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- Daily business and finance update 15th January 2024
Daily business and finance update 15th January 2024
Recession risk lingers
Good morning. Today we're talking about the UK economy, Burberry’s profit warning and Amazon cutting back.
Recession risk lingers
The UK economy rebounded in November, driven by Black Friday sales, growing by 0.3% after a 0.3% contraction in October. However economists think there is still a risk of a recession, defined as two consecutive quarters of negative growth, as the UK economy is in a fragile state having shown little growth over 2023. Over the broader three month-period to the end of November, economic output was estimated to have fallen by 0.2%, reflecting the pressure on households amid the cost of living crisis. The latest figures come amid growing expectations the Bank of England will cut interest rates this year as inflation continues to fall back from the highest level in decades. Official figures due this week are expected to show inflation cooled in November from 3.9% in October, although households remain under significant pressure as prices remain high.
Burberry’s poor Christmas
Burberry cut its annual profit forecasts after posting disappointing Christmas sales. The British fashion house said that it had been affected by a continued slowdown in luxury demand after rises in the cost of living and increases to interest rates globally. The news sent Burberry shares down 6% and they are now down 45% over the past year. Rivals including the French luxury brands LVMH and Kering have also reported lower demand for high-end goods in key markets such as the US, Europe and China as the post-pandemic spending spree wears off.
Amazon cuts streaming jobs
The e-commerce giant has spent billions building its content and streaming service, but now it wants to rein in costs. So, it’s laying off hundreds of employees in its Prime Video and MGM Studios units, the latter of which it acquired for $6.5bn in 2022. It’s also cutting 500 employees from its livestreaming platform Twitch. These job cuts come after Amazon terminated around 27,000 employees across the company in late 2022 and early 2023 to bring costs down. But it’s not the only company that wants to spend less on streaming: Disney, Paramount and Warner Bros. are all looking to shave expenses, while Netflix hasn’t raised its content budget in two years, per Bloomberg.
Plot uncovered: Six people have been arrested on suspicion of a plot to disrupt the London Stock Exchange.
Cutting back: Citi is set to cut 20,000 jobs in a massive cost-cutting program after racking up huge losses last year.
AI jobs: Artificial intelligence is set to affect nearly 40% of all jobs, according to a new analysis by the International Monetary Fund.
Number of the Day
The amount of tax the Post Office may have underpaid by deducting payments to victims of the Horizon scandal from its profits, say tax experts.
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