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Economy, business and finance

1 july 2022

Chinese layoffs
Two Chinese tech giants are laying off thousands of staff because lockdowns and regulations are eating into profits. Tencent, which owns the Activision Blizzard video game powerhouse, will be shrinking its workforce across all divisions at least until the end of the year, the WSJ reports, and Bytedance, parent of TikTok, is cutting hundreds of jobs in its gaming division. This is not as niche as it sounds. Officials are starting to see how Xi Jinping’s campaign to tame the tech sector, starting with Jack Ma’s Ant group in 2020, is hobbling growth nationally, and they’re already trying to ease regulations imposed as recently as last year. They could be too late. As the former Australian prime minister Kevin Rudd tells Andrew Neil in The Backstory, Xi is finding that “if you bugger up the economy, you bugger up everything else”. 

30 june 2022

Which? v airlines
British Airways is accused of telling customers they can get compensation after a five-hour delay when in reality they can get it after three. Ryanair is accused of blacklisting hundreds of passengers for credit and debit card “chargebacks” (when customers instruct their card issuer to halt or reverse a payment). The accuser in each case is Which?, the UK consumer magazine, which wants more powers given to the Civil Aviation Authority to fine airlines when they trample on consumers’ rights. TUI is also accused of misleading customers about their rights to compensation, and Simon Calder, the veteran air travel expert, told audience members at our ThinkIn last night they were entitled to hundreds of pounds in compensation for cancelled flights – money that BA and others appear to be denying they are required to pay under EU rules that continue to apply in the UK to flights to or from EU airports. Suggestion: do the right thing.

29 june 2022

EY on the naughty step
Ernst & Young has been fined $100 million by the Securities and Exchange Commission in the US after a whistleblower said auditors had been cheating in ethics exams. It’s the SEC’s largest-ever penalty for an accounting firm and twice as big as one levied on KPMG in 2019 when its staff were found to have been cheating on internal training tests. For a big four firm whose business depends on a reputation for probity to let staff cheat on ethics tests beggars belief, but that seems to be what happened: the size of the EY fine is partly a result of the firm’s failure to fess up promptly when the SEC asked if it had a problem; and partly because of a finding that a significant number of staff who didn’t cheat knew that others had and failed to report them.

28 june 2022

Another strike
About 1,500 British postal workers will go on a one-day strike in a dispute over pay. The Communication Workers Union, which represents some 3,500 members involved in the dispute, said its members rejected a pay offer which it said was worth 3 per cent from April this year, offered together with a £500 lump sum. The union described the deal as “woefully inadequate” and well below the current inflation rate of 9.1 per cent. The strike adds to a wave of industrial action disrupting the UK’s economy this summer. Last week rail staff staged their biggest strike in three decades over pay and jobs. Voters old enough to remember the last time unions took on a UK government with such determination – in 1984 – may be less likely to back it in the next election than they were 

27 june 2022

Russian default
Russia defaulted on its foreign debt last night for the first time since the Bolshevik Revolution, even though it has the money. Funds are pouring in from the sale of oil and gas to countries that don’t care about the war in Ukraine (and plenty that do), but sanctions prevent Russia getting money out: last month the US closed a sanctions loophole that had allowed American holders of Russian eurobonds to accept payments when they fell due. As a result, when a 30-day grace period expired yesterday Moscow was in technical default on about $100 million of interest payments. Russia’s finance minister calls the situation a farce, but nearly $1 billion more in interest payments fall due between now and the end of the year, and it was Russia’s decision to go to war. Long term, this could hurt.

Our ThinkIns