Category: Business News

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The US House of Representatives has approved new Hong Kong-related sanctions, after Beijing imposed a security law that was condemned by countries around the world.

The measure, which was passed unanimously, penalises banks that do business with Chinese officials.

It will have to be approved by the Senate before going to President Trump.

Critics say China’s law ends freedoms that were guaranteed for 50 years when British rule ended in 1997.

“The law is a brutal, sweeping crackdown against the people of Hong Kong, intended to destroy the freedoms they were promised,” said House Speaker Nancy Pelosi.

UK Prime Minister Boris Johnson said the passing of the law was a “clear and serious breach” of the 1985 Sino-British joint declaration.

Under this declaration, Hong Kong was handed back to China in 1997, with certain freedoms guaranteed for at least 50 years under the “one country, two systems” agreement.

The UK has offered residency, and then citizenship, to up to three million Hong Kongers.

But on Thursday China threatened “corresponding measures” to block the citizenship plan.

“If the British side makes unilateral changes to the relevant practice, it will breach its own position and pledges, as well as international law and basic norms,” said the Chinese Embassy in the UK..

• Why people are scared of Hong Kong’s new law
• UK asylum for ex-consulate worker ‘tortured in China’

China said the security law was necessary to stop the type of protests seen in Hong Kong during much of 2019.

And despite condemnation in the West, more than 50 countries, led by Cuba, supported China at the UN this week.

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What does the US law say?

The Hong Kong Autonomy Act imposes sanctions on banks that do business with Chinese officials who are involved in cracking down on pro-democracy protesters in Hong Kong.

Ms Pelosi said the law was an “urgently needed response to [China’s passing] of its so-called ‘national security’ law… which is purpose built to dismantle democratic freedoms in Hong Kong”.

• What if the US removes Hong Kong’s special status?
• US imposes visa restrictions on Chinese officials

Before the bill was signed, the US had already began eliminating Hong Kong’s special status – halting defence exports and restricting the territory’s access to high-technology products.

Last year, the US had also signed into law the Human Rights and Democracy Act, supporting pro-democracy protesters in Hong Kong.

What have other countries said?

The UK said it will offer up to three million Hong Kong residents the chance to settle there and ultimately apply for full British citizenship.

Australia is also “actively considering” offering safe haven to Hong Kong residents – with Prime Minister Scott Morrison saying there were proposals that will “soon be considered by cabinet”.

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Japan was among the other countries that spoke out against the law, calling it “regrettable”.

“It will undermine trust for the principle of ‘one country, two systems’” said Foreign Minister Toshimitsu Motegi.

European Council President Charles Michel said it “deplored” the law – adding that it had a “detrimental effect on the independence of the judiciary and rule of law”.

And Canada changed its travel advice to Hong Kong, saying the new law “increased the risk of arbitrary detention on national security grounds and possible extradition to mainland China”.

Yesterday, a senior Chinese official slammed foreign critics, saying Hong Kong’s affairs were “none of your business”.

Have all countries been critical?

No. At the United Nations this week, Cuba – on behalf of 53 countries – welcomed the law.

Speaking at the 44th session of the United Nations Human Rights Council, it said: “Non-interference in internal affairs of sovereign states is an essential principle enshrined in the Charter of the United Nations.

“We believe every country has the right to safeguard its national security through legislation, and commend relevant steps taken for this purpose.”

How has the new law been used so far?

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Just hours after the law was passed, Hong Kong police made their first arrests.

Ten people were accused of violating the new law, including a man with a pro-independence flag. About 360 others were detained at a banned rally.

Under the new law, inciting hatred of China’s central government and Hong Kong’s regional government are offences.

Acts including damaging public transport facilities – which often happened during the 2019 protests – can be considered terrorism.

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The House of Lords Gambling Committee says video game loot boxes should be regulated under gambling laws.

The Lords say loot boxes should be classified as “games of chance” – which would bring them under the Gambling Act 2005.

“If a product looks like gambling and feels like gambling, it should be regulated as gambling,” their report says.

And they warn that such a change should not wait.

“The Government must act immediately to bring loot boxes within the remit of gambling legislation and regulation,” said a statement accompanying the report.

Loot boxes have long been controversial in video games. They offer players a chance at a randomised reward when opened. To further complicate matters, boxes can often be bought for real money, and the rewards can sometimes be traded.

The Lords report is wide-ranging, covering the entire gambling industry, but focuses in part on new forms of gambling, and those targeted towards children.

“There is academic research which proves that there is a connection, though not necessarily a causal link, between loot box spending and problem gambling,” it says.

One expert, Dr David Zendle, explained to the committee that either loot box spending causes problem gambling, due to their similarity – or that people who have gambling problems spend heavily on loot boxes. But he warned that either way, the connection was “extraordinarily robust”.

The Lords report concludes that ministers should make new regulations which explicitly state that loot boxes are games of chance. It also says the same definition should apply to any other in-game item paid for with real money, such as FIFA player packs.

The Government told the committee that its planned future review of the Gambling Act would focus on loot boxes. But the Lords report warns: “This issue requires more urgent attention.”

The Lords join a range of parents and childrens’ groups, as well as a previous report from the digital committee on addictive technologies, in calling on ministers to regulate loot boxes as a form of gambling.

Some action has already been taken: in Belgium, loot boxes were banned in 2018 due to similar fears. Earlier this year, game-rating agency Pegi said clearer warning labels would be added.

And in the video game industry, some companies have taken the initiative and elected to change the way their systems work.

As part of its wider review of the sector, the Lords report also notes that young people are “most at risk” of becoming problem gamblers.

It says 55,000 problem gamblers are aged between 11-16. As a result, it says, all new online gambling games should be reviewed to see if they appeal to children – and their potential to cause harm should be assessed.

The report also highlights the problems with eSports betting as another potential gateway for young people.

Researchers told the committee: “eSports represents the largest growth opportunity for sports gambling and presents a particular worry, as its players and spectators are young.”

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Governments around the world are testing citizens for coronavirus antibodies, to work out whether people have had the deadly Covid-19 disease.

Some countries are setting up so-called “immunity passports” and others may follow suit.

The idea is that a passport would certify that you have had coronavirus and will not carry or contract the disease again, opening up a way out of lockdown restrictions for the holder.

But is this theory correct? And will it create a group of antibody-carrying elite who can date, travel and work as they wish, while others are still limited by health precautions?

‘I know I’m clear, we should meet!’

Pam Evans, from Aberdeen in Scotland, has just had a rude awakening to the new reality of internet dating. She says that a man who was interested in meeting her took a novel approach.

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“I had one guy at the weekend: ‘I’ve just been tested last week for Covid so I know I’m clear, we should meet up’ And I said: ‘Oh no, absolutely not’… he became just absolutely abusive straight away.”

Pam’s hopeful date was trying to take advantage of his apparent negative coronavirus test result as a reason to break lockdown rules to visit her.

Is this a sign of how those who get a certificate stating they’ve already had coronavirus might use their privileged position in society?

In New York, people are using antibody tests – showing that they have been exposed to the virus and have recovered – as a way of suggesting they are safe to date.

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They are photographing positive test results to use as a kind of improvised “Covid-immunity passport”.

If you have antibodies, the theory goes, you will not get the disease again.

Dating aside, what if we could decide who is safe to return to work or get on an aircraft? For those people. the Covid-19 lockdown could be over.

‘Immunity passports’

The idea behind immunity passports, is that of a certificate confirming that you have had Covid-19. It could be used to enter places that those people without one are barred from.

To get one, you’d have to test positive for antibodies created after exposure to the virus.

Estonia is building an “immunity passport” system, and Chile is also planning what it calls a “release certificate”, following such principles.

Tavvet Hinrikus, co-founder of the money exchange firm TransferWise, helped in the development of Estonia’s phone app-based system.

“There are areas where I think it’s a no-brainer we should use this, like… who takes care of our elders; can I go and see my parents?

“If immunity as a concept exists, then I think people who have immunity should be cleared to work with elders, or the same for frontline workers,” he says.

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Other apps are being developed to display antibody – and potentially immunity – status. One example is Onfido. Its co-founder, Husayn Kasai, says some US hotel chains are now are accepting immunity passports via an app.

“It’s predominately for guests who want to access some of the services, be it the spa or the gym, where social distancing isn’t an option.”

Antibody elite

But could there be a sinister aspect: the potential for a supposedly Covid-immune elite to develop?

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Robert West, professor of health, psychology and behavioural science at University College London (UCL), fears a “divisive society”.

“You can imagine a situation where if you can get hold of some sort of certification, it will open up doors for you that wouldn’t be open to people who can’t have that certification.

“It could create a multi-tier society and increase levels of discrimination and inequity.” Prof West also warns that the entire premise of immunity might be on shaky ground.

“It wouldn’t be based on solid scientific foundation. It would be based on a probability that you may or may not be susceptible [to coronavirus] yourself or may or may not be in a position to pass the virus onto other people.

“It would be to the detriment of sectors of society, really being driven by commercial pressures.”

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Prof West envisages a point where people with recent antibody certificates would be able to work with vulnerable patients in healthcare roles, or that firms might use their workers’ immunity passports as a way of competing with other companies.

But he believes there’s not enough evidence to show that having antibodies is a reliable way to tell how likely you are to catch or pass on the virus.

‘She’s OK, she has antibodies’

The air travel sector has been hit particularly hit hard by the pandemic and John Holland-Kaye, chief executive of Europe’s busiest airport, London Heathrow, wants all countries to recognise antibody certificates.

“What you really need [is to know that] your health passport… is going to be accepted in the country you are going to, and you’ll be allowed to return home safely without having any kind of quarantine.”

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Carmel Shachar, of the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School in the US, fears that people may actually try to catch Covid-19.

A scenario she worries about is: “If you want to go back to work, you’re going to have to contract a deadly disease, one that we don’t actually want you to have, from a public health point of view or from an individual point of view.”

She also worries about privacy. “If my employer can demand medical information about me, have I had Covid, do I have antibodies – are they allowed to do so? If they have that information, are they allowed to share it?”

The commercial benefits of publicising this information for certain industries are obvious, Ms Shachar believes. “If I work at a restaurant, can my employer tell every customer who walks in the door: ‘Oh don’t worry, she’s OK because she has antibodies’?”

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Ms Shachar thinks known immunity could be of significant benefit. “You might say, for healthcare workers working with Covid patients, or nursing facility workers… we do want to see immunity.”

She says that people really want to get back to how things were before the pandemic, or a “new normal” that is close to it, and are prepared to make compromises.

Testing questions

Getting to that “new normal” as quickly as possible is the target for governments around the globe, Many find antibody-testing the entire population a tantalising idea where infection rates are high.

In Germany, the country’s disease control and prevention agency, the Robert Koch Institute, is conducting large-scale random antibody testing.

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But questions remain about the accuracy of some of these tests. Research published in May by the US-based Covid-19 Testing Project found that 12 antibody tests were accurate between 81-100% of the time.

While the US Centers for Diseases Control and Prevention (CDC) has warned that some antibody tests could incorrectly state you had antibodies – up to half the time. Meaning those who’d never had Covid-19 could mistakenly think they had immunity, and might then act riskily because of this false sense of security.

And even if the test correctly identifies that you have antibodies, does that mean you are actually immune? The World Health Organization (WHO) has expressed its doubts.

In the UK, for example, concerns were voiced by 14 senior academics in a letter published in the British Medical Journal at the end of June, saying that antibody tests for UK healthcare staff were being rolled out without “adequate assessment”.

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Back in Aberdeen, Pam is similarly unconvinced by the antibody testing argument.

“We don’t know how long this immunity could last for. We don’t know if it is 100% right if you’ve had those symptoms. There’s no harm in meeting somebody and sitting and having a coffee in a park,” she says.

“I’m not someone who’ll kiss on the first date anyway. So to me, having that two metres apart means that a guy can’t lunge on you for once!”

This article featured interviews broadcast on Business Daily, on the BBC World Service.

Can ‘immunity passports’ help us get back to normal?

The business case for immunity passports

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The rapid roll-out of more online shopping capacity has helped Sainsbury’s to report soaring sales over the lockdown period.

Online sales have more than doubled compared with last year as consumers shopped and ate at home.

Overall, grocery sales were up 10.5%, including in-store and online shopping, but fuel and clothing sales were lower.

The second half of the year would be “challenging”, said the chain’s new chief executive, Simon Roberts.

“Our business has fundamentally changed,” said Mr Roberts, who took over from Mike Coupe at the start of June.

“Customers are shopping very differently. The business has changed the way it works,”

Adapting to the Covid-19 pandemic meant an extra £500m in costs, as the company invested in its digital services, hired more staff and altered store layouts.

Online deliveries have increased from 7% of the chain’s grocery business to 17%, while click-and-collect sales are up 13-fold, it said. Sainsbury’s has added 184 click-and-collect locations during the last three months and recruited 25,000 new staff.

• Sainsbury’s boss warns queues set to stay in place

“A number of the decisions we have made have materially increased costs, but meant that we have done the right thing for our customers and set us up well for the future,” said Mr Roberts.

Mr Roberts also predicted more constraints on customer spending later in the year, with unemployment set to rise.

“The coming weeks and months will continue to be challenging for our customers and our colleagues and we do not expect the current strong sales growth to continue,” he said.

The company said pre-tax profits for the year would be in line with previous expectations.

Total sales grew 8.5% between April and June, with particularly strong demand for store-cupboard essentials, leading to restrictions on sales of some items.

Sales at Sainsbury’s-owned Argos had enjoyed a boost from the hot weather, the chain said, with a rise of 10.7%, despite the majority of its stand-alone stores being closed during lockdown.

Julie Palmer, partner at Begbies Traynor, said the new chief executive now faced the task of “navigating the supermarket through the murky economic waters of covid-19”.

“Although grocery sales have spiked during the past few months, the increased costs retailers have had to absorb from disruptions to the supply chain and the implementation of social distancing measures have rocked the boat, with the business’s profitability taking a hit,” she said.

Richard Hunter, head of markets at Interactive Investor, said Sainsbury’s had demonstrated “an ability rapidly to evolve within a new environment”.

“If the pandemic has marked a sustained change in consumer behaviour, Sainsbury’s will be well placed to benefit. In particular, its digital capabilities and the possibility that shoppers might lean more towards the click-and-collect option in future would play directly into the group’s hands,” he added.

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The UK needs tougher rules to curb the dominance of Google and Facebook, including powers to break them up, the Competition and Markets Authority has said.

It is concerned that the firms’ dominance in digital advertising raises barriers for new competitors.

This may be pushing up prices for consumers, the CMA said.

The tech giants said they faced strong competition and that they would work with regulators on their concerns.

The CMA, which has been investigating their power in advertising for a year, said on Wednesday that it was “concerned that they have developed such unassailable market positions that rivals can no longer compete on equal terms”.

Google has more than 90% of the £7.3bn search advertising market in the UK, it said.

• Have we become too reliant on Big Tech firms?
• Sunak urges US to back digital services tax

Facebook takes more than half of the £5.5bn UK online display advertising market.

The CMA said the services provided by Google and Facebook “are highly valued by consumers and help many small businesses to reach new customers”.

But it said their massive reach is a source of power and that “each has unmatchable access to user data”.

“If the £14bn spend in the UK last year on digital advertising is higher than it would be in a more competitive market, this will be felt in the prices for hotels, flights, consumer electronics, books, insurance and many other products that make heavy use of digital advertising,” the CMA said.

It said that Google and Facebook’s market positions “also have a profound impact on newspapers and other publishers”, with newspapers reliant on the giants for nearly 40% of visits to their sites.

New unit

The CMA called for a new “Digital Markets Unit” to enforce a new code of conduct for big tech firms and allow more data accessibility for rivals.

It would also have the power to break up the tech firms if necessary, such as being able to order Google Ad Manager, its advertising management platform, to become a separate business,.

The CMA said it would work with watchdogs the Information Commissioner’s Office and Ofcom to establish a “Digital Markets Taskforce” to advise the government on a new regulatory regime.

The Department for Business, Energy and Industrial Strategy said it would “carefully consider” the CMA recommendations.

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‘Significant competition’

Ronan Harris, Google UK and Ireland vice-president, said digital advertising “helps businesses find customers and supports the websites that people know and love”.

Mr Harris added that Google would “continue to work constructively with regulatory authorities and government”.

A Facebook spokesman said: “Providing a free service, funded by advertising that is relevant and useful, gives millions of people and businesses in the UK the opportunity to connect and share.

“We face significant competition from the likes of Google, Apple, Snap, Twitter and Amazon, as well as new entrants like TikTok, which keeps us on our toes.”

He said Facebook would be “engaging with UK government bodies on rules that protect consumers and help small businesses rebuild as the British economy recovers”.

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Political sensitivities

The CMA is “passing the baton to the UK government with a range of politically controversial proposals”, according to Christian Ahlborn, global head of competition at law firm Linklaters.

“One is left wondering whether the fact that many of its ideas would have caused political ructions on the other side of the Atlantic has played a significant role” in its deciding not to launch a market investigation and instead recommend legislation, he said.

The UK and other European countries have been at loggerheads with the US over international proposals for tech giants “to pay their fair share of tax”.

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UK house prices were 0.1% lower in June than the same month a year ago – the first annual fall since December 2012, according to the Nationwide.

The building society also said property values had dropped by 1.4% compared with May as the coronavirus lockdown hit the housing market.

Sales plummeted and viewings halted when the sector was effectively frozen.

The Nationwide said the magnitude of the shock to the economy made a house price fall unsurprising.

It said the outlook for the housing market was “highly uncertain” in the coming months.

The housing market, as with the rest of the economy, has been hit hard by the coronavirus pandemic. The lockdown meant activity slowed sharply, with sales at half the levels of a year earlier.

Viewings, sales and moves have now resumed in much of the UK, but buyers and sellers face fresh unease about job and income prospects, prompting some to rethink plans over property.

The Nationwide, which bases its figures on its own mortgage lending, said that house prices, on an annual basis, dropped from a 1.8% rise in May to a 0.1% fall in June as the effects of the shutdown were felt. The typical home was now worth £216,403, it said.

This will be welcomed by first-time buyers hoping for a consistent fall in house prices, although restrictions by lenders mean mortgages have become more difficult to secure.

“With lockdown measures due to be eased in the weeks ahead, housing market activity is likely to edge higher in the near term, albeit remaining below pre-pandemic levels. Nevertheless, the medium-term outlook for the housing market remains highly uncertain,” said Robert Gardner, Nationwide’s chief economist.

He said that government measures to support the economy and jobs would dilute the potential impact of the pandemic on the housing market.

What next?

Prices in April, May and June were lower than the previous three months in Wales (down 2.2%) and Northern Ireland (down 0.5%) compared with rises in Scotland (up 2.5%) and England (up 0.4%), the Nationwide said. These figures can be relatively volatile owing to the relative lack of data in some areas.

Commentators said the rest of the year could be a test for the housing market.

“The property market was never going to get through such a profound economic shock without taking a material hit,” said Andrew Montlake, managing director at mortgage broker Coreco.

“The second half of 2020 is going to be the real test for the property market, as government support for workers is slowly removed and we see a rise in unemployment. The government and Treasury are going to be tested like never before as they seek to keep people in jobs, which will clearly be pivotal to the future direction of house prices.”

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Department store owner John Lewis is planning to cut jobs and stores in an effort to slash costs.

The firm said it had come to terms with the fact it has too much store space.

It comes as luxury department store Harrods and Topshop owner Arcadia said they planned to cut as many as 1,180 jobs between them.

John Lewis’ plans were first shared with staff at the company, which is owned by its employees. The number of stores and jobs has yet to be decided.

Cuts could also include the smaller of its two head office buildings in London.

“The reality is that we have too much store space for the way people want to shop now and we have shared this with our Partners,” the company said in a statement.

“As difficult as it is, it is highly unlikely we will reopen all our John Lewis stores. However no decision has been made and any details would be shared with Partners first by the middle of July.”

‘Heavy heart’

The company is unlikely to pay its workers a bonus next year, it added.

The news was first reported by the Evening Standard, which obtained a copy of the memo to staff.

It follows a warning from the company in March that it could close shops, as a plunge in profits forced it to cut staff bonuses to their lowest level in almost 70 years.

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The retailer, which also owns Waitrose, launched a review of the business which it said would involve “right sizing” its stores across both brands.

The luxury retailer Harrods has announced it is cutting up to 680 jobs due to the impact of the coronavirus.

In an email to staff, managing director Michael Ward said Harrods was slashing up to 14% of its workforce of 4,800 people.

Lost customers

He wrote: “With a heavy heart, today I need to confirm that due to the ongoing impacts of this pandemic, we as a business will need to make reductions to our workforce.”

He said it would take a “drastic improvement in external conditions” for Harrods to recover and return to growth.

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“The necessary social distancing requirements to protect employees and customers is having a huge impact on our ability to trade, while the devastation in international travel has meant we have lost key customers coming to our store and frontline operations,” he added.

Mr Ward said the job cuts would come “in parts of the business that have been most affected by the challenges of lockdown”.

Arcadia, owned by billionaire Philip Green, said 500 of its 2,500 head office workforce would be cut.

“Due to the impact of Covid-19 on our business including the closure for over three months of all our stores and head offices, we have today informed staff of the need to restructure our head offices,” the company said.