Major International Business Headlines Brief::: 19 January 2023

Thu Jan 19 14:11:30 CAT 2023

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Major International Business Headlines Brief::: 19 January 2023 

 <https://wwww.nedbank.co.zw/> 

ü  Microsoft to cut 10,000 jobs as spending slows

ü  What happens if the US hits the debt ceiling?

ü  Twitter's bird statue sells for $100,000 at auction

ü  Germany says it is no longer reliant on Russian energy

ü  Bitzlato crypto founder charged with $700m financial crimes

ü  Starmer: UK will be 'open for business' under Labour

ü  Royal Mail restarts limited overseas post after cyber-attack

ü  HMRC trials answer by text system to cut call queues

ü  Starmer: UK will be 'open for business' under Labour

ü  Cost of living: Rents and house prices continue to rise

ü  Green energy regeneration hopes for Kirkconnel and Kelloholm

ü  Rising costs hitting Cambridgeshire chip shops and potato farms

 <mailto:info at bulls.co.zw> 

Microsoft to cut 10,000 jobs as spending slows

Microsoft will cut 10,000 jobs in the latest round of staff redundancies to
hit the tech industry.

It will affect up to 5% of its global workforce and cost the business $1.2bn
(£972m) in severance and reorganisation costs.

Microsoft chief executive Satya Nadella said that while customer spending
had grown during Covid, more people were now choosing to "exercise caution".

He said the firm would continue to hire in key areas.

Breaking the news in a memo to staff, Mr Nadella said many parts of the
world were in recession or anticipating one, while "at the same time, the
next major wave of computing is being born, with advances in AI".

Microsoft is considering a multi-billion-dollar investment in artificial
intelligence company OpenAI, the maker of ChatGPT (Generative Pre-trained
Transformer), according to the Financial Times.

We didn't have to wait very long for the next round of lay-offs from big
tech.

Microsoft is the latest but it won't be the last, as the giants seek to
tighten their belts following the boom time of the pandemic, when lockdowns
meant people were stuck at home, wanting to spend their cash on digital
entertainment and devices.

That's not to say the sector is stagnating, though - reports suggest
Microsoft is considering a $10bn investment in the company behind ChatGPT,
the chatbot that's not only captivated the millions of people who have tried
it out but is also predicted by some experts to be the future of search.

Microsoft knows from its search engine, Bing, that you only need a fraction
of that market for it to prove very lucrative.

And let's not forget its proposed acquisition of the games giant Activision
Blizzard, which would bring a whole new portfolio of high-profile gaming
titles under its wing.

That's small comfort, though, for the thousands of staff facing redundancy
in the early days of 2023.

2px presentational grey line

Hundreds of tech firms, including some of the sector's biggest names like
Amazon and Instagram-owner Meta, have revealed lay-offs in recent weeks.

At the start of this year, Amazon announced that it planned to cut more than
18,000 jobs because of "the uncertain economy" and rapid hiring during the
pandemic.

In November, Meta announced that it would cut 13% of its workforce, a total
of 11,000 employees.

But Jason Wong, a tech industry analyst with consultants Gartner, warned
against assuming redundancies in "enterprise" businesses like Microsoft and
Amazon happened for the same reasons as the cuts by big social media firms,
some of which had faced additional challenges because of "where they intend
to take the business".

In the case of Twitter, that was moving to "a model away from pure
advertising", and for Facebook he pointed to its pursuit of the metaverse.

Pandemic boom

Like other tech companies, Microsoft's business boomed during the pandemic,
fuelled by the increase in remote work and other online activity.

Its workforce grew by roughly 40,000 between June 2021 and June 2022, when
it reported having about 221,000 full-time employees, including 99,000
outside the US.

As business slowed last year, the firm embarked on a series of job cuts.

The latest 10,000 are expected to be completed by the end of the third
quarter of 2023.

The memo said some staff would be notified immediately.

Mr Nadella promised to "treat our people with dignity and respect and act
transparently".

More than 1,000 tech companies laid off 154,336 employees in 2022 alone,
according to Layoffs.fyi which tracks redundancies.

This year, including the latest Microsoft losses, the site says 26,061 tech
sector employees have already been made redundant.

Experts say there is still demand for job hunters with the right skills,
particularly engineers experienced in AI and data science.

But Kevin Poulter, an employment lawyer at law firm Freeths, warns
"employees affected by these cuts may struggle to secure alternative work in
light of similar reductions already announced across Meta, Amazon,
Salesforce and across the wider tech sector".-BBC

What happens if the US hits the debt ceiling?

The US is, once again, poised to run up against the country's debt limit.

That means that the government is not allowed to borrow any more money -
unless Congress agrees to suspend or change the cap, which currently stands
at almost $31.4bn.

Typically that is what happens.

Since 1960, politicians have moved to raise, extend or revise the definition
of the debt limit 78 times - including three just in the last six months.

But fresh tensions in Congress, where Republicans recently took control of
the House of Representatives and are calling for spending cuts, have raised
concerns that politicians will delay acting this time - potentially leading
the US to intentionally default for the first time in its history.

So what would happen?

What 'extraordinary measures' can the US take to avoid hitting the debt
limit?

For most of us, the impact should be barely noticeable - at least in the
first few months.

The US Treasury can manage the situation by taking what are dubbed
"extraordinary" measures to avoid actually breaching the limit. In the past,
this has included steps such as suspending investments it is supposed to
make into retirement and health benefit funds for federal employees - then
re-topping those funds at a later date.

But even delays do have a real price.

The stand-off on the issue in 2011 prompted the S&P credit ratings agency to
downgrade the country's rating - a first for the US.

Government analysts have estimated that delays that year caused the cost of
borrowing for the US Treasury to increase by at least $1.3bn, as investors
demanded higher rates due to the uncertainty.

Analysts are already expecting debate on the issue this year to make
financial markets jumpy.

Then, economic catastrophe

Treasury Secretary Janet Yellen has estimated that special measures can buy
time for the US until at least June, at which point the government will no
longer be able to pay its bills.

That is the scenario many analysts see as a true economic catastrophe.

In the event, some say authorities would have to do as much as they can to
avoid default. That would mean finding ways to make interest payments while
other obligations go unpaid, such as defence contractor payments; Social
Security cheques, received by retirees across the country; and salaries of
government employees, including the military.

Even something as basic as weather forecasts could be affected, since so
many rely on data from the government-funded National Weather Service.

A default could ruin the country's trustworthiness, roiling global financial
markets, where US debt is heavily traded and has traditionally been viewed
as low risk.

The dollar would weaken and borrowing costs would spike - at first for the
government but ultimately for the broader public, in the form of higher
interest rates for mortgages, credit card debt and other loans.

Getting to that point would be unprecedented, and cause widespread damage to
consumer confidence and the economy, which is already in a precarious state.

"Failure to meet the government's obligations would cause irreparable harm
to the US economy, the livelihoods of all Americans and global financial
stability" Ms Yellen warned recently.

Why has this become an increasing problem?

The debt limit was first introduced in 1917, as a way to give the government
flexibility to raise money during the First World War. In theory it gives
Congress a way to check in on spending.

But fights over the ceiling have become increasingly fractious, as political
polarisation increases and US debt has skyrocketed, roughly doubling in a
decade.

That is due in part to major government spending during the financial crisis
and the pandemic - but it is also a reflection of the fact that the country
has consistently run a budget deficit - spent more than it raised - every
year since 2001.

Now, the debt ceiling is a perennial political bargaining chip.

The 2011 fight over the debt limit was resolved when then-President Barack
Obama agreed to spending cuts worth more than $900bn - and the debt limit
was lifted by a similar amount.

Some Republicans are pushing for spending cuts again this time - a position
that Democrats have rejected.-BBC

Twitter's bird statue sells for $100,000 at auction

An auction for hundreds of items at Twitter's San Francisco HQ has just
ended.

A statue of the platform's famous bird logo has claimed the most expensive
item sold, coming in at $100,000 (£81,000).

Viewers online noted that some of the used items were no bargain, as they
were selling for more than retail.

The sale comes as owner Elon Musk cuts costs at Twitter following his $44bn
purchase of the company last year.

Since taking over in late October, Mr Musk has laid off around half of the
company's 7,500 staff.

He has also ended many of Twitter's perks, such as free meals.

Heritage Global Partners, the auction's administrator, did not publish the
auction's final results, but the BBC has collected several prices just
before closing.

A 190cm (6ft) planter in the shape of an @ symbol finished near $15,000
(£12,160).

There was also a custom reclaimed wood conference room table that closed
near $10,500 (£8,510).

>From its former coffee bar, Twitter sold a high-end La Marzocco Strada 3
espresso machine, retail $30,000 (24,300), for around $13,500 (£10,940).

On the lower end, Polycom conference call speaker phones were going for
about $300.

A still-in-box ergonomic standing desk kit was looking to fetch about the
same with two hours left to bid.

But some items seemed to sell for more than their street value - a moulded
plywood Eames chair from designer Herman Miller that normally retails for
$1195 went for at least $1400.

Mr Musk tweeted in November that the company had seen a "massive drop in
revenue" following the departure of several advertisers.

He also warned the firm could go bankrupt.

Twitter has allegedly failed to pay rent at offices around the globe,
including their San Francisco HQ, where their landlord is suing for
non-payment.

Nick Dove, a representative of Heritage Global Partners, the company
administering the auction, told Fortune magazine the sale had nothing to do
with recouping costs for the $44bn purchase, however.

"If anyone genuinely thinks that the revenue from selling a couple computers
and chairs will pay for the mountain there, then they're a moron," he
said.-BBC

Germany says it is no longer reliant on Russian energy

Germany no longer depends on Russian imports for its energy supply, the
country's finance minister has told the BBC.

Christian Lindner said Germany had completely diversified its energy
infrastructure since Russia's invasion of Ukraine last year.

Following the invasion, Russia turned off the gas taps to Europe, leading to
fears of blackouts this winter.

But Germany had found new sources of energy, Mr Lindner said.

"Yes, of course Germany is still dependent on energy imports, but today, not
from Russian imports but from global markets," he said.

Germany previously imported around half of its gas from Russia and more than
a third of its oil.

But Russia cut off the country's gas supply in August, while Germany halted
Russian oil imports at the start of the year.

In its race to find alternate sources of energy, the country has reopened
coal-fired power plants, delayed plans to shut down its three remaining
nuclear power plants, and pushed to increase capacity to store natural gas
imported from other countries such as Norway and the US.

At the World Economic Forum (WEF) in Davos, Switzerland, Mr Lindner pointed
to the speed with which a new liquefied natural gas terminal had been built
in Germany - in a record of around eight months, he said. More
infrastructure investments were planned, he added.

"This is only [one] example of the enormous change in German policies," he
said.

"We have understood that we have to foster our competitiveness after the era
of Chancellor [Angela] Merkel. That era was focused on, well, strengths of
the past, and now we are developing strengths of the future," he said.

Green trade war

Mr Lindner struck an optimistic note, suggesting there was "some evidence"
that inflation in Germany had reached its peak last year.

"Probably there's a faster recovery of the global economy and European
economies than expected," he said.

However, potential for a damaging trade row between the EU and the US over
green subsidies remains.

The US last year approved a massive $370bn (£299bn) in investments for
climate-friendly technologies, including tax credits for electric cars that
are made in America.

However, the law includes some "made in America" rules, which have raised
concerns in Europe that businesses outside the US will be put at a
disadvantage.

In a visit to Washington last month, French president Emmanuel Macron
criticised the US rules as "super aggressive".

Mr Lindner said he did not want to see the European Union start a trade war
with the US over those rules.

'Must not happen'

"We have to avoid any kind of competition - who is able to pay more
subsidies," he said. "It mustn't happen."

Mr Lindner's comments signal the challenges that lie ahead as Europe tries
to develop a response to the US climate law, which is officially called the
Inflation Reduction Act.

France has proposed responding with rival "buy European" incentives, and
European Union officials this week also promised "decisive" steps.

Mr Lindner said maintaining a level playing field was important, but he
wanted to see the two sides negotiate exemptions for companies or develop a
new trade deal, rather than try to out-subsidise each other.

"There is a threat for the level playing field and I take this seriously
but... we are spending and investing much more than the US-side so we don't
have to be afraid," he said.

"Some in the European context, they see the Inflation Reduction Act as the
occasion to introduce policies they've proposed in the past, and I think it
is an occasion to strengthen our competitiveness at the European level, make
further progress on capital markets union, to negotiate with the US side a
free trade agreement - but not pay more subsidies," he said.

Unlike the big French car companies, many German firms already have a big
presence in the US, including manufacturing plants.

The "made in America" rules have prompted a pushback even from some American
companies, many of which rely on parts manufactured in other countries.0BBC

Bitzlato crypto founder charged with $700m financial crimes

Authorities have seized cryptocurrency exchange Bitzlato, and arrested its
co-founder, accusing the firm of fuelling a "high-tech axis of crypto
crime".

The US Department of Justice charged Anatoly Legkodymov, a Russian national
living in China, with running a business that catered to what he once
described as "crooks".

They said Bitzlato processed more than $700m (£567m) in illicit funds,
breaking rules designed to thwart money laundering.

Mr Legkodymov was arrested in Miami.

"Institutions that trade in cryptocurrency are not above the law and their
owners are not beyond our reach," US Attorney Breon Peace said at a press
conference on Wednesday, announcing the arrest.

"As alleged, Bitzlato sold itself to criminals as a no-questions-asked
cryptocurrency exchange, and reaped hundreds of millions of dollars' worth
of deposits as a result. The defendant is now paying the price for the
malign role that his company played in the cryptocurrency ecosystem."

Since 2018, the Hong Kong-registered exchange had processed about $4.5bn
worth of crypto currency transactions, according to the complaint.

The firm required minimal identification from its users, allowing it to
become a "haven for criminal proceeds and funds intended for use in criminal
activity", prosecutors said.

They alleged that the firm was aware of the issues, citing an internal
document that described Bitzlato as handling "dirty money" without standard
customer-vetting procedures.

Authorities said the firm was closely connected to Hydra Market, a darknet
marketplace for drugs, money laundering and stolen financial information
that international authorities shut down last year.

Bitzlato claimed it did not accept US customers but prosecutors said it in
fact did "substantial" business with Americans.

US authorities worked with law enforcement in France and other countries on
the operation.-BBC

Starmer: UK will be 'open for business' under Labour

Labour's leader, Sir Keir Starmer, will tell business leaders in Davos that
a Labour government would do more to draw foreign investment into Britain,
especially in "green industries".

Sir Keir, attending the World Economic Forum meeting, said Labour would push
to "bring global investors back".

He said foreign investment had declined sharply under the Conservatives.

His predecessor, Jeremy Corbyn, shunned the elite gathering, which he
described as a "billionaires' jamboree".

But Sir Keir and shadow chancellor Rachel Reeves, who is also attending the
meeting of politicians, business people and other influential figures, have
taken a much more pro-business stance.

Ms Reeves said Labour would "work in partnership with business" to boost
investment.

"With Labour in government, Britain will be open for business," said Ms
Reeves.

Labour wanted to ensure the UK was "a world leader in the climate
transition", she added.

Foreign direct investment (FDI) involves money flowing into the UK from
overseas, for example when a foreign firm buys a British factory, or opens a
branch in the UK. It can create jobs and boost growth and productivity.

Labour said that foreign investment in the UK had declined while the
Conservatives have been in power since 2010, citing United Nations figures.

Between 1997 and 2010 the UK accounted for 8% of world FDI, but that fell to
4% between 2010 and 2021, the figures show.

In 2021, UK FDI accounted for 1.7% of world FDI, the lowest since records
began.

Labour has been determined to burnish its pro-business credentials under Sir
Keir, including courting the financial sector at Canary Wharf and promising
to improve trading relations with the EU.

Meanwhile, the UK government will be represented at Davos by Business
Secretary Grant Shapps and International Trade Secretary Kemi Badenoch.

Mr Shapps tweeted a video of himself on Wednesday saying alongside his warm
jacket for Davos, he would be packing a "vision for how we scale up Britain"
as the best place to start and grow a business.

He highlighted a survey conducted by accountancy firm PwC, published this
week which suggested that Britain was the third "most important" place in
the world for businesses to invest, behind the US and China

A spokesperson for the Treasury said: "As a central part of our plan to grow
the economy we are supporting business investment, including by permanently
setting the Annual Investment Allowance at its highest ever level of £1m
from April, and through our generous £13.6bn package of business rates
support."

The investment allowance allows businesses to offset investment against
their tax bill. The government announced the extra support for businesses
that pay rates in its Autumn statement last year.-BBC

Royal Mail restarts limited overseas post after cyber-attack

Royal Mail has restarted the export of parcels from a backlog, and will
accept new letters for overseas, as it tries to recover from a cyber-attack.

Parcels that have already been processed will start to be moved in "limited
volumes" the firm said.

But no new parcels should be submitted for now, it said.

Royal Mail was the victim of a ransomware attack last week, and it is still
working with security authorities "to mitigate the impact".

Ransomware is malicious computer software that encrypts data and locks up
systems. Criminals usually demand payment for releasing the data.

Last week, Royal Mail told customers they would not be able to send letters
or parcels overseas until the matter was resolved.

On Wednesday Royal Mail said it was trying out "operational workarounds",
but it asked customers not to send post yet that needs a customs
declaration.

Royal Mail is remaining tight-lipped about what is happening in its depot
centres around the country.

As a private company it is required to keep the authorities and regulators
informed about the situation, but it has chosen to say very little to the
public.

The firm is still referring to the cyber-attack as a "cyber incident" and is
refusing to say publicly that it is ransomware, days after reporters
confirmed it.

These distinctions matter because ransomware attacks often involve the
encryption, destruction or theft of company, and sometimes customer, data.

It also brings up the thorny issue of whether or not the company will pay
the cyber-criminals - something police forces the world over discourage.

The company won't say if it is negotiating with the hackers, but their
statement says they are "trialling operational workarounds" which implies
they are not paying the criminals.

But, as with many cases of ransomware, it won't be easy to know unless they
tell us.

2px presentational grey line

Firms that rely on posting items overseas have expressed irritation at the
impact on their business.

Sam Cannon, who sells her artwork abroad, said the latest statement would
not change exporters in her position.

"Everything needs a customs declaration, so nothing has changed for many
small businesses like mine.

"I've had to cancel all overseas sales right now, and have no idea when
things will be normal again with so few updates from Royal Mail."

However, she has some items stuck in transit, including original paintings,
that may now be delivered.

Royal Mail apologised for the disruption.

"Our initial focus will be to clear mail that has already been processed and
is waiting to be despatched," it said in a statement.

It said from 7:00pm on Thursday, customers can start sending international
letters which do not need a customs declaration.

It asked customers not to send international parcels.

Letters and parcels coming into the UK were affected by "minor delays" but
otherwise were operating normally and domestic postal services had not been
affected, it said.-BBC

HMRC trials answer by text system to cut call queues

Routine calls to HM Revenue and Customs will be answered by text, rather
than by a human, in a trial aimed at improving its customer service record.

>From Thursday, the tax authority will send a direct website link by text to
some people who want to find their reference number or reset a password.

It is expecting 170,000 calls this month with simple questions before the
self-assessment tax return deadline.

MPs have slammed HMRC for a poor call handling record over the years.

More than 12 million people are required to complete tax self-assessments
online before 31 January, but some are left frustrated by long waits on
HMRC's phonelines when trying to get help.

The trial will continue until the start of April, and is designed to free up
the call handlers for more complex issues.

A text answer will be triggered based on a customer's reason for calling.
Routine requests that will be answered with a text and a website link
include:

Callers will also be given the option to receive an online link or speak to
someone to deal with other inquiries such as help filling in their tax
return, getting a National Insurance by letter, or requests for income and
employment history.

Similar technology has been widely adopted by other businesses and services,
and is far from cutting-edge, but HMRC is battling against a poor customer
service reputation.

Earlier this month, the Public Accounts Committee of MPs said that taxpayers
and their accountants were receiving an unacceptable level of service from
HMRC.

The number of tax authority customer service staff has been cut from 25,500
to 19,500 in the last five years.

"We were surprised to learn that at times in the past, HMRC has simply
closed its telephone line when it could not cope with demand. It is not
acceptable not to answer calls from people who are trying to pay the
government money," the committee said.

It said that HMRC's plan was to move people onto better-received online
services, but it questioned whether this would reduce demand for phonelines,
improve the quality of service, or be appropriate for all circumstances or
customers.

Richard West, director of personal tax operations at HMRC, said:
"Redirecting these sorts of queries to online services should help customers
find the answer more quickly. It also means calls from customers during the
current self-assessment peak, whose questions cannot easily be answered
online and require help from an adviser, get the appropriate support they
need.

"Customers who cannot use digital services will be able to get support in
the normal way. This is available through our telephony service and through
our extra support team for those who have difficulty using our other
services."-BBC

Starmer: UK will be 'open for business' under Labour