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In this week’s Commercial Awareness update, we discuss whether Britain should continue with HS2, JPMorgan Chase’s record profits, the successful test for SpaceX, when flying taxis will be in your city and what’s in store at Davos.
Should Britain commit to HS2?
A leaked government review of the HS2 railway project has revealed that costs could spiral from the initial £56bn to over £100bn. The ambitious rail project, looking to improve Britain’s transport links between London, Birmingham, Leeds and Manchester has been beset by controversy from the outset and the latest revised cost, as well as operational challenges, has seen criticism mount.
The report does however advocate for the continuation of the project, and recommends the first phase, building a high speed line between London and Birmingham, should be undertaken with a pause on building the second stages connecting to the North.
The argument is that the HS2 project would help address the imbalance of Britain’s economy which is currently very London focused, helping the ‘Northern Powerhouses’ realise their potential. The government wants businesses to have viable alternatives to set up offices outside of London, whilst maintaining the convenience of easy access to the capital. The new line would be a vast improvement on the current rail links, offering speeds of over 250mph and cutting journey times from London to Birmingham from the current 1 hours 27 minutes, down to 52 minutes.
HS2 is currently Europe's largest infrastructure project, and has seen thousands of jobs created in the construction and rail industry. However, with the spiralling costs potentially surpassing £1,600 for every citizen of the UK, some MP’s are calling for a halt to the project.
Questions to ask yourself... What are the impacts of the project and do you think it should be continued? Is London too dominant in the UK's economy?
Companies to watch
JPMorgan Chase has just announced that 2019 is its most profitable year ever, bringing in $29.9billion. The company saw particularly strong profits across its mortgage division, along with the opening of 70 new consumer bank branches in 16 new countries. Their fourth quarter profits were particularly high, with the holiday season driving a 10% increase in card sales, and an 8% increase in loan balances. Traditionally, JPMorgan Chase has made strong profits in its investment arm, but these latest figures highlight the success it has experienced from growing its retail offering.
Despite global uncertainty, along with fears of stagnating growth, these results point to positive signs for the economy, with strong consumer confidence demonstrated in the increased borrowing and spending. It’s a welcome boost to the American economy in particular that has been short of confidence recently due to ongoing trade disputes, and uncertainty surrounding military action within the middle east.
Elon Musk’s space exploration company, SpaceX has passed its final test to launch astronauts to the international space station on behalf of NASA. On Sunday they successfully completed a test launch in which they created a deliberate engine failure which saw their Falcon 9 rocket explode on launch. As the engine failure was detected the Crew Dragon pod which will hold the astronauts during manned flight separated and landed safely in the ocean with the help of parachutes. You can see the video of the separation here.
The test means SpaceX can successfully fulfil a contract they signed with Nasa in 2014, running astronaut shuttles to the space station - something which removes Nasa’s reliance on Russian rockets and launch sites. With more private companies such as Boeing and Amazon CEO Jeff Bezos’ Blue Origin taking more of an interest in space and manned flight, we could be on the cusp of a new, privately-funded space age.
Toyota have made a £300m investment in Joby Aviation, a company aimed at creating electrical air taxis, capable of shuttling people around cities. The investment makes the California based started the best funded ‘eVTOL’ (electric vertical take-off and landing) firm in a blossoming industry with competition from traditional aviation firms such as Airbus and Boeing. Uber have also entered the market in partnership with Hyundai and one of Google’s co-founders Larry Page has set up rival start up, Kitty Hawk.
Joby have a prototype, which they will begin building in their California factory, along with seeking approval from the Federal Aviation Authority to take to the skies - this could take between three and five years. However, don’t expect to be ordering an air taxi near you any-time soon though, the proposed rollout for a working fleet could be as late as 2035.
Questions to ask yourself... Do you think there are any problems involved with privately owned space exploration? What safety extra safety concerns come with flying taxis?
Looking ahead to Davos
The Davos 2020 event is kicking off this week and will see the top business owners, politicians and celebrities get together to discuss some of the worlds big issues. This year’s notable attendees are US President Donald Trump, climate activist Greta Thunberg, and Christine Lagarde, President of the European Central Bank. It’s an opportunity for influential people to come together and tackle problems such as access to clean water, eradicating disease and other global health and economic issues. This year’s major topics are likely to focus around global warming, plastic pollution and trade.
The event is run by the World Economic Forum which started in 1971 with the aim of setting a global agenda to improve the living standards of people across the world. Whilst Davos has lofty aims, the yearly events do not pass without criticism with some feeling the event only exacerbates inequalities, with only the rich and influential invited to give their opinion.
Questions to ask yourself... Is Davos a force for good? What is the most pressing global issue for this decade?