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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Brussels accuses Apple of breaking EU rules; Badenoch and Reynolds clash over business – as it happened

United Kingdom Unemployment Adzuna Inflation

Closing post

Time to wrap up….

Business secretary Kemi Badenoch has told UK business leaders they should not risk handing the economy to Labour.

Her opposite number, Jonathan Reynolds, has argued that businesses can’t risk another five years of a chaotic and unstable Conservative government.

Reynolds and Badenoch also clashed over the UK’s net zero plans, plans for apprenticeships, and were also quizzed about their leadership ambitions.

Here are today’s main stories:

Updated

The Bloomberg debate wrapped up with quick statements from the two protagonists.

Jonathan Reynolds goes first, saying businesses are facing too many serious challenges to risk another five years of a chaotic and unstable government.

“It’s time to return to a government that solves problems, rather than causing then”, he says, pledging to keep working with businesses after the election.

Kemi Badenoch says the difference between the two parties is that Labour want to bring in new laws that make it harder to hire staff, and to micro manage businesses.

Conservatives believe in capitalism, she pledges, the power of business to do good.

“We don’t think profit is a dirty word, and we are optimistic about our future,” Badenoch concludes.

Updated

Badenoch and Reynolds on leadership ambitions

And finally…

Q: Bloomberg turns to its guests’ leadership ambitions.

Jonathan Reynolds gets the giggles, turning red, before insisting he is “very much focused” on becoming the secretary state for business and trade.

Keir Starmer has done a “quite exceptional” job of turning Labour around, he adds.

Kemi Badenoch (who has been cited as a potential leader if the Conservatives are hammered in next month’s election) says the question was obviously meant for her (getting Reynolds guffawing).

Badenoch says she stood for the leadership before, and lost, and is now “terrified” at the prospect of Labour coming into power.

She insisted there was “no better job” than Business and Trade Secretary, which “is a lot easier and a lot less pressured than being prime minister”.

Q: Some cabinet ministers may lose their seats… would you be up for the leadership challenge if it came up?

Badenoch says leadership issues will be discussed after the election, not before….

That doesn’t exactly rule out a Badenoch bid… and appears to leave the door open for one….

Updated

Q: Should Thames Water be nationalised?

Kemi Badenoch says Thames Water is a “very, very difficult” situation; she doesn’t want to move markets by discussing nationalisation while it is going through difficulties.

Reminder: The Guardian reported in April that the government was considering radical plans to renationalise Thames Water, under which most of its £15.6bn debt would be added to the public purse.

The palava with Thames Water shows that the UK’s regulatory system is not working well, as the company tries to make a profit, keep bills low, and invest in infrastructure.

Jonathan Reynolds says people are unhappy about the state of the UK water industry.

Reynolds hopes that nationalisation can be avoided, pointing out that investment must involve losing as well as gaining money.

Reynolds: Shein London listing would help regulate company

Onto topical issues.

Q: Have you met with Shein, and would you put any restrictions if they chose to list in the UK [a decision which is moving closer…].

Jonathan Reynolds says Labour have met with Shein. Many people who are considering economic activity in the UK have spoken to Labour in recent years, he explains.

His view is that if companies are doing businesses in the UK, they should be regulated from the UK.

So, a listing would be the way to enforce the “highest standards” on, for example, the labour market, regulatory compliance, or tax.

Any listed company in the UK has a fairly significant set of compliance placed upon them.

If you are keen to see businesses operating to the highest standards, you should want to see them do that from the UK.

Kemi Badenoch, the current business and trade secretary, reveals she has NOT met with Shein.

She has two concerns with a potential Shein listing in London.

1) The way Shein ships individually packaged orders directly from Chinese warehouses to consumers’ homes, meaning they fall below the £135 threshold for import duty

“That could mean quite a lot lost in terms of taxes,” Badenoch says.

2) Concerns that Shein are using forced labor in Xinjiang.

Q: What’s your policy on money from the Middle East and China?

Jonathan Reynolds says Labour is extremely keen to bring in overseas investment.

The Gulf is an “obvious place to look for that” money, he says, while China brings different considerations in terms of national security.

Labour will hold an investment summit in its first 100 days of power, he says, and ‘make the case’ for investing in Britain.

Reynolds says many of Labour’s plans come from the “reasonable complaints” of businesses who said they considered investing in the UK, but were put off by the prime minister changing, or because they didn’t know the country’s plans post-2016 (the year of the Brexit vote).

Kemi Badenoch says the UK already has the largest foreign domestic investment of an European country.

Updated

Q: What will you do to help small businesses get paid on time?

Kemi Badenoch says it is “extraordinary” how larger corporations treat smaller firms in their supply chain. “We will look again” at more regulations to speed up payments, she pledges.

Jonathan Reynolds says Labour would force the audit committees of large public companies to say how quickly they pay their suppliers – that would address the power inbalance that allows them to leave small firms waiting for money….

Kemi Badenoch is then asked about why more trade deals haven’t been signed.

Badenoch says the US government is not signing any free trade deals at the moment, so the UK has been signing agreements with individual US states instead.

It has been “very difficult” negotiating with India, she adds; any deal with Delhi has to work for business.

Jonathan Reynolds says Labour will improve the UK’s relationship with the European Union – starting with it not being governed by the internal politics of the Conservative Party.

He says Labour will seek to reduce checks on food and agricultural products, and to improve the mutual recognition of professional qualifications.

Reynolds argues that ‘relitigating the arguments on the customs unions or the single markets would not provide the stability Britain needs.

Q: The EU say they’re open to negotiating a deal to ease border friction for fresh food, for example, but it must have a role for the European Court of Justice. Will you accept that?

Reynolds says Labour won’t give away its negotiating hand. But surely, if you don’t want lower food standards than the EU, you can remove some of the trade frictions and costs.

Kemi Badenoch says the Conservative government tried to strike such a deal, but the EU wouldn’t accept it. She insists the UK can’t accept oversight by the ECJ.

Onto Brexit!

Q: What is your top proposal to cut costs for businesses exporting to the EU?

Kemi Badenoch claims that it’s hard to tell the impact of Brexit, versus the impact of the pandemic.

But she insists that services exports have been “going gangbusters”, making the UK the 2nd largest services exporter, and the 4th largest exporter in the world.

“Those are facts”.

Well….. this thread from Sky News’s Ed Conway shows that the picture is not quite as rosy as that:

Reynolds: Need to escape low-growth, high-tax, poor-services doom loop

Next issue – fiscal issues, and the IMF’s warning that both major parties’ manifestos are too opaque and lack detail on tax and spend.

Q: They say voters will be voting in a knowledge vacuum….

Kemi Badenoch says she “completely disagrees” with IFS’s assessment.

The truth is that people are not placing their votes based on the IFS’s analysis, but actually base it on what a party believes in, and what its values are.

She says the mini-budget showed the problems of cutting tax without cutting spending.

We are the party of sound money, of business, Badenoch promises.

Jonathan Reynolds says he respects the IFS…. and agrees that the Conservatives record speaks for itself (!).

Taxes are at a record high, and public services don’t reflect that tax burden.

The key is to break out of this low-growth, high-tax, poor-services doom loop, Reynolds says – and that’s Labour’s plan.

He says the UK would have billions of pounds more, if the economy had grown at the rate of the last Labour government.

Q: Are you ready to fight interest groups which won’t like the planning changes you have in mind?

Reynolds says that’s why Labour needs a mandate, so it can build the homes and infrastructure Britain needs.

Kemi Badenoch disputes this claim, pointing out that Labour members of the House of Lords had blocked the government’s attempts to remove nutrient neutrality rules, and free up housebuilding.

Reynoldsd defends Labour's plans for workers rights

Next, a question on Labour’s plans for more protection against unfair dismissal, and ending zero-hours contracts.

Q: Is a Labour government going to make life much harder for small businesses?

Jonathan Reynolds says Labour’s manifesto is “a pro-worker, pro-business” agenda, that – he says – has been developed closely with businesses.

That includes a better business environment, changes to planning rules, certainty on tax, that will deliver more growth.

Reynolds adds that “The floor will rise”, but insists the vast majority of businesses are already operating at a much higher level than this new, higher floor already.

Kemi Badenoch hits back, saying it’s businesses don’t want these measures. She claims it’s “unbelievable” that Reynolds claims these new regulations have been developed with businesses.

She insists:

Businesss is terrified of what Labour is selling.

Badenoch says Labour’s plans for employment rights from day one are unpopular, and that the CEOs of Asda, Currys [see here] and M&S have said these are “terrible regulations”.

Reynolds returns fire, saying that the Conservative Party promised an employment bill after Brexit, and security in the workplace, and hasn’t delivered on it.

Labour, he says, will create a better working environment, one where people have secure work they can build a family round.

Badenoch won’t accept this, telling business leaders they should be “absolutely terrified” of “surrendering” your business, the economy, and tax, to Labour.

Badenoch argues that Labour are “fishing in an empty barrel”, and that flexible working rights are not the cause of problems in the UK economy.

Updated

Jonathan Reynolds agrees that governments must change their plans when circumstances change…

…and blames Liz Truss’s “disastrous mini-budget” for forcing Labour to drop its £28bn green investment plans.

He then returns to his criticism of Rishi Sunak’s climate u-turn speech last September, in which the PM pushed back the deadline for selling new petrol and diesel cars and the phasing out of gas boilers.

That was a “short-lived relaunch of the Rishi Sunak premiership”, Reynolds says, to pitch the PM as a change candidate.

Badenoch: So many difficulties with US election candidates

Kemi Badenoch then explains that governments respond to changing circumstances and instability – citing elections in Europe, and across the Atlantic.

In an apparent criticism of both Donald Trump and Joe Biden, Badenoch declares:

Look at what is happening in the US – we don’t even want to talk about the candidates that they’ve got for election, so many difficulties.

This uncertainty is all over the world, and we have managed to keep our economy growing.

[er, there was a shallow recession last year….]

The point about net zero, Badenoch adds, is that it can be an opportunity, but other things need to be delivered too, on a “no regrets” basis.

The CBI get the next question:

Q: Is the transition to Net Zero a growth opportunity to be seized, or a cost to be mitigated?

Labour’s Jonathan Reynolds insists it’s one of the greatest opportunities that have ever existed for the UK.

The transition could address regional inequality, and some of the long-standing problems in the UK economy, he says.

Government’s job is to build and shape the markets that the private sector will work in, he insists.

He criticises the government for chopping and changing its own policies, and claims that Rishi Sunak’s climate u-turn speech last autumn was ‘dishonest’, as it talked about the costs today rather than the markets that are being built around the cost of transition.

Investors need certainty, he says, and they don’t have it at the moment.

Badenoch, though, says net zero is both an opportunity and a cost.

She says there was cross-party agreement on net zero, before Covid and the War in Ukraine has changed the landscape.

That’s why the PM made his announcement last year, she says, because circumstances changed.

And she takes a swipe at Reynolds’ criticism of Sunak’s u-turn last year, saying:

To say that is dishonest, is to just show a lack of understanding of the reality of governing.

Jonathan Reynolds says he’d be “extremely worried” if Conservatives politicians were to pick which degrees had value.

It would be another Culture War issue, he warns.

Reynolds adds that the UK should be proud of its higher education sector – he wouldn’t want fewer young people in his constituency at Greater Manchester to go to university.

Kemi Badenoch hits back on that last point – insisting the Conservatives do value higher education.

But, if businesses tell us that the skills coming out of higher education are not the skills we need, we need to ‘re-orientate what we’re doing’, Badenoch explains.

Q: so it about certain degrees that are not worth doing, or is it about what you could do instead?

Badenoch says it’s both, saying the Conservatives want to reduce the courses where students end up earning less than if they’d not gone to university at all.

Updated

So over to Jonathan Reynolds!

He confirms that Labour’s flagship policy is to reform the apprenticeship levy, so that businesses can use some funds to other forms of training.

He points out that the number of apprenticeships has declined, so giving businesses some flexibility makes sense.

[Explainer: Under current rules, larger firms must give 0.5 per cent of their total payroll to HMRC, which can be claimed back to spend on apprenticeships.

But the funds can only be spent on apprenticeship training and assessment with a training provider; the Treasury reclaims unspent levy money].

Reynolds adds that Labour want further education colleges specialise, and become technical excellence colleges.

Reynolds also says he often worries about “the denegration of higher education by this Conservative government.

We should be a country that can recognise the contributions that both sectors bring.

Onto questions, first on skills.

Q: The lack of skilled workers is the top issues hurting British businesses, according to the Institute of Directors. How will you fix it?

Kemi Badenoch says we are in an era where the skills needed to grow the economy is changing, and that the government has invested £3.6bn in this.

She says the government wants to make sure people can take apprenticeships to learn practical skills, rather than the “university degrees that some are taking that don’t necessarily deliver what we need for economic growth”.

She says she’s worried by Labour’s plans, saying its apprenticeships reforms are unfunded….

Kemi Badenoch speaks next, saying business has a clear choice at the next election.

She tells the audience at Bloomberg:

The Conservatives, who are the party of entrepreneurs and wealth creators, or Labour, the party of trade unions and a big regulatory state.

Badenoch says business owners need to think who is better for them, and their business.

She points out that the last decade has been “the toughest” for businesses globally – starting with the aftermath of the global financial crisis, which was followed by the Covid-19 pandemic.

Badenoch says:

We’ve been challenged by a war in Europe that has raised energy costs at the same time that we decided to deliver net zero, which I know is a cost to business, while delivering an exit from the European Union, which the people voted for.

Badenoch says it has been a time of “extreme global turbulence”, but inflation has been brought down, and the UK is forecast to grow faster than France, Italy, Germany and Japan over the next four years.

She adds:

Now is not the time for more uncertainty by handing the economy to Labour.

Watch Badenoch vs Reynolds business debate

You can watch the debate between Kemi Badenoch and Jonathan Reynolds here:

Badenoch and Reynolds face off on Bloomberg

Bloomberg are hosting a debate now between business secretary Kemi Badenoch and her Labour opposite number, Jonathan Reynolds.

Reynolds speaks first, declaring that there’s no reasonable argument for the Conservative’s to remain in office.

He says:

The last 14 years have been marked by political chaos, by economic stagnation and – too frequently – by improper behaviour.

Business and investors need stability, and that only comes with a change to a Labour government, Reynolds pledges.

Reynolds adds that Labour have an agenda to get Britain moving: planning reform, an industrial strategy, ambitions on green energy, and a “pragmatic, good-faith” relationship with the EU.

He adds reforming the apprentive levy, business rates, and an agenda for small businesses, to that list of plans.

Reynolds says Labour is hugely appreciative of the support it has received from businesses, adding:

Together we can turn the page on the last few years, look to the future, and start to rebuild Britain.

Updated

Chinese online fashion company Shein has moved a little closer to floating on the London stock market.

Reuters is reporting that Shein confidentially filed papers with Britain’s markets regulator in early June for a potential London listing, according to two sources.

A Shein float would be one of the largest IPOs globally this year, as the company’s value has been estimated at £52bn.

Shein had initially hoped to float on the US markets, but has now pivoted to London having faces many hurdles across the Atlantic as relations between Washington and Beijing have worsened.

Taiwan’s manufacturers are having a bumper year, helped by strong demand for semiconductors from the AI sector.

Taiwan’s industrial production growth rose to above 16.1%, year-on-year, in May, beating forecasts.

This is the fastest growth since highest level since July 2021, which was affected by base effects from the pandemic.

ING economist Lynn Song says:

The strength of Taiwan’s industrial production has been concentrated in several sectors. Computers, electronics, and optical products (31.8% YoY) once again led the way in May for the second consecutive month, while electronic parts and components (29.3% YoY) also continued to outperform, driven by the semiconductor (41.0% YoY) subindex.

Given semiconductors account for over a third of Taiwan’s total industrial production weight, the strong demand for semiconductors amid the AI boom has been a core pillar of the recent recovery of industrial activity.

UK manufacturers are hoping for a “modest” rise in output over the next quarter.

The latest industrial trends survey from the CBI has found that output volumes were broadly unchanged in the three months to June, leaving factory bosses expecting a slight pickup over the next three months.

The long-running poll also found that total order books improved in June compared with May, but were still below normal.

Less encouragingly, export order books were also seen as below normal and deteriorated relative to May.

London Tunnels to float... in Amsterdam

London Tunnels, a company that plans to turn Second World War tunnels in the UK capital into a tourist attraction, has ditched plans to float in the City.

Instead, London Tunnels has decided to raise money by floating on the Amsterdam stock exchange.

London Tunnels plans to restore the Kingsway Exchange Tunnels in Central London, originally built in the early 1940s, and designed to shelter people during the London Blitz.

Back in January, it announced it intended to float on the London Stock Exchange, saying it was right that the tunnels – which it has agreed to buy – should be listed in London.

But it has now dropped those plans in favour of an IPO on Amsterdam’s Euronext, in a blow to the capital’s public markets.

London Tunnels hopes to raise £30m, and be valued at £130m.

The float prospectus, though, warns that its plans could be delayed if it can’t get the full planning permission it needs to turn the tunnels into a tourist attraction that can accommodate three million visitors per year.

Other risks include the possibility that it doesn’t manage to acquire the leasehold of the Tunnels, or that the “structural integrity of the Tunnels” may be affected by their age or other factors.

Full story: Apple found in breach of EU competition rules

Apple has been found to be in breach of sweeping new EU laws designed to allow smaller companies to compete and allow consumers to find cheaper and alternative apps in the tech business’s app store.

The European Commission, which also acts as the EU antitrust and technology regulator, said it had sent its preliminary findings to Apple following an investigation launched in March.

In preliminary findings, against which Apple can appeal, the European Commission said it believed its rules of engagement did not comply with the Digital Markets Act (DMA) “as they prevent app developers from freely steering consumers to alternatives channels for offers and content”.

In addition, the commission has opened a new non-compliance procedure against Apple over concerns its new contract terms for third-party app developers also fall short of the DMA’s requirements.

More here:

IFS: UK faces hard choices on tax, debt and public services

Back in the UK, the Institute for Fiscal Studies is warning that the UK’s public finances face a “toxic mix”, with debt at a 60-year high, taxes near an all-time high, and public services visibly struggling.

In its analysis of the political parties manifestos, the IFS says spending on many public services will likely need to be cut over the next five years if government debt is not to ratchet ever upwards or unless taxes are increased further.

The IFS say this is due to high debt interest costs, a growing welfare budget, and rising spending on health and defence.

It accuses the two main parties of largely ignoring these raw facts.

IFS director Paul Johnson explains:

We need more efficient and effective public services. We need a government laser-focused on improving our economic performance. It’s good to see those facts acknowledged. But on the big issues over which governments have direct control - on how they will change tax, welfare, public spending - the manifestos of the main parties provide thin gruel indeed. On 4 July we will be voting in a knowledge vacuum.

If - as is likely - growth forecasts are not revised up this autumn, we do not know whether the new government would stick roughly to the day-to-day and investment spending totals set out in the March Budget, or whether they would borrow more or tax more to top them up. If they were to stick to spending plans we do not know what would be cut. If taxes are to go up, we do not know which ones. We certainly don’t know how they would respond if things were to get worse.

The choices in front of us are hard. High taxes, high debt, struggling public services, make them so. Pressures from health, defence, welfare, ageing will not make them easier. That is not a reason to hide the choices or to duck them. Quite the reverse. Yet hidden and ducked they have been.

You can watch the IFS’s briefing here.

ING: The German recovery is still stuttering

Today’s Ifo business confidence survey shows that the German recovery is still stuttering, says Carsten Brzeski, global head of macro at ING.

Brzeski explains:

Germany’s most prominent leading indicator, the Ifo index, dropped to 88.6 in June, from 89.3 in May.

After three consecutive increases at the start of the year, business confidence has weakened again, illustrating that the cyclical bottoming out will not automatically be followed by a strong recovery. Today’s Ifo index weakening was exclusively driven by declining expectations, while the current assessment component remained unchanged, albeit at a low level.

A strong rebound for this year remains highly unlikely, Brzeski fears, citing the Euros as an example:

To some extent, since the start of the year, the German economy has gone through similar phases as the German national football team at the European Championships so far: too much enthusiasm about a good start to the tournament only because the years before had been miserable: a painful reality check in the first 89 minutes in the match last night against Switzerland, followed by a blast of euphoria after scoring in the very last minute.

Euphoria after a draw, not after a win; it’s a new reality, both in German football and for its economy.

German business sentiment darkens in June

Elsewhere in Europe, gloom is rising at German companies.

German business morale has fallen this month, according to the Ifo Institute for Economic Research, whose business climate index has fallen to 88.6 points this month, down from 89.3 points in May.

IFO reports that business expectations have weakened, at a time when Germany’s economy is struggling to overcome stagnation.

The report found that factories are being hit by a fall in orders, an issue which is also hurting building firms.

Clemens Fuest, president of the ifo Institute, explains:

In manufacturing, the business climate declined after three rises in a row. Companies were again more skeptical for the months ahead. They were particularly concerned by the declining order backlog, but were somewhat more satisfied with current business.

In the service sector, the index rose. Service providers assessed their situation more positively. The outlook for the second half-year also continued to brighten. Sentiment in the hotel sector, in particular, improved, while the hospitality sector expressed dissatisfaction.

In trade, the business climate deteriorated considerably. Regarding expectations, skeptical sentiment increased markedly. Assessments of current business have been corrected downward. Both wholesalers and retailers were equally impacted by the negative development.

In construction, the index rose slightly. This was thanks to less pessimistic expectations. However the current situation was assessed as worse. A lack of orders remains a core problem.

Elsewhere, another day, another accusation by European regulators that Apple is breaking its tech rules, says Kathleen Brooks, research director at XTB, adding:

This time the EU Commission said that Apple is breaching its rules because it does not allow customers of its App store to be steered to alternatives.

Apple seems to be on a merry-go-round of EU regulatory scrutiny.

It’s share price is up slightly in pre-market trading, however, the intense regulatory focus on Apple in recent years is one of the reasons why the stock is lagging the performance of other tech titans, and why it is the second weakest performer in the Magnificent 7 so far this year.

Filomena Chirico, who leads the implementation of the Digital Markets Act, has posted that no company should feel it is above the law because they are “big and powerful, shiny and cool”.

‘Big’, ‘powerful’ and ‘shiny’ are fair enough, but ‘cool’? Brussels journalist Catherine Feore has doubts:

Vestager: Today is a very important day for DMA enforcement

Today is a very important day for the effective enforcement of the Digital Markets Act, declares Margrethe Vestager, Executive Vice-President in charge of competition policy at the EC.

Vestager says:

Our preliminary position is that Apple does not fully allow steering. Steering is key to ensure that app developers are less dependent on gatekeepers’ app stores and for consumers to be aware of better offers.

We have also opened proceedings against Apple in relation to its so-called core technology fee and various rules for allowing third party app stores and sideloading. The developers’ community and consumers are eager to offer alternatives to the App Store. We will investigate to ensure Apple does not undermine these efforts.

The EC's case against Apple

The European Commission’s latest concerns about Apple fall into two camps.

  1. The EC has informed Apple that it has taken a preliminary view that App Store rules breach the Digital Markets Act (DMA), as they prevent app developers from freely steering consumers to alternative channels for offers and content.

  2. The EC has opened a new non-compliance procedure against Apple over concerns that its new contractual requirements for third-party app developers and app stores, including Apple’s new “Core Technology Fee”, do not comply with the DMA.

On the first point, the EC says that Apple is making it hard for developers to tell customers about alternative cheaper purchasing possibilities, steer them to those offers and allow them to make purchases.

It says that none of Apple’s business terms allow developers to freely steer their customers, and that the fees charged by Apple when a developers acquires a new customer through the AppStore go beyond what is strictly necessary.

On the second point, the EC will investigate whether Apple’s new contractual terms for developers comply with the DMA.

It cites three concerns:

  1. Apple’s Core Technology Fee, under which developers of third-party app stores and third-party apps must pay a €0.50 fee per installed app. The Commission will investigate whether Apple has demonstrated that the fee structure that it has imposed, as part of the new business terms, and in particular the Core Technology Fee, effectively complies with the DMA.

  2. Apple’s multi-step user journey to download and install alternative app stores or apps on iPhones. The Commission will investigate whether the steps that a user has to undertake to successfully complete the download and installation of alternative app stores or apps, as well as the various information screens displayed by Apple to the user, comply with the DMA.

  3. The eligibility requirements for developers related to the ability to offer alternative app stores or directly distribute apps from the web on iPhones. The Commission will investigate whether these requirements, such as the ‘membership of good standing’ in the Apple Developer Program, that app developers have to meet in order to be able to benefit from alternative distribution provided for in the DMA comply with the DMA.

You can read more here.

Apple has said it had “made a number of changes to comply with the DMA in response to feedback from developers and the European Commission”.

It added (via the FT):

“We are confident our plan complies with the law, and estimate more than 99 per cent of developers would pay the same or less in fees to Apple under the new business terms we created.”

Brussels accuses Apple of breaking EU rules

Newsflash: Brussels has accused Apple of restricting competition on its app store.

European commissioner Thierry Breton has announced that the EU will take action against Apple under its new digital regulations, the Digital Markets Act.

Posting on X, Breton says:

For too long Apple has been squeezing out innovative companies — denying consumers new opportunities & choices.

Today we are taking further steps to ensure AppStore & iOS comply with the DMA.

The EU are also investigating whether Apple’s developer fees breached the bloc’s rules, the Financial Times reports, adding:

As part of the new probe into developer fees, Brussels said it was looking at whether Apple was imposing too many restrictions for users to download and install alternative app stores.

Mortgage of first-time buyer tops £1,000 a month as house prices and rates rise

Speaking of misery….the monthly mortgage of a first-time buyer has soared by more than 60% to exceed £1,000 a month since the last general election.

That’s according to figures from Rightmove that underline the financial challenge facing Britons trying to gain a foothold on the housing ladder.

Over the last five years, the average mortgage payment for a typical first-time buyer in Great Britain has risen by 61% to £1,075 a month, up from £667 in 2019, according to the property website Rightmove.

The increase of about £400 a month is linked to the march of house prices and interest rates, which have heaped financial pressure on borrowers, whose average wages have grown by just 27% over the same period. The financial squeeze has forced many younger borrowers to either look for smaller properties or to take out an ultra-long mortgage.

More here:

PepsiCo to waive clause in bottling deal as Carlsberg ponders Britvic bid

Shares in Britvic have jumped 7% in early trading, after suiter Carlsberg removed one hurdle to a potential takeover.

Carlsberg has told the City that drinks giant PepsiCo has agreed to waive the change of control clause in the bottling arrangements it has with Britvic.

This waiver will come into effect if an acquisition of Britvic by Carlsberg proceeds to completion.

Last Friday, Robinsons maker Britvic announced it has rejected two takeover approaches from Carlsberg, but a further bid is still possible.

Currently, Britvic has a bottling agreement with PepsiCo giving it exclusive distribution and sales rights for all of the US company’s brands, including 7Up and Lipton Iced Tea, until 2040. But it includes a change-of-control clause that would allow PepsiCo to end the deal, making Britvic less attractive as a takeover target, The Sunday Times reported.

Carlsberg says today that it is “considering its position”, adding “There can be no certainty that any offer will be made”.

Britvic shares are up 7.3% at £11.74, having hit an alltime high this morning.

Updated

Ouch indeed! Shares in SIG have tumbled 22% at the start of trading in London to a four-year low, after the building supplies firm’s profit warning this morning.

Updated

UK building supplies firm SIG warns on profits

A slowdown in demand across parts of Europe has hit UK building supplies firm SIG.

SIG has warned shareholders this morning that profits will be well below expectations for this financial year, saying that market conditions have remained challenging.

The company has blamed a slowdown in the French and German markets.

Demand has also been weak in “the end markets of our UK Interiors business”, SIG adds, a sign that Britons may be cutting back on home improvement amid the cost of living squeeze.

It adds:

Whilst we continue to see more robust demand in our Poland, Ireland and UK Exteriors businesses, Group sales overall were weaker than expected in May and June to date.

SIG now expects full year underlying operating profits of £20m-£30m, which is below the current analyst range of £36.7m to £43.0m.

It hopes that sales will pick up in the second half of this yeara, but cautions:

The extent of this improvement is subject to the evolution of demand conditions, particularly given market uncertainties in France and Germany, and recognising the sensitivity of operating profit to relatively small movements in sales.

Updated

Mike Ashley's Frasers buys THG's portfolio of luxury goods websites

Mike Ashley has pulled off another retail deal.

Ashley’s Frasers Group has struck a deal to buy a portfolio of luxury goods websites form UK e-commerce firm THG

The two companies have also agreed a partnership across several areas including with THG Ingenuity, the online platform that serves third-party brands, and online sports nutrition brand Myprotein.

Salary offers dip for first time since October

Advertised salaries for UK jobs have fallen slightly for the first time since last autumn, according to new research which suggest the jobs market is weakening.

Jobs site Adzuna reports this morning that the average salary being offered for advertised vacancies fell by 0.1% in May, on a monthly basis, to £38,765, down for the first time since last October.

Adzuna says:

While slightly weaker salaries could help relieve some of the tightness in the UK labour market, it may also suggest increasing vacancies for entry or junior-level roles with lower salaries.

On an annual basis, salaries were 2.69% higher than in May 2023, following the rise in the National Living Wage to £11.44/hour at the start of April.

The report also found that. vacancies were increasing for teachers but falling for nurses and healthcare staff.

Andrew Hunter, co-founder of Adzuna, says:

“Hopes that a return to growth in Q1 would result in greater confidence in hiring were not reflected in job vacancies in May, which remained essentially flat. However, there were slight increases in roles in Travel, Teaching and Manufacturing - areas where there have been some entrenched staff shortages.

“The UK job market has been met with resistance in the past few months but the upcoming general election may have the potential to salvage the situation. Any outcome is likely to move the needle on the sluggish job market, with both the Conservative and Labour parties pledging to create more jobs. Sectors highlighted in their manifestos, such as Healthcare & Nursing, Energy, Oil & Gas, and Manufacturing, all experienced a vacancy drop of more than 20% year-on-year as of May 2024.”

Key event

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Britain’s Misery Index is tipped to rise later this year and through 2025, giving the next government an early headache.

Unemployment is set to increase further, puncturing the boost from inflation having fallen back to normal levels this year.

That means the Misery Index — dreamed up in the 1970s to capture the combined impact of unemployment and inflation on the population — is likely to worsen over the next 18 months.

The UK unemployment rate has already risen to its highest level in two and a half years, at 4.4% in the February-April quarter. It is forecast to keep rising; the Bank of England estimates it will average 4.6% in the second quarter of 2025, and rise further to 4.8% in Q2 2026 and 2027.

Bloomberg has calculated that this will push up the Misery Index to around 7.5 points over the first 18 months of the next government, up from six points at present.

The Misery Index has been falling under Rishi Sunak’s premiership, having hit a painful 15 (the worst since the 1990s) under Liz Truss’s administration in autumn 2022, when inflation was a 40-year high.

Andrew Oswald, a professor of economics and behavioral science at the University of Warwick, told Bloomberg:

“We still have quite strong underlying wage inflation, unemployment will have to rise to reestablish the equilibrium.

“That will be much more painful than inflation has been.”

Both major parties are promising to help working people, if they win next month’s election. Labour’s pledges include delivering a genuine living wage, updating trade union legislation, banning exploitative zero hour contracts and ending fire and rehire tactics.

The Conservatives are promising another cut to national insurance rates, maintaining the National Living Wage at two-thirds of median earnings, and creating 100,000 more apprenticeships in England every year by the end of next Parliament.

But without a pick-up in growth, economists fear unemployment will rise as firms lay off some of the staff they have been hoarding in recent years.

As Hetal Mehta, head of economic research at St. James’s Place, put it:

“Ten to fifteen years ago, if you said to people unemployment is going to be 5%, they would’ve said that’s a great outcome, but now we’re talking about unemployment rising from what was a much lower point.

It will be a difficult message for any new government to manage.”

More here: UK’s Next PM Faces Rise in Economic Misery Right After Election

The agenda

  • 9am BST: IFO German business climate index

  • 10am BST: IFS to publish analysis of the General Election manifestos

  • 11am BST: CBI industrial trends survey of UK manufacturing

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