In this week's Commercial Awareness update, we discuss the Brexit withdrawal proposal, the highest paid CEO in the UK, the pub trade and another drop in the value of cryptocurrency.
EU agrees the Brexit withdrawal
Headlines continue to be dominated by Brexit and the withdrawal agreement that Theresa May is aiming to pass through Parliament. There was no such problem for the European Commission, who got the agreement of the 27 leaders of the EU to accept the proposed deal. The agreement sets out the £39 billion divorce bill, citizen’s rights, the Northern Ireland ‘backstop’ and an extension of the withdrawal period until 31st December 2020. The declaration does not fully embed a future trade deal, however, it does set out key principles of what the agreement will look like. The EU has made it quite clear that those in Britain who believe the UK should demand more from the deal are going to be disappointed.
Over the last ten days, it has been telling how the pound has been valued compared to other major currencies. If there’s confidence in the future of the UK, the pound will tend to rise as investors are more likely to want to hold it and the markets believe the value will rise (making Forex Traders money). When the withdrawal agreement was announced, the pound sharply rose as speculators believed there was less chance of Britain leaving the EU without a deal. However, when Dominic Raab and Esther McVey resigned from the cabinet two days after, the pound lost over 1% against the dollar in one day. In the last week, the pound has slowly risen, as Theresa May appears to have fended off a leadership challenge and has received more positive support for the deal.
Will May get it through Parliament?
The House of Commons will vote on the withdrawal agreement on 12th December - but at the moment, it looks like an uphill struggle. With the DUP, May’s government has a very slight majority, but there are up to 80 MPs who are potentially set to vote against it. Labour, the SNP, Liberal Democrats and other opposition parties have said they will also oppose it. Even with some Labour rebels who defy Corbyn, the numbers are struggling to add up. May’s best hope is twofold - firstly, that worries about a no-deal encourage more to back her deal; secondly, the public overwhelmingly supports the deal.
It’s an essential time to get this right and find a solution, with figures suggesting the UK has just experienced their third consecutive period of declining investment. Many businesses have suggested they will start moving operations away from the UK, which are likely to be put into action if the UK isn’t coherent with their message.
Highest Paid CEO in the UK
Denise Coates, the founder of Bet365, has been rewarded for the companies continued growth with a £265 million paypacket this year, making her the best paid female executive in the world and the UK highest paid CEO. She has been labelled Britain’s most successful woman – starting Bet365 in a portacabin in Stoke-on-Trent, it’s now the world’s biggest online gambling service with 35 million customers worldwide and worth £5.8 billion. Gamblers wagered £52.2 billion with the company last year alone. Coates hefty salary has gone up from last year’s £217 million. Is it justified? The results suggest so, with the firm’s revenue having grown by 25% with a profit margin of £628 million. The online gambling company is set to expand even further into the US, having just signed a $50 million (£39 million) deal with a New York casino.
Bitcoin and other cryptocurrencies were up to 10% down last week after speculation regulators are about to clamp down on digital currency markets. On Saturday morning, Bitcoin dipped below $4,000, after hitting an all-time high of over $19,700 around a year ago - that means the current value is 80% lower than it was at the peak. Commentators also point to the ‘Hard Fork’ - when a new version of a digital currency comes in and the old version becomes accepted - as a reason for its latest drop, with occurred last week. Generally, those with the old version will update and continue to process transactions, but this didn’t stop some investors selling off their holding.
Speculation about tighter regulation has often led to the value of Bitcoin declining, but it might not necessarily be a bad thing. It could be possible that regulation would separate the good investments from the bad ones and give the markets more confidence in cryptocurrency.
Changing trends in pub trade
Figures released recently show that over 25% of pubs have closed their doors in the last 17 years. The Office for National Statistics says the number of pubs in the UK now stands at 38,815, down from 52,500 in 2001. The decline has been especially prominent in small independent pubs, as more commercial chains have become stronger. Beer accounts for around 70% of drinks sold in pubs, but hikes in beer duty and costs have driven up prices - however, supermarkets have been able to keep prices down more effectively, making drinking at home much cheaper relative to a decade ago.
In the latest budget, Chancellor Philip Hammond announced some tax reliefs for small pubs, but there are a number of groups calling for the government to do more to save the traditional British pub.
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