Catch up with developments in the business world with a round up of this week’s top stories.
Financial Times
Lower borrowing costs are expected following evidence that rate cuts are on the agenda at the Bank of England. Minutes from the Bank’s latest meeting show that two of the nine members of the monetary policy committee voted for a quarter-percent cut, the first time any member has done so since July 2003. The minutes also revealed that the main reason that members voted against a cut was that it might come as a surprise to people and businesses.
Companies with convictions for bribery, fraud and money laundering will not be banned from competing for public sector contracts. The news came in draft rules implementing new European rules issued this week by the Office of Government Commerce. The government was heavily criticised for the decision by anti-corruption lobby group Corner House. The state contract market is believed to be worth £109bn per year.
Employers that use illegal workers face stiff penalties and possible jail terms. The immigration, asylum and nationality bill introduces a civil penalty scheme involving fines of up to £2,000 for not carrying out sufficient checks on an illegal employee.
The Times
CNOOC the Chinese state oil company made a £10.2bn bid for Unocal, the Californian based US energy group. However, the Chinese bid is likely to face strong political resistance, US Energy Secretary Sam Bodman said the offer would face a ‘complex’ review.
Tesco delivered some good news to a flagging retail sector by reporting strong growth in both its domestic and international businesses and claimed its market share was continuing to improve. The group said like-for-like sales rose by 8.8 per cent and total UK sales were up by 11.3 per cent.
The Guardian
Dixons is slashing costs in attempt to boost flagging sales as well as changing its name to DSG International. The company, which began as a photographic studio in the 1940s, said the name change was needed in order to reflect the multiple brands under which it trades. Shareholders will vote on the name change in September.
Coca-Cola is being forced by the European Commission to give up its restrictive practices when selling to pubs, shops and cafes. The law change will mean that the company will no longer be able to offer rebates to stores if they buy the same amount or more of their products than in the past. Also, retailers will be able to buy from any supplier they choose and are able to free up to 20% of fridge space for competitors even if they are provided by Coke. The change is expected to increase competition in the market for soft drinks.
The Daily Telegraph
BT has agreed to slash its wholesale prices and create a new unit that gives rivals equal access to its local network, the decision comes as Ofcom, the telecoms regulator, drops the threat of a BT break-up and promises lighter regulation on the company. The agreement will be legally binding and Ofcom will guarantee competitors the same treatment as received by BTs consumer arm. The telecoms giant had faced the threat reference to the Competition Commission, which has now been dropped.
The eurozone is heading towards a Japanese-style ‘liquidity trap’ and may have trouble holding monetary union together, according to a report by HSBC. The report claimed that GDP growth in the zone is likely to ‘grind to a halt’, that ‘Germany is perilously close to deflation’ and the Netherlands and Italy were also in danger.
Shareholders at Wm Morrison have welcomed attempts to bring in Archie Norman, the former Asda chief to run the business. The group is said to be trying to tempt the ex-Tory MP with a highly lucrative package that would net him millions if he managed to turn the company around. It is thought, however, that Mr Norman is more interested in private equity than in running another public company.