The business stories that matter today
Monday news review
Hello everyone and welcome to Off to Lunch. In this edition I want to do a quick run-through of the business news that matters in the UK today and share some great articles with you…
1. Meta, the owner of Facebook, has been hit with a record €1.2 billion fine by the European Union for breaching data laws. In simple terms, the EU is alleging that Meta moved data on its European users to the US without ensuring that they would be protected from data surveillance in the US. It’s a breach of the GDPR rules (General Data Protection Regulation) that we hear so much about, which affects the UK too. The size of the fine reflects the size of the allegations. One has to wonder, if this was Chinese-owned TikTok being fined, what sorts of questions would we be asking? Also, this is another example of the tensions between the EU and the US on tech regulation (with the UK somewhere in between) and Europe’s efforts to take the lead. The previous record fine in Europe was €746 million for Amazon in 2021. Nick Clegg, Meta’s president of global affairs, and the former deputy prime minister, said: “This decision is flawed, unjustified and sets a dangerous precedent for the countless other companies transferring data between the EU and US.” You can read the Financial Times’s take on the story here.
2. Shares in Ryanair are up more than 2 per cent after it published full-year results. The budget airline said annual revenues more than doubled from €4.8 billion to €10.8 billion in the year to March 31, helping it move from a pre-tax loss of €430 million last year to pre-tax profits of €1.44 billion. There are some interesting comments from chief executive Michael O’Leary, as usual. The airline is targeting a 10 per cent rise in passenger numbers over the next 12 months, although this could be impacted by delays in getting new planes for Boeing. O’Leary said Ryanair is “cautiously optimistic that revenue will grow sufficiently to cover our €1 billion higher fuel bill”. On consumer trends, he added:
"There is no doubt in my mind that people who have been locked up for the two years of Covid are going back travelling. They see travel not as a luxury but as an essential and families are returning to the beaches of Europe this summer.”
This is how the company’s share price has performed over the last 10 years relative to the FTSE 100. Ryanair is blue and the FTSE 100 is white. It’s been a rocky road - and the performances over the last five years are broadly the same - but Ryanair is well ahead of the FTSE over the last decade.
For more on Ryanair check-out an interview with O’Leary in the FT today in which he says the airline wants to carry 300 million passengers a year by 2034, more than any airline has ever done. He says:
“As long as we don’t do something stupid — which is a daily challenge in this industry — we will continue to wipe the floor with every other airline in Europe.”
The full interview is here
3. Last week I flagged Patrick Jenkin’s column in the FT that suggested the government hands its shares in Natwest to the public to try to encourage more share ownership. Well, the government has announced it has sold shares in Natwest today, but to, er, Natwest. Natwest has bought £1.26 billion of shares, reducing the government’s stake from 41.4 per cent to 38.6 per cent. Taxpayers owned 84 per cent of Natwest, then known as Royal Bank of Scotland, after the financial crisis and this is the sixth time since then that the government has sold shares. The government has said it wants to completely exit its stake in the bank by 2026 at the latest. Government statement here and that FT column here
4. The Times is running an extract today from a new book by Andy Verity, the BBC journalist, about the Libor-rigging scandal. The book claims there was a co-ordinated drive by central banks and governments to get commercial banks to push Libor down at the height of the financial crisis to try to calm markets. Libor is the interest rate at which banks lent to each other. An upward surge in that rate suggests that banks have lost confidence in each other. Here is an example of a phone call between Barclays employees at that time:
“The bottom line is you’re going to absolutely hate this, and I’ve spoken to Spence about it as well, but we’ve had some very serious pressure from the UK government and the Bank of England about pushing our Libors lower.”
The man who took that call was later jailed for rigging Libor. You can read The Times’s news story here and its extract here. For the context on this topic check-out our podcast interview with Tom Hayes here
5. A fascinating row is developing ahead of McDonald’s annual meeting on Thursday. A collection of European investors, led by Legal & General, are backing a resolution that has been tabled by The Shareholder Commons, a campaign group, that calls on the fast-food chain to reduce the use of antibiotics on cows by its suppliers. This is because of concerns about the risk of antimicrobial resistance - when bacteria, viruses, fungi and parasites become resistant to antibiotics - which the World Health Organisation says is one of the top 10 health threats facing the world. McDonald’s says it has a “strong record of responsible antibiotic use” and that investors should oppose the resolution. Similar resolutions have been tabled at the McDonald’s meeting before and been defeated. This one is likely to be defeated too, but it seems to have attracted more support and attention this time. The Mail on Sunday looked at this story yesterday, which you can read here, and the FT has followed it up today here.
6. The Wall Street Journal has an extraordinary story about how Jeffery Epstein allegedly discovered that Bill Gates was having an affair with a Russian bridge player and then appears to have threatened the Microsoft co-founder with making this public unless they continued to work together. Full story here.
7. Ireland looks set to be the first country in the world to introduce health-warning labels on alcohol. These labels will include the number of calories in the drink, warnings about the risk of cancer, and the danger of drinking while pregnant. BBC story here. This is an interesting precedent…
8. Stevenage is working on a regeneration of the town centre that focuses on building flats and creating jobs, rather than anchoring the area around shops. This project was covered in detail by a superb piece in the FT on Saturday, which you can read here. This focus will be familiar to regular Off to Lunch readers. Chris Oglesby, the boss of Bruntwood, spoke about the performance of getting people to live in urban centres in our piece from Manchester in March (which you can read here). Roger Madelin also spoke about how to make regeneration projects work in our podcast interview with him (which you can find here) There is more good news for Stevenage today. Plans for a £900 million life sciences campus in the Hertfordshire town have been submitted. Times story here
9. The Economist has looked at whether carbon removal can become a trillion-dollar industry. New technology being developed in this field can literally suck carbon dioxide from the air like a tree. This could be a key part of the fight against climate change. The piece says: “Backers of the new crop of carbon-removal projects think this time is different. One reason for their optimism is better and, crucially, cheaper technology.” The full piece is here.
10. There was a lot in our Sunday press review about the working-from-home debate and the negative impact on productivity (more here). A piece from Farhad Manjoo in the New York Times should also be part of the debate. The problem is not the office, or the ease of working at home, it’s the miserable commute, the piece says. Cities - and businesses - need to make it easier and more pleasant for people to get to the office if they want to encourage people to get out and about. Column here. Here is a recent interview from Elon Musk on the topic and why the “laptop class” is a problem:
Podcast
A reminder that the latest episode of our Business Studies podcast looks back at the story of Teach First and how it became the biggest recruiter of graduates in the UK. You can listen to the episode on Substack here, Apple here and Spotify here.
The next episode will go live tomorrow and tells a story I have been looking forward to exploring - how Arm became one of the most successful and talked-about British companies of the 21st century. Off to Lunch subscribers will get that episode sent directly to their inbox.
Just a note to say that after this week’s episode Business Studies will be taking a short-break to coincide with the Whit-week holidays. It will be back with a bang after this break with some great episodes and guests. I look forward to sharing them with you…
And finally…
To the man on the number 68 bus in London who got off a stop after us and ran back up the street to give our son his green bunny - probably the most important thing in his life, but which had been left behind on the bus - we will be forever grateful. It was an act of kindness that restores your faith in people. He will probably never see this message, but on the off-chance he does - thank you!
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Best
Graham