Full story: Amazon to shut three UK warehouses, putting 1,200 jobs at risk
Sarah Butler
Amazon has announced plans to shut three of its 30-plus UK warehouses, affecting 1,200 jobs, our retail corresponent Sarah Butler reports.
Workers from the facilities in Doncaster, Hemel Hempstead in Hertfordshire and Gourock in western Scotland will be offered roles at other Amazon locations.
It is thought unlikely that many of the 300 workers at the Gourock site will want to relocate as there is not another Amazon facility nearby, as is the case with the Doncaster and Hertfordshire factories.
The closures of the older sites come as Amazon prepares to open new delivery warehouses in Peddimore in the West Midlands and Stockton-on-Tees, County Durham, which will employ 2,500 people.
A spokesperson for Amazon said the company remained “committed to our customers, employees, and communities across the UK”, saying:
“We’re always evaluating our network to make sure it fits our business needs and to improve the experience for our employees and customers.
As part of that effort, we may close older sites, enhance existing facilities, or open new sites, and we’ve launched a consultation on the proposed closure of three fulfilment centres in 2023,.
The potential job losses come after Amazon announced last week that it planned to cut 18,000 jobs around the world – mostly in its head offices – in an effort to become more efficient under Andrew Jassy, who took over as chief executive in summer 2021.
More here:
Key events
Time for a recap…. here are today’s main stories:
Counsel Nick Barnard, from law firm Corker Binning says the government’s approach to cryptoasset regulation has become more ‘muted’, following the crash in valuations in the last year.
Here’s his take on today’s Treasury committee hearing (see earlier post for details):
“At the outset of his evidence to the Treasury Committee on cryptoassets, Andrew Griffith MP was reminded of then-Chancellor Rishi Sunak’s bold announcement in April 2022 that the UK would become a ‘global hub for cryptoasset technology’. What that announcement did not foresee was the series of crypto-related scandals and collapses that would follow, most notably that of FTX in late 2022. As a result, the tone of the Government’s approach to future regulation of cryptoassets as presented by My Griffith today was muted by comparison.
“Whilst the Government is pressing ahead to enable the use of crypto-assets and related technology at an institutional level – in particular, the use of stablecoins for wholesale settlement and the introduction of a UK sovereign digital currency – there seems to be no appetite for increasing consumer access to cryptocurrencies, either as a means of payment or investment asset. At least in the short term, the regulatory approach will be to limit the risk and damage to consumers posed by cryptoassets – for example, through the new promotion restrictions which will enabled by the Financial Services & Markets Bill – rather than encouraging their everyday use.
“Interestingly, Mr Griffith did not mention at all Mr Sunak’s proposal that the Royal Mint should be asked to issue its own NFTs as an ‘emblem of the forward-looking approach the UK is determined to take’, on which no progress appears to have to been made since April 2022. Given the bad publicity for crypto in recent months, the Government has likely decided to play down the gimmicks in favour of more pedestrian – but undoubtedly more important for the UK financial sector – structural progress.”
Tulchan founder Andrew Grant set for £35m pay day after PR firm sold
Mark Sweney
The founder of Tulchan is set for a £35m pay day after selling the London-based financial based corporate public relations firm to rival global advisory Teneo, my colleague Mark Sweney reports.
Teneo, the US PR firm acquired by private equity group CVC in a $700m deal in 2019, is understood to have acquired Tulchan in a deal that values the business at more than £70m.
The exact value of the deal has not been revealed and will be determined depending on the performance of Tulchan over the next four years, the Guardian understands.
Andrew Grant, who founded Tulchan in 2000, is understood to control broadly half of the business, with the remainder split among 14 other partners. Here’s the full story.
You can see the World Bank’s latest forecasts here.
They warn that:
Global growth is projected to slow to its third-weakest pace in nearly three decades, overshadowed only by the 2009 and 2020 global recessions. Investment growth in emerging market and developing economies is predicted to remain below its average rate of the past two decades. Any additional adverse shocks could push the global economy into recession.
Small states are especially vulnerable to such shocks because of their reliance on external trade and financing, limited diversification, elevated debt, and susceptibility to natural disasters. Immediate policy action is needed to bolster growth and investment, including redirecting existing spending, such as agricultural and fuel subsidies.
Amazon plan to shut Scottish fulfilment centre is devastating, say MSPs
Amazon’s plan to shut its warehouse in Gourock, near Greenock in Inverclyde, has been heavily criticised by Scottish politicians who fear it is a devastating blow to the area.
Labour’s West of Scotland MSP, Katy Clark, said (via PA Media):
“It is appalling that after 19 years in the area, Amazon has announced it intends to up sticks.”
She urged Scotland’s government to invervene:
“This is devastating for the local community and the 300 workers who may find themselves out of a job.
“These workers have been heroic supporting households and providing vital supplies throughout the pandemic and holiday periods.
“The Scottish Government needs to intervene as a matter of urgency to support these workers back into employment.”
Another Labour MSP, Neil Bibby, described the planned closure of the Gourock site as “devastating”.
Mr Bibby, who also represents the West of Scotland region, added:
“For 19 years, Amazon has been a major source of jobs in a part of Scotland with high unemployment and for 300 people to find out they are out of a work so soon after Christmas is a hammer blow.
“The Scottish Government should leave no stone unturned in trying to minimise the impact of these job losses and help people back into employment.”
A Scottish Government spokesperson said:
“It is very disappointing to learn of the announcement made today by Amazon to consult on closing its distribution centre in Gourock.
“This will be a difficult time for staff, their families and the local areas affected.”
The World Bank fears that emerging market and developing economies face a tough 2023 and 2024, as they struggle with heavy debt burdens, weak currencies and poor income growth.
Today’s report estimates that over the next two years, per-capita income growth in emerging market and developing economies will average 2.8% — a full percentage point lower than the 2010-2019 average.
World Bank president David Malpass said in a statement that the crisis facing the developing world is intensifying as the global growth outlook deteriorates,adding:
“Weakness in growth and business investment will compound the already devastating reversals in education, health, poverty and infrastructure and the increasing demands from climate change,”
Full story: Global economy risks second recession within three years, warns World Bank
Larry Elliott
Any fresh setback to a global economy already rapidly weakening as a result of high inflation, interest rates and war could result in a second recession within three years in 2023, the World Bank has warned.
In its half-yearly health check, the Washington-based institution said it had cut its 2023 growth forecast from 3% to 1.7% after the risks it identified six months ago all materialised, our economics editor Larry Elliott writes.
The Bank’s global economic prospects report said the tougher than anticipated anti-inflationary measures, persistently high energy prices and continued lockdowns in China had led to a much weaker outlook for this year than it had expected last summer. Almost every advanced country and nearly 70% of emerging and developing countries have had their growth forecasts cut.
Given the fragility of the global economy, the World Bank said any new adverse development – such as higher than expected inflation, abrupt rises in interest rates to contain it, a resurgence of the Covid-19 pandemic or escalating geopolitical tensions – could push the global economy into recession. Not since the 1930s have two global recessions occurred in the same decade.
More here:
World Bank warns global economy could fall into recession this year
The World Bank has slashed its 2023 growth forecasts to levels that would leave some major countries on the brink of recession.
The World Bank now expected global GDP growth of 1.7% in 2023 — down from a previous forecast of 3%.
Its latest Global Economic Prospects report warns that global growth is “slowing sharply”, due to high inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine.
The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95% of advanced economies and nearly 70% of emerging market and developing economies.
The US is only expected to grow by 0.5% this year, a cut of 1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970.
In 2023, euro-area growth is expected at zero percent—a downward revision of 1.9 percentage points. In China, growth is projected at 4.3% in 2023—0.9 percentage point below previous forecasts.
The World Bank warns that the global economy was at risk of falling into recession.
Given fragile economic conditions, any new adverse development—such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions—could push the global economy into recession.
This would mark the first time in more than 80 years that two global recessions have occurred within the same decade.
Shares in Virgin Orbit Holdings have fallen by a fifth in early trading on the Nasdaq stock exchange.
Virgin Orbit Holdings dropped by 20% to $1.54 per share, on disappointment that its historic attempt to launch satellites into orbit from the UK had failed last night (see earlier post).
Virgin Orbit shares have opened in New York 22% down, with more than $150m being wiped off the group’s value following last nights failed satellite launch from Cornwall.#Cornwall #cornwallspace
— David Parsley (@DavidParsley50) January 10, 2023
BioNTech buys UK AI start-up InstaDeep in £562mn deal
BioNTech, the German vaccine developer, is to acquire UK artificial intelligence startup InstaDeep in a deal that could be worth £562m deal.
BioNtech is acquiring 100% of InstaDeep’s shares, excluding those it already owns for an upfront payment of £362m in cash and shares, plus additional payments that could be worth about £200 million if certain milestones are hit.
The transaction follows BioNTech’s initial equity investment as part of InstaDeep’s Series B financing round in January 2022.
BioNTech, which developed its Covid-19 vaccine with Pfizer, says the InstaDeep deal will help it “build world-leading capabilities in AI-driven drug discovery” and to develop next-generation immunotherapies and vaccines to address diseases with high unmet medical need.
Professor Ugur Sahin, CEO and Co-founder of BioNTech, says:
“Since the inception of BioNTech, we have focused on leveraging computational solutions to create personalized immunotherapies that can reach a wide patient population.
“The acquisition of InstaDeep allows us to incorporate the rapidly evolving AI capabilities of the digital world into our technologies, research, drug discovery, manufacturing, and deployment processes. Our aim is to make BioNTech a technology company where AI is seamlessly integrated into all aspects of our work.”
Obscure Indonesia-linked investor circles UK’s Britishvolt with £160m deal
Jasper Jolly
The battery startup Britishvolt is in talks with an Indonesia-linked oil and gas investor for a £160m rescue deal that would almost wipe out the value of existing shareholders’ stakes, my colleague Jasper Jolly reports.
The investor consortium is led by DeaLab Group, a UK-based private equity investor that has been involved in several fossil fuel and renewable energy transactions in Indonesia, and an associated metals business, Barracuda Group.
A takeover of the project, if completed, would provide welcome relief for employees and enable the company to continue its ambitious effort to build a factory capable of making 30 gigawatt hours of batteries every year – enough for hundreds of thousands of cars. Building gigafactories is seen as a key aim by the UK government, which pledged £100m in financial support to the project.
Britishvolt’s site, near Blyth in Northumberland, is seen by many in the automotive industry as one of the UK’s best potential locations for a gigafactory because of proximity to power lines carrying renewable energy and a deep-sea port. However, the startup reached the brink of collapse in October as it ran out of money, with building work on the factory mostly halted since the summer.
Under the terms of the rescue deal, the investors will pay £30m for 95% of the business – a deal that would leave existing shareholders including co-founder Orral Nadjari and FTSE 100 companies Glencore and Ashtead with 5% of the business worth less than £2m. The consortium would then commit a further £128m to fund the next stage in Britishvolt’s plan.
More here:
Alex Lawson
The average UK price for a litre of petrol has fallen below 150p for the first time since the outbreak of war in Ukraine, bringing some relief to motorists and businesses.
The AA said that a litre of petrol typically cost 149.74p on Monday, its lowest since Russia invaded Ukraine on 24 February 2022, when it averaged 149.67p a litre.
The outbreak of war in Europe sent commodity markets soaring, pushing up the wholesale prices of oil and gas.
Petrol reached a record of 191.53p a litre on 3 July as surging fuel prices fed into rampant inflation and a squeeze on the cost of living.
Luke Bosdet, the AA’s spokesperson on pump prices, said:
“A 41.8p-a-litre crash in the average pump price of petrol is a huge relief for drivers, cutting £22.99 from the cost of filling the typical car tank.”
Here’s the full story:
There are more job cuts in the cryptocurrency world today.
Coinbase Global is cutting about 950 employees, as the digital-asset exchange tries to lower its costs to get through the downturn in the crypto market and the wider economy.
Announcing the move to employees, co-founder and CEO Brian Armstrong explains Coinbase is cutting its operating expenses by about 25%.
He says:
While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough, without considering changes to headcount.
Armstrong also told staff that in 2022 “the crypto market trended downwards along with the broader macroeconomy”.
He added that there was also “the fallout from unscrupulous actors in the industry, and there could still be further contagion”.
Virgin Orbit shares to plummet after UK satellite launch failure
In the financial markets, shares in Virgin Orbit Holdings are down over 20% in premarket trading, after the UK’s historic attempt to launch satellites into space failed.
Last night, Virgin Orbit’s Cosmic Girl, a customised Boeing 747, released a rocket loaded with nine satellites, in a historic first mission from Spaceport Cornwall near Newquay.
But the rocket was lost after “a technical failure”, which Virgin Orbit has pledged to “tirelessly” investigate, as my colleague Steven Morris reports here.
UK space chiefs have said they would try again to send satellites into space from British soil within a year, but the failure of the mission is a set-back for Virgin Orbit and for Cornwall’s ambitions to be a new launchpad for space ventures.
Shares in Virgin Orbit are on track to drop 22%, to $1.50, when the US market opens.
Virgin Orbit shares lost more than 20% of their value in extended New York trade after the failure of its highly-anticipated attempt to launch satellites. pic.twitter.com/ksFJfpeqPD
— Peter Hoskins (@PeterHoskinsTV) January 10, 2023
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says there were high hopes that last night’s operation would be the start of a brighter future for Virgin Orbit.
Streeter explains:
The cash burn rate for the company has been huge, and the prospects for revenue have been significantly set back.
While space may have been heralded as the new investment frontier, the ventures clearly come with a huge amount of risk.
Given the initial launch from Newquay airport also progressed well, the aborted mission is “hugely disappointing but doesn’t not fully dim Newquay’s prospects as a future space hub”, Streeter argues, adding:
However, as investment case, the flight ahead for space looks set to be volatile.’’
Goldman Sachs drops eurozone recession call, but UK still seen shrinking in 2023
Goldman Sachs has dropped its prediction that the eurozone will fall into recession, but still expects a UK recession this year.
The US investment bank now expects the euro zone economy to grow by 0.6% during 2023, up from its previous forecast of an 0.1% contraction.
Goldman economists, led by Sven Jari Stehn, told clients in a research note that recent falls in gas prices, and the end of China’s Covid-19 restrictions, would support growth, saying:
We maintain our view that Euro area growth will be weak over the winter months given the energy crisis but no longer look for a technical recession.
This reflects more resilient growth momentum at the end of last year, sharply lower natural gas prices and earlier China reopening.
! Goldman Sachs no longer predicts a recession in the euro area – upgrades GDP forecast to +0.6% for 2023 vs -0.1% prior per research note
— Maria Tadeo (@mariatad) January 10, 2023
Growth is expected to be weaker Germany and Italy, which are more reliant on energy-intensive industrial activity, than France and Spain.
Goldman has also raised its UK growth forecast, in response to lower wholesale gas prices.
But, it still expects a UK recession given “persistent headline inflation, rising mortgage rates and structural headwinds to labour supply”.
UK GDP is forecast to fall by 0.7% this year, up from a 1% fall predicted before, with Goldman predicting “a notably more pronounced downturn in the UK than the Euro area”.
City minister: important to get digital pound right
Julia Kollewe
The City minister, Andrew Griffith, has been quizzed about crypto assets by MPs on the Treasury Committee this morning.
Griffith said despite risks and “vulnerabilities,” the UK should be at the forefront of a “potentially game changing technology”, quoting an Ernst & Young estimate of a £60bn opportunity.
About 2.3 million people in the UK own some of crypto assets, one MP said.
Griffith said there was clearly a balance to be struck between protecting consumers, saying it was “clearly regrettable” that some had suffered large losses from crypto investments, and reaping benefits from a “disruptive” new technology, such as lower transaction costs.
Asked whether crypto assets can improve financial inclusion, Griffith said he wanted to “hear more on that,” noting that a digital currency is easily accessible via an app. But he said he was “worried” about people who can’t get bank accounts using crypto assets instead, saying it would be “very premature” to remove banks as an intermediary.
The Bank of England is currently considering whether to create a central bank digital currency, like other countries (such as the US, EU, and China).
“With the UK’s strong financial reputation, I’d rather be right than first,” the minister said.
