Daily business and finance update 21st August 2023
WeWork’s uncertain future
Good morning. Today we're talking about WeWork’s uncertain future, the UK’s latest AI investment and China rate cuts.
WeWork’s uncertain future
WeWork, the co-working company that was once valued at $47bn, has warned that there is "substantial doubt" about its future due to increased member churn, financial losses and the need for cash. The firm said that it is taking steps to address its challenges, including cutting costs and raising additional capital. In 2019 the company was the biggest commercial landlord in London and New York and was seen as a leading disrupter of the traditional office space market. But the mass adoption of remote working during the pandemic has led to a decline in demand for office space. The company also had a failed IPO attempt in 2019 after a range of issues were exposed including creative accounting, excessive spending and concerns around the CEO’s leadership style.
UK AI investment
The UK government will invest £100m in high-powered artificial intelligence (AI) chips, according to The Telegraph. The investment is part of the government's efforts to catch up with other countries in the global competition for computing power. The chips will be used to train and run AI models, which are used in a variety of applications, such as self-driving cars, medical diagnosis and fraud detection. The government revealed plans in May to invest £1bn over 10 years in semiconductor research, design and production, a step dwarfed by the US’s $52bn (£41bn) Chips Act, and EU subsidies of €43bn (£37bn).
China cuts rates
Chinese banks made a smaller-than-expected cut to one of the key interest rates for the second time in three months, despite the central bank putting pressure on lenders to boost loans. The one-year loan prime rate was lowered from 3.55% to 3.45%. It comes as the world's second-largest economy’s post Covid recovery has been hit by a property crisis, falling exports and weak consumer spending. Last week, the serious problems in its property market were highlighted when crisis-hit real estate giant Evergrande filed for bankruptcy protection in the US. Meanwhile, the government has also stopped releasing youth unemployment figures, which were seen by some as a key indication of the country's slowdown.
Police perks: Waitrose and John Lewis are offering free hot drinks to on-duty police officers in a bid to deter shoplifters.
Takeaway update: Deliveroo will allow app users to combine takeaway food with grocery shopping in a single order.
Shutting down: The CBI, the embattled business lobbying group, is to close a swathe of its overseas offices as part of a cost-cutting drive aimed at ensuring its survival.
Pothole problems: The number of pothole-related breakdowns jumped to a five-year high due to one of the wettest months of July on record, figures suggest.
The number of households that missed out on financial support for soaring fuel bills, according to the charity Age UK.
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