamber Street in Dublin. The fire ignited over 5000 barrels of whiskey which exploded and left the contents pouring into the streets. The incident claimed the lives of 13 people, however, no one died due to the flames or smoke inhalation – all 13 people died from alcohol poisoning.

Parliamentary highlights

TODAY House of Commons Oral Questions: International Development (including Topical Questions) Prime Minister’s Question Time Opposition Day Debate Policing and crime - Jeremy Corbyn, Ms Diane Abbott, Louise Haigh, Andrew Gwynne, Valerie Vaz, Mr Nicholas Brown

Homelessness - Jeremy Corbyn, John Healey, Alex Cunningham, Sarah Jones, Margaret Greenwood, Mr Nicholas Brown House of Lords Oral Questions When the government expect the Constitution, Democracy and Rights Commission to be established - Lord Lisvane

Priority given to Sudan and South Sudan among the government's foreign policy objectives - The Earl of Sandwich

Godfray Report, A Strategy for achieving Bovine Tuberculosis Free Status for England, published in November 2018 - Lord Krebs

Decision of the International Court of Justice to direct the Myanmar government to prevent all genocidal acts against Rohingya Muslims - Lord Alton of Liverpool Legislation: Direct Payments to Farmers (Legislative Continuity) Bill (Money Bill) – Second reading and remaining stages - Lord Gardiner of Kimble Short debate: Improving social mobility proposed in the Sutton Trust’s Mobility Manifesto, and the recommendations of the Social Mobility Commission’s report 'State of the Nation 2018-19: Social Mobility in Great Britain' - Baroness Tyler of Enfield Scottish Parliament Scottish Government Debate: Recognising Scotland in Europe Portfolio Questions: Health and Sport; Communities and Local Government Scottish Government Debate: Scotland’s Future