UK probes Nvidia’s Arm deal; workers split over return to office – as it happened

Graeme Wearden

from on 2021-04-19 17:46 (#5GRP0)

Rolling coverage of the latest economic and financial news

Latest: Government issues intervention notice over Nvidia-Arm Holdings deal
Nvidia is buying Arm from SoftBank for $40bn
Taskforce on Bank of England digital currency launched
Introduction: Investors upbeat, but fear of the office' hits some workers
Deloitte: One in four want to WFH forever

6.45pm BST

Time to wrap up

The UK has ordered a probe into the sale of chip designer Arm by SoftBank to Nvidia, citing concerns over national security. Digital secretary Oliver Dowden issued an intervention notice, saying:

As a next step and to help me gather the relevant information, the UK's independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions.

We want to support our thriving UK tech industry and welcome foreign investment, but it is appropriate that we properly consider the national security implications of a transaction like this."

Amongst Brits that now work from home, this trend is more prevalent among those who have previously tested positive for Covid-19, with only 34% planning on returning to the office. This compares to 69% of those who haven't suffered from the virus.

The data highlights that despite the potential for continued immunity, those who have experienced Covid-19 are more reluctant to return to work face-to-face.

6.28pm BST

The EU is considering introducing new conflict of interest rules after it was criticised for hiring BlackRock, a major manager of oil company and financial shares, to work on new environmental rules for banks.

The European ombudsman found in November found that the European commission, the EU's executive arm, had not properly considered conflicts of interest when awarding the contract to BlackRock, the world's biggest investor.

6.03pm BST

Nvidia are also among the top fallers on the Nasdaq, dropping by 3.7%, after the UK government put its takeover of Arm in doubt.

Nvidia's shares hit a record high last week, after it unveiled a new high-powered chip called Grace.

5.58pm BST

The US stock market has started the new week on the back foot.

The Dow Jones industrial average is down 188 points or 0.55% at 34,012 points. Chipmaker Intel led the fallers, down 2.4%, followed by aerospace firm Boeing (-2.2%) and consumer credit group American Express.

5.39pm BST

In the City, stocks have ended lower with the stronger pound weighing on multinational firms.

The FTSE 100 fell back from last week's one-year high, to finish 19 points lower at exactly 7,000.08 points.

5.16pm BST

The pound's had a good day, gaining ground against other currencies.

Sterling has rallied by a cent and a half against the US dollar, hitting $1.399 for the first time in a month.

The pound went on a tear this Monday, using a quiet session to indulge in some economic optimism following the first weekend under the latest set of eased restrictions in the UK.

Sterling was especially strong against the dollar - but then again, what wasn't this afternoon. The greenback is having a minor tantrum over the Federal Reserve's insistence that rising inflation will only be temporary, and therefore that the central bank won't be taking any action to combat it.

5.07pm BST

Shares in Manchester United jumped by over 9% in morning trading in New York, following the news of a breakaway European Super League that has gripped football.

Juventus, another founding member' of the ESL, have surged even higher, and closed almost 18% higher on the Milan exchange a few minutes ago.

Bought by the Glazer family utilizing debt, they have largely ramped up their borrowing which has invariably meant huge interest repayments each year. However, entry into this competition would finally see the club back in a stable financial footing.

Whatever the merit of the competition, Manchester United could be a major benefactor if it goes ahead as planned. The prospect of higher guaranteed revenues brings a revaluation for investors, while the reduction of debt also provides another reason for investment.

3.58pm BST

Unions have welcomed the UK government's decision to probe Nvidia's purchase of Arm Holdings.

Prospect general secretary Mike Clancy says:

Prospect has been urging the government to intervene in the sale of ARM and it is welcome that this action has been announced today.

If the UK is serious about becoming a science superpower, then we need to ensure that the future of our most cutting-edge companies is secure and that high quality jobs are protected for the future."

3.05pm BST

Around 8,800 investors who lost savings when mini-bond provider London Capital & Finance collapsed in 2019 are to receive some compensation.

The Government has said it will pay out around 120m to about 8,800 LCF bondholders who suffered from the scandal. They'll receive 80% of their losses, up to a maximum of 68,000 per person.

The situation regarding LCF is unique and exceptional and the government has decided to establish a compensation scheme for LCF bondholders in this instance."

Britain's Financial Services Compensation Scheme, which has a limited scope and is generally restricted to bank deposits, has already paid out 57 million pounds to 2,800 LCF bondholders.

An attempt by some LCF bondholders to force the FSCS to pay further compensation for their losses was rejected by a court last month, piling pressure on the government to step in

2.27pm BST

Nvidia says it does not believe the Arm deal is a threat to UK national security.

A spokesperson for Nvidia says (via CNBC):

We do not believe that this transaction poses any material national security issues. We will continue to work closely with the British authorities, as we have done since the announcement of this deal."

1.49pm BST

The UK government is intervening in the sale of Cambridge-based chip designer ARM to US tech giant Nvidia, on the grounds of national security.

Following careful consideration of the proposed takeover of ARM, I have today issued an intervention notice on national security grounds.

ARM's co-founder Hermann Hauser described the deal as an absolute disaster for Cambridge, the UK, and Europe".

He said Nvidia would destroy" ARM's business model, which involves licensing chip designs to hundreds of companies around the world - some of which compete with Nvidia.

1.29pm BST

Before the pandemic, working from home may not have been a great career move.

People who mainly worked from home were less than half as likely to be promoted than all other workers between 2012 and 2017, when controlling for other factors, according to new figures from the ONS show.

This morning @ONS published new analysis on working from home. We explore the connection between homeworking and various measures of labour market success, like pay, promotions, bonuses, etc. Full article here: https://t.co/DRou8EIVSx
A short thread 1/9

Bottom line:
People who worked mainly at home fared worse than average before the pandemic - they were paid less and were less likely to receive a promotion or bonus.
But people who combined some WFH with some working away from home fared better.
In 2020, things converge.
2/9

People who WFH work more hours on average than people who never work from home, although they tend to be more varied and spread out - less 9-to-5. They also report doing more unpaid overtime.
However, only people who work mainly' at home increased their hours in 2020.
3/9 pic.twitter.com/0fSrpVyTPw

Sickness absence fell in 2020 amongst those who could work from home and increased amongst those who couldn't. This continues a longer running trend that homeworkers take less sick leave.
4/9 pic.twitter.com/lwI2MUinNM

People who combine homeworking with non-homeworking (recently and occasionally groups) are paid more than those who never work from home. This is true even after controlling for a range of factors in regression analysis (e.g. industry, occupation, full-time/part-time, etc.)
5/9 pic.twitter.com/zXaDxbv1dD

People who worked mainly from home were paid less than average pre-pandemic, but more during 2020. This reflects the fact that these people were less likely to be furloughed and more able to continue working as normal. The composition of the group also changed substantially.
6/9

Those who mix homeworking with non-homeworking were more likely to receive a bonus and receive training, than those who never work from home. Those who worked mainly at home were less likely on both metrics, and less likely to get promoted.
7/9 pic.twitter.com/c54GLxoI8X

The proportion of people working from home varies substantially across the country, which is partly (both not completely) explained by the types of industry in each region. Working from home was most common in and around London.
8/9 pic.twitter.com/pYMGVhZPbN

All of this is tentative evidence that those who combine homeworking with non-homeworking are more productive than those who never work from home. However, there may be selection effects and biases, and the future may not look like the past! 9/9

1.02pm BST

The pandemic has also left UK households with a huge pot of savings which could drive the recovery this year.

The Office for National Satistics reports that the total currency and deposits held by UK households surged by 186.1bn in 2020.

The combination of an unleashing of significant pent-up demand and overflowing excess saving will drive a surge in consumer spending across the globe as countries approach herd immunity and open up."

12.32pm BST

The most dramatic action in the market so far today is in football club shares.

Juventus shares have soared over 10% so far today, after they and 11 other founder clubs' launched a breakaway European Super League backed by JP Morgan that has enraged fans and been widely condemned.

Juventus' share price is up more than 12% this morning on the back of The Super League's announcement.

Man Utd shares are also up in pre-market trading.

Whether just a negotiating ruse or the real thing, investors think there's value in it.

The financial incentive for the clubs is plain to see, with a multi-billion dollar package at the heart of the scheme, albeit it would forever break the integrity of the club game. The sort of additional revenues the ESL will deliver would need to be offset by a potential material decline or total loss of existing earnings from media deals through national leagues and UEFA.

12.17pm BST

A Bank of England digital currency for the UK has moved a step closer after the chancellor Rishi Sunak announced a top-level taskforce to explore the benefits and risks of the idea.

Sunak said a joint Treasury-Bank of England taskforce was being set up as part of a range of measures designed to boost the City following Britain's departure from the EU.

11.01am BST

A David versus Goliath" legal action gets under way at the high court on Monday as hospitality bosses try to force the UK government to bring forward the reopening date for pubs and restaurants indoors.

A judge will this week consider evidence in the case brought by Sacha Lord, the night-time economy adviser for Greater Manchester and a co-founder of Parklife festival, and Hugh Osmond, the founder of Punch Taverns and a former boss at Pizza Express. The case has been expedited.

9.05am BST

Changing working patterns due to the pandemic are also helping to push UK property prices higher.

The average UK asking price jumped almost 7,000 this month, Rightmove reports, as some families try to find properties with more space for homeworking away from the office.

A combination of lowest-ever interest rates, high loan-to-value mortgages, stamp duty relief and government stimulus, along with a year of on-and-off lockdown, has pushed demand for property to record levels.

If now isn't the time to buy, then when is? Will we have such an appealing time to buy again, who knows? But with so many positive reasons to buy and people simply needing more space, this trend is set to continue in the short term at least.

8.57am BST

In the City, the FTSE 100 index has opened higher.

It's up 12 points at 7031, having hit the 7,000 point mark for the first time in over a year on Friday.

8.37am BST

European stock markets nudged a fresh peak in early trading.

The Europe-wide Stoxx 600 gained another 0.1%, with carmakers among the risers.

Automakers were the top gainers, up 0.7%, followed by miners and travel stocks.

French car parts maker Faurecia rose 1% after its first-quarter sales beat market expectations, helped by particularly strong growth in China.

8.14am BST

Another survey, by Deloitte, has also found that almost one in four UK workers hope never to set foot in the office again.

Thats suggests that 7.5m people keen to permanently work from home every day of the week, even once the pandemic is over. Some say home working is more efficient, or relaxing, while others enjoy the break from commuting (avoiding cost, stress and lost time).

It underlines the stark split in the nation's workforce, divided by their experiences of lockdown and their hopes for the future.

Just over two-fifths (42pc) want a balance between the extremes, with at least two days at home each week.

TELEGRAPH BUSINESS: 7.5m staff never want to return to the office again #TomorrowsPapersToday pic.twitter.com/ZGaoKqYZm1

8.03am BST

The split between workers keen to return to the office, and those reluctant, means that employers need to be flexible.

Canada Life's survey of current home-workers* found that 70% of those who plan on returning to the office are happy to adapt their working practices.

7.51am BST

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

Hopes of a return to economic normality have lifted stock markets to record levels... but some workers are concerned about returning to the office after more than a year of working from home.

Global stocks ran higher into the end of the week to clock-up fresh record highs on Friday. Market sentiment is undoubtedly bullish right now, with the VIX [volatility index] hitting new post-pandemic lows, and investors surveys and indicators like the put-call ratio and AAII investor sentiment reading indicating a market increasingly willing to load-up on risk.

At the moment, it seems like markets are in that goldilocks zone: policy is accommodative and economic fundamentals improving - but not so much to increase expectations of an unsustainable recovery, inflationary pressures and tighter monetary policy.

The data highlights that despite the potential for continued immunity, those who have experienced Covid-19 are more reluctant to return to work face-to-face.

Ultimately, it's going to be very hard for employers to please everyone. In reality, the return to the office should be a phased approach which is sensitive to the needs of employees.

Plans should be flexible as they are likely to evolve over time."

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