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  • Business and finance update 2nd December 2024

Business and finance update 2nd December 2024

Trump tariff talk

Good morning. Today we're talking about Donald Trump’s tariff threats, Direct Line talkover talk and Just Eat’s London exit.

Big Stories

Trump tariff talk

The prospect of another trade war emerged after President-elect Donald Trump threatened major tariffs against products from the US’s three largest trade partners: Mexico, Canada and China. Trump vowed to impose a 25% tariff on Canadian and Mexican products and keep them in place until both countries crack down on drugs and migrants at their borders. The President-elect also pledged an additional 10% tariff on Chinese products as punishment for not cracking down on drug traffickers. If enacted, the tariffs could disrupt global supply chains, raise consumer prices in the US, and hurt Mexico’s and Canada’s economies, in particular. Trump also threatened to impose 100% tariffs on Bric countries - a China- and Russia-backed group of emerging economies - if they create a new currency to rival the US dollar. Trump has a history of using tariffs as leverage to gain concessions from other countries. In response to the threats, Mexican President Claudia Sheinbaum wrote a letter to Trump suggesting she would retaliate with tariffs of her own, while Canadian Prime Minister Justin Trudeau called Trump to discuss cooperation. China argued that “no one will win a trade war.”

Just Eat London exit

Just Eat Takeaway, the Anglo-Dutch food delivery giant, announced it will delist from the London Stock Exchange (LSE) by the end of this year. This move comes after a review of optimal listing venues and aims to simplify operations. The company cites low trading volume and administrative burdens as key reasons for the decision. This delisting follows a trend of high-growth companies leaving the LSE, potentially hindering the UK's ambitions to attract tech firms. Just Eat Takeaway will maintain its sole listing on Amsterdam's Euronext exchange. This decision comes after the company said it would sell its US arm, GrubHub, for $650m — a huge discount compared to the $7.3bn the firm paid in 2020. The delisting echoes the departures of other major companies like TUI and Flutter Entertainment, raising concerns about the LSE's post-Brexit competitiveness. Despite efforts by both Conservative and Labour governments to attract new listings, broader economic challenges continue to dampen investor demand.

Insurance mega merger

Car insurer Direct Line has once again rejected a takeover bid, this time from rival Aviva. The offer, valued at £3.3bn, represented a 58% premium to Direct Line's share price. Direct Line has faced challenges in recent years, including rising claims costs and increased competition from online insurers. Its shares have also struggled to recover from a profit warning back in early 2023, when it scrapped its dividend and sent shares spiralling lower. Aviva, meanwhile, has seen shares gain over that period as it benefited from a booming annuities business in its life insurance division. Last month Direct Line, which includes the Churchill and Privilege brands, revealed a "series of initiatives" designed to slash its cost base, with 550 job losses included in the cuts. The rejection of Aviva's bid follows an earlier approach from Belgian insurer Ageas in March. Analysts do not expect the rejection of the offer to be the end of the matter, with the prospect of a possible bidding war.

Elsewhere...

End of an era: Vauxhall will close its 120-year-old Luton car plant in April putting 1,100 jobs at risk.

Told off: The UK's financial watchdog has fined Barclays £40m over the bank's conduct during a fundraising drive in 2008, which it described as "reckless" and lacking integrity.

Tea time over: Typhoo Tea has fallen into administration after 121 years.

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Number of the Day

$154 million

How much US department store Macy’s discovered a single employee intentionally hid in expenses over the course of nearly three years.

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