This week: Royal wedding raises UK economy, technology team-up in grocery and Big Four accounting firms held accountable.
It seems the cash registers are already ringing in the UK this week. According to consulting firm Brand Finance, Saturday’s royal wedding between Prince Harry and Meghan Markle will boost the UK economy by around £1.05 billion ($1.4 billion). Tourism is set to be a key beneficiary, standing to generate around £300 million ($404 million). Elsewhere, the retail and restaurant sectors could experience a £250 million ($337 million) boost, with a £150 million ($202 million) uplift for the fashion industry and with merchandise bringing in a further £50 million ($67 million). While the “feel-good” factor may be short-lived, the UK economy could probably use all the help it can get after the disappointing 0.1% first-quarter gross domestic product (GDP) growth figure.
Oil high on lack of supply
At $80 per barrel, oil prices neared a three-and-a-half-year high on Thursday after data showed a surprise fall in U.S. oil supplies. Oil prices have already risen this month due to the ongoing tensions between Washington and Tehran, as well as political uncertainty in Venezuela. But it was a surprise drop in U.S. inventories that caused the latest price surge. This week also saw the U.S. 10-year Treasury yield reach a seven-year high following the release of strong U.S. retail sales and speculation that the U.S. Federal Reserve (Fed) may hike interest rates more aggressively than previously speculated. Increases are forecasted for June, September and now also December.
In the retail sector, U.S. grocery giant Kroger become the latest company to strike a deal with Ocado for its technology that automates online grocery orders.
Ocado continues to deliver
In the retail sector, U.S. grocery giant Kroger become the latest company to strike a deal with Ocado for its technology that automates online grocery orders. This is the fourth deal that Ocado has concluded in six months, and its first foray into the U.S. Ocado shares surged 47% to 814p upon the announcement.
It wasn’t all good news in retail, however, with Sir Phillip Green’s retail empire reporting a 42% slump in profits. Taveta Investments, the holding company for brands such as Topshop and Dorothy Perkins, recorded a 5.6% fall in total sales to £1.9 billion ($2.6 billion).
Vodafone chief hangs up
Vittorio Colao, Vodafone’s chief executive since 2008, has announced that he will be leaving the company in October after 20 years of service. Company shares struggled on Tuesday, falling 4.3% upon the news that Colao will be replaced by its current finance director, Nick Read. Colao has led a remarkable transformation of the group, turning it into an industry champion with Europe’s fastest broadband growth. Colao announced the company’s impressive full-year results at the same time as his resignation, showing a €120 billion ($141 billion) return to investors from a €100 billion ($118 billion) investment. Clearly, Read has a tough act to follow.
Big Four in the firing line
British MPs concluded this week that Carillion’s board presided over a “rotten corporate culture” and was liable for its “costly collapse,” having racked up a £1.5 billion ($2 billion) debt pile that has resulted in thousands losing their jobs. The UK’s Big Four audit firms (Deloitte, Ernst & Young, KPMG, PwC) also came under fire, as it emerged that they failed to challenge the indebted construction company on numerous occasions. MPs have demanded that the Big Four are referred to the competition authorities for a potential break-up, calling them “a cozy club incapable of providing the degree of independent challenge needed.”
A Japanese railway company has apologized to commuters for a “truly inexcusable” mistake after a train left 25 seconds early – the second such case in a matter of months.
The conductor of the West Japan Railways (JR West) train had thought it was scheduled to depart at 7:11am, rather than the correct time of 7:12 a.m. Those that arrived in the one-minute interlude were forced to wait a lengthy six minutes for the next train. JR West issued an official apology and stated that it would thoroughly evaluate conduct to stop such an incident occurring again. It also assured commuters that staff would receive extra training to avoid such events in the future.
But some other countries could learn to follow in Japan’s tracks in terms of timeliness.
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