BoE: Corporates are not ready for non-deal Brexit

It is likely that the UK corporate sector is in general not yet well equipped to cope with a ‘no-deal’ Brexit. This conclusion is in the Bank of England´s analysis of the Brexit situation in the UK economy (EU withdrawal scenarios & monetary & financial stability). The analysis was published  28th November 2018.

– It is unclear how comprehensive contingency planning by companies for a ‘no-deal’ Brexit is. While a growing proportion of contacts say they have prepared plans, only some of those plans have begun to be implemented. It is likely that the corporate sector is in general not yet well equipped to cope with a ‘no-deal’ Brexit, the Bank of England says.

A Confederation of British Industry (CBI) survey found that 41% of companies had carried out some of their contingency plans, but only 2% of businesses had carried out all of them.

These plans often involve stockpiling of goods imported from the EU. A CBI survey suggests that nearly 44% of businesses are planning to stockpile goods in the future, while 15% have already done so.

According to the survey, it is expected that the Brexit would mean 34 billion pounds additional import  to UK before the Brexit day, the 29th March 2019. One of the reasons for this, is the analysis of the delayed customs and transport for goods.

 

Business

Brexit insight: Marine planning vital for low-carbon energy

The UK decision to leave the European Union has caused questions related to the issues on the UK coastal line and the economic development in the area.  According to the UK Goverment, the Brexit deal means that the UK will have its own, independent fishery policy in the future.  This indicates also that UK will no longer be part of the European Marine Spatial Planning process – but will stay in the Unclos, which is an UN convetion on the Law of Seas.

The Unclos is important part of the governance in the seas, while aquaculture origins and other natural resources in the global Seas are governed by this. The goverments have agreed for example of the so called Exclusive Economic Zone (EEZ) -areas, which indicate the ownership of the country in the seas. And under these nautical miles the country has the full owership to the natural resources.

What does this mean in practice? It means that the countries, in which the UK has the EEZ-border (Iceland, Denmark, Germany, Netherlands, Belgium, France and Faroe Islands) must work together more closely in the economic issues if the EU Marine Spatial Planning is not any more in use and if the UK will not be part in the EU Marine Strategy Framework Directive.

UK MSP

This is also important while the UK Marine is importat part of the country´s energy policy and energy mix. But also the UK´s energy supply and distribution. This includes the country´s oil and gas sector ,companies like BP (BP) and  Royal Dutch Shell (RDSA) , but also the growing new energy sector, the renewables. According to the national oil and gas industry, capital investments in the UK offshore oil and gas industry were 5.6 billion pounds in 2017.

This low carbon energy related to mitigating the Climate Change and energy security in general include for example offshore wind, wave and tide energy. According to the UK Marine Policy Statement, it is anticipated that the amount of wave and tidal energy will increase markedly up to and beyond 2020.

The low carbon energy sector is also a major employer in the offshore and in the coastal line.  According to Oxford Economics, it is assumed that each 1MW
of installed capacity adds 0.29 direct and 0.16 indirect jobs.  The employment growth in the coastal towns has been better than average, says the UK Statistical office.

Currently there are 12 offshore wind farms in the UK, with the largest offshore wind farm in the world located off Kent.

In addition to the renewables, the coastal line is imporant economic factor for example to construction, port operations, aquaculture, tourism, water and waste management and telecommunications.

-Aquaculture is the process of farming or culturing aquatic
organisms. The majority of marine aquaculture is currently related to
Atlantic salmon and shellfish.  The majority (99%) of existing UK marine based finfish aquaculture activity is located in Scotland, which is the largest producer of
farmed salmon in the EU, and the second largest in the world,
although aquaculture activity is increasing in other areas of the
UK, the UK Marine planning organization says.

The Brexit vote on next week Tuesday in the UK Parliament will give the independece of the UK fishery policy according to the PM Theresa May. It also means that in the future, UK will have to negotiate with its EEZ-border partners more in direct dialog in order to sustain and manage the economic, environmental, social and governance issues related to the area.  The oceans and seas are getting their true meaning for the socioeconomic development for a nation.

Päivi Härkönen, co-founder, EarthRate

Sources: EU Marine Spatial Platform, UK Marine Management Organization, EU Marine Strategy Framework Directive, Unclos, UK Oil and Gas, UK Goverment, UK Parliament
Business Research and Insights

Uber to file a confidential IPO – sources

According to several media sources, the ride-hailing company Uber has filed a confidential IPO during last week. Its filing would be one of the biggest technology listings ever and would also test the market apetite during very volatile times.

Uber’s valuation in its most recent deals has been 76 billion dollars, and it could be worth 120 billion dollars in a listing IPO.

Uber´s lost in the third quarter was 1.07 billion dollars and the company is struggling with slowing growth.

According to New York Times, Uber´s rival Lyft would have also filed to the SEC during last week, but it is offering. The companies do not comment the situation.

Morgan Stanley and Goldman Sachs are Uber´s advisors in the IPO.  JPMorgan Chase is the advisor for Lyft.

Business Finance

Stocks down in Wall Street – crude oil up

Stocks continued their downward trend in Wall Street on Friday. The S&P 500 -index ended down by 2,33% and Dow Jones -index 2,24 % . The tech-intensive Nasdaq ended down 3,05%. Concerns over the global trade, oil prises and slower growth in US jobs in November were the topics.

The crude oil surged nearly 6 % as the Opec agreed more than expected production cuts. The Opec members agreed to cut the production by 1,2 million barrels a day.

This week for the stocks markets have been very volatile and the uncertainty over the Brexit vote in the British Parliament on the 11th December, global trade talks between the US-China and the moneraty policies in different continents have been the major news affecting the market sentiment.

According to Bloomberg News, the investment bank JP Morgan estimates that the US stocks can surge 17 % next year. The bank says the estimate is based on the fact that hedge funds hold fewer stocks than normal and returning to average holding would mean 500 billion dollars into US equities.

In Europe, the stock markets ended mixed. In London, the FTSE 100 -index was up 1,10 % to 6778, in Frankfurt the stocks declined sligthly by 0,21 % to 10788 and in Paris the CAC 40-index ended up by 0,68 % to 4813.

In Asia the stocks were also mixed. In Tokio, Japan, the stocks ended up 0,82 % to 21 687 points, but in Hong Kong the Hang Seng index ended down 0,35 % to 26063.

During one month period only the Hong Kong and Shanghai stock exchanges have been on positive trend. The other markets are in red ranging from the New York Nasdaq – 7,95 % to Tokio Nikkei -2,45%.

The euro was up 0,04 % to 1,13 US-dollars, but the UK sterling was down by 0,43 % to 1,272 US-dollars.

 

Business Finance

LVMH: Carbon Fund achieved its targets 2018

The LVMH (LVMH, Paris) Carbon Fund has achieved its objective for 2018, raising 11.3 million euros in financing for 112 projects designed to control and reduce the Group’s greenhouse gas emissions, the company said in the statement.

This result is that LVMH doubled the price per metric ton of CO2 generated from 15 to 30 euros in 2018.  By mechanically increasing the carbon contributions of each Maison, LVMH signals its intent to accelerate initiatives to reduce CO2 emissions.

-The success of our Carbon Fund once again underlines the major and decisive commitment of LVMH management and all our teams to help protect the environment and fight climate change.  The LIFE environmental program is a top priority for all our employees. We thank them for their engagement and we continue to count on them to help us achieve all our environmental targets for 2020,” said Antonio Belloni, LVMH Group Managing Director.

The 112 projects deployed in 2018 have eliminated nearly 2,500 CO2 equivalent metric tons of emissions annually. This is equivalent to the annual emissions of 1,600 European households.

Created in 2016, the LVMH Carbon Fund is a pillar in the Group’s environmental policy, which has announced a 25% reduction in CO2emissions by 2020 as one of its main objectives.  This aligns the Group with the 2°C climate target  agreed in the COP21 climate conference in Paris.

The annual contribution of each LVMH Maison is calculated by multiplying the greenhouse gas emissions from its activities by the carbon price set by the Group. The amount must then be invested the following year in eligible projects designed to reduce these emissions.

The investments were in all the Group´s locations: 29% in France, 34% in Europe (excluding France), 15% in Asia, 6% in Japan and 16% in the United States.

The projects included for example:

  • 80% of the projects concern energy efficiency: LED relamping, building insulation, upgrading to install more efficient air-conditioning and heating systems, energy consumption monitoring systems;
  • 13% of the projects enable production of renewable energy;
  • 6% of the projects concern other areas (purchasing of electric tractors, for example);

28 Maisons are actively engaged in this program: Acqua di Parma, Belvedere, Benefit, Berluti, Bulgari, Celine, Chandon India, Christian Dior Couture, DFS, Fendi, Fred, Fresh, Givenchy, Glenmorangie, Guerlain, Hennessy, Hublot, Le Bon Marché, Loewe, Loro Piana, Louis Vuitton, LVMH Fragrance Brand, MHCS, Parfums Christian Dior, Royal Van Lent, Sephora, TAG Heuer and Zenith.

Business Lifestyle