Regions of the future

Written by Juan Palenzuela, Associate

Edited by Harriet Moll, Creative Director

Good morning,

A new report by EY released yesterday which surveys over 800 international investors, found that for the seventh consecutive year, Scotland is the most attractive region outside London for foreign investment. Throughout 2019, the number of Foreign Direct Investment (FDI) projects increased by 7.4% to 101 projects, well above the UK average growth rate of 5.2%.

But it is not just in terms of the numbers of projects and pounds invested. The number of jobs created in Scotland was also higher per project (83.6) in comparison to the UK average (51.4).

The attractiveness of Scotland has been noted by others too. fDi Intelligence, an FDI magazine operated by the Financial Times, currently lists as Scotland as the tenth most desirable region in its annual ranking of European “regions of the future”.In particular, Glasgow ranks first out of all large European cities for FDI Strategy.

It is unavoidable that FDI will suffer in 2020, but there are several reasons to remain positive.

One sector in particular, biotechnology, is set to grow globally as a result of the pandemic.The Industrial Biotechnology Innovation Centre, an initiative from the University of Strathclyde which aims to grow the Scottish biotech to a £900m industry by 2025, is one of the main driving forces. The centre funds and guides new projects, and so far has seen the industry grow from £170m in 2014 to over £350m currently.

News

Donald Trump signed an executive order aimed at removing some legal protections from social media platforms and encouraged legislators to pursue stronger legal actions against Twitter and Facebook. The order seeks to clarify the Communications Decency Act, a law that offers platforms such as Twitter legal protection for content posted by their users. It comes afterTwitter fact-checked two of Trump’s tweets on Wednesday.

A British court must now decide on which political faction of Venezuela it recognises as the legitimate government as the government of Nicolás Maduro continues to push for the country’s gold to be withdrawn from the vaults of the Bank of England. Britain currently recognises Juan Guaido as the legitimate president and has denied Maduro’s request on that basis.

Tensions between India and China have continued to grow as soldiers from both countries have set up camp along several remote disputed areas in the Himalayas, with each side accusing the other of trespassing.

Business and economy

The Society of Motor Manufacturers and Traders revealed yesterday that Britain’s automotive industry produced just 197 cars last month, from 70,971 in April 2019. The pandemic has forced most factories to close, with only a handful of premium, luxury and sports car manufacturers still allowed to operate.

Renault is reportedly planning to slash around 15,000 jobs around the world as it tries to cut costs. The firm was already suffering before the pandemic and saw its first annual loss since the financial crisis last year, in spite of steadily growing demand. The cost-cutting programme is expected to be announced later today.

Rolls-Royce lost its investment-grade rating, which it held for more than 20 years yesterday after Standard & Poor’s downgraded the company to “junk” status because of prolonged and weak profitability and expectations of lower cash flow from its engine service contracts.

Columns of note

The editorial board of the Financial Times writes that fact-checking tweets, as long as it is done through a rigorous and independent process, must be a right and even a duty for social media platforms.

Writing on Project Syndicate, Yanis Varoufakis argues that the Covid pandemic will not necessarily be used by governments to harness more power.

Source: The New Yorker

Markets

What happened yesterday?

Conflicting results for equity markets yesterday amid growing concerns about a global recession. In the US, the Dow Jones Industrial Average was down 0.58% at 25,400.64, while the S&P 500 was 0.21% weaker at 3,029.73 and the Nasdaq Composite saw out the session 0.46% softer at 9,368.99.

Over the pond, however, investors were less weary. No one is entirely sure why. In London, the FTSE 100 ended the session up 1.21% at 6,218.79 and the FTSE 250 was 1.14% firmer at 17,338.48. In mainland Europe, the Stoxx 600 was 1.64% higher to 355.47, alongside a 1.06% gain for the German Dax to 11,781.13 while the FTSE Mibtel was advancing 2.46% to 18,351.16.

In company announcements, Boeing announced plans to lay off 6,770 American employees, while a further 5,520 workers will receive buyout offers and be asked to leave in the coming weeks. This represents around 10% of its 160,000 workforce and comes after air travel fell by 96% in the US on the year to mid-April.

Easyjet, meanwhile, announced that it will cut 30% of its workforce, as it warned that demand for flying will not return to normal levels until 2023. John Lundgren, EasyJet’s chief executive, recognised the company was having to consider some “very difficult decisions”, but said they were aiming “to protect as many jobs as we can for the long-term”.

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Did you know?

Jadwiga, Poland's first female monarch, was crowned "King of Poland" in Krakow in 1384 because there were no ruling Queens allowed, but the rules didn't specify that the King had to be a male.

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