1. Monarch nosedives, EasyJet soars
The collapse of Monarch Airlines on Monday has sparked the country’s “largest peacetime repatriation”, according to transport secretary Chris Grayling.
Approximately 110,000 customers will be flown back to the UK on 30 chartered planes, and 300,000 future bookings have been cancelled.
Monarch reported losses of £291m in October 2016 and had encountered significant challenges in recent months, including geopolitical turbulence and airline market competitiveness. Chief executive of the airline Andrew Swaffield said that terror attacks in Egypt and Tunisia and the “decimation of Turkey” had been key to Monarch’s downfall.
KPMG partners Blair Nimmo, Jim Tucker and Mike Pink have been appointed as joint administrators, with Nimmo hinting that dismantling the company would be the most likely course of action.
Gains for EasyJet
Amid Monarch’s collapse and Ryanair’s ongoing issues with flight cancellations and pilot resignations, EasyJet posted record passenger numbers on Friday and said that pre-tax profits for financial year 2017 were expected to be between £405m-$410m – the upper end of the guidance range.
“The market continues to be challenging and easyJet has had to absorb a significant currency impact of £100m in the year. However, easyJet continues to operate Europe’s strongest network and the current turmoil in the sector provides easyJet with opportunities to capitalise on its strong customer proposition and grow and strengthen our positions in Europe’s leading airports still further,” said Carolyn McCall, chief executive of EasyJet.
2. EC rules on Amazon tax breaks
The European Commission has ruled that Luxembourg granted illegal tax benefits of €250 million to Amazon – money that now must be recovered by the government.
Under EU state aid rules, EU Member States are prohibited from granting favourable tax treatment to selected companies, and must ensure that transactions between companies in a corporate group are carried out using the arm’s length principle – that is, in line with arrangements that take place between independent businesses.
The EC said that a Luxembourg tax ruling in 2003, which was prolonged in 2011, allowed Amazon to shift the majority of its profits from Amazon EU – which is subject to Luxembourg tax – to Amazon Europe Holding Technologies – a company not subject to tax.
The structure enabled Amazon to reduce its tax payments “without any valid justification”, resulting in the company being able to avoid tax on three quarters of profits from Amazon sales in the EU.
3. May’s speech makes Sterling splutter
Theresa May’s speech at the Conservative Party conference, alongside warnings from ratings agency Standard & Poor’s that the UK economy may not be ready for interest rate increases, have led to a fall in the pound.
Sterling dropped 0.4% to €1.12 against the euro on Thursday, and 0.9% against the dollar to $1.31.
May’s speech was dubbed “calamitous” by the media, and did little to alleviate growing concern that she may not hold on as prime minister for long.
In an eventful week for the government, Standard & Poor’s voiced concern that interest rate rises next month, as floated as a possibility by the Bank of England, could jeopardise the economy, and that talks of an increase were premature given the current Brexit uncertainty.
4. House prices on the climb
House prices have registered the fastest growth price in the last three months, since February, according to Halifax. Prices were 1.5% high between July to September than the three months between April to June. House price were also 4% higher than the same three months in 2016.
In terms of other housing activity, total UK home sales remained flat in August, although exceeded 100,000 for the eighth month in succession. However, mortgage approvals for house purchases fell by 2.7% between July and August to 66,580.
5. Fall in US employment
According to figures released by the US labour department on Friday, jobs fell by 33,000 despite experts expecting to see an increase. It’s the first time that employment has fallen since 2010 and the August and September hurricanes have been given as a key reason behind the fall.
US secretary of labour Alexander Acosta commented, “Even as parts of our nation recover from multiple devastating hurricanes, September’s jobs report reflects the resilience of the American economy.
“The bottom line is this: 154.35 million Americans are employed compared to 153.44 million the previous month, an increase of 906,000. The number of paychecks earned for the week of September 10th through 16th declined by 33,000, largely reflecting Irma’s devastating landfall on September 10th. The difference in these two numbers is that more Americans are employed, yet many missed a paycheck in September. These Americans are counted as employed for purposes of the employment survey but not for purposes of the jobs (payroll) survey. Thus, while more individuals are employed—which is why the unemployment rate decreased—33,000 fewer individuals received a paycheck for the survey period.”
The department also announced that unemployment fell to 4.2%, down from 4.4% in August, and average hourly earnings increased to 2.9%, up from 2.7%.