Royal Mail delivers
But strikes could hurt
Royal Mail, the recently part-privatised UK mail and parcel delivery service, delivered strong maiden interim results this week which showed profits doubling on the back of relatively flat volume as management’s efficiency improvements kicked in. The company reaffirmed its intention to pay out £133m in dividends at year end but also warned that strike threats had affected volumes in recent weeks. Meawhile, lawyers from Clifford Chance are reported to have been brought in by a substantial investor in the business to revalue the Royal Mail's property estate, which could resurrect criticism that the business was sold off too cheaply.
See Royal Mail posts confident results
Luxury loses lustre
China slows
Further confirmation that the boom in demand for luxury goods in China is on the wane came this week with news that French drinks maker Remy Cointreau and German luxury brand Hugo Boss had both recorded shrinking sales in the middle kingdom. Remy said sales had fallen 6.3 per cent in the half year to September despite continued decent performance in Europe and the US, with China seeing a 'sharp slowdown'. Hugo Boss chief executive Claus Dietrich Lahrs admitted that China is 'a particular concern' after reporting that the company will miss its 2015 target of operating profit of €750m (£625.32m) due to slowing emerging market growth.
Eastern promise
Iran deal
The historic deal on nuclear enrichment signed between Iran and six major global economic players last weekend weighed on the oil price earlier this week as the prospect of an easing of sanctions against Iran promised a potential uplift in production. Iran holds the world’s fourth biggest reserves of oil but has been stymied by economic and trade sanctions which have made it difficult to trade with much of the outside world. But the agreement, which could mark the first step towards further, more substantial deals, should see some easing of sanctions in the short term and Iran has already been in contact with Western oil companies with a view to a further thaw in relations.
Pension problems
Young miss out
The Organisation for Economic Co-operation and Development this week warned that the UK's pensions system is at risk if youth unemployment remains a prolonged problem. The longer young people stay unemployed, the less time they have to save on a monthly basis in contributory schemes for their retirement and with demographics suggesting an increasing number of people living to 100, the risk of many of today's 16-24 year olds running out of money in their old age is growing. Meanwhile, the OECD also highlighted that the UK's workers can expect to receive an average of 32.6 per cent of their final pay as their pension, well below the OECD average of 54.4 per cent.
RBS rattled
Restructuring rapped
The 81 per cent government-owned bank Royal Bank of Scotland has come under renewed pressure after allegations that one of its business units has closed down viable businesses in the UK for its own profit. The Global Restructuring Group unit was accused by former customer and Vince Cable adviser Lawrence Tomlinson of unnecessarily pushing businesses which owed funds to the unit into insolvency only to then buy then back at a knock-down rate. Concerns were also raised during an investigation set up by RBS itself and headed by Bank of England deputy governor Sir Andrew Large who highlighted opaque management structures and poor controls within the business.
See More woe for RBS
Recovery redux
Consumer drivers
Government data showed that the pick up in the pace of growth for the UK economy in the third quarter to 0.8 per cent was primarily driven by consumer spending and supported by a long awaited uptick in business investment. But imports rose more quickly than exports, holding back expansion and scotching hopes of an economic rebalancing towards the exporting industries. The recent strengthening of sterling and two months of flat retail sales growth suggest that the fourth quarter may suffer from some headwinds too.
