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  • Today's business and finance round up 13th August 2021

Today's business and finance round up 13th August 2021

✅UK economy almost back on track

August 13, 2021

13th August 2021

Good morning Sportswear giant Adidas will have to take a huge ‘L’ of its own after agreeing to sell Reebok for €2.1bn, 15 years after it bought the brand for €3.1bn.Adidas had hoped that buying Reebok would help it compete with long-time rival Nike but alas it just couldn’t do it.

Today's stories

  • UK economy almost back on track

  • China plans long term crackdown on business

Yesterday's market moves

FTSE 100 -0.4%  7,193 FTSE 250 0.0% 23,747

The FTSE 100 dipped 0.4% from its highest since February 2020, entirely because companies start to trade “ex-div” i.e. without the right to the next dividend payment. The FTSE 250 trod water, dipping 10 points from its all-time high.

ECONOMYUK economy almost back on track

What’s going on?As expected the lifting of lockdown restrictions this spring led to a lift off in the UK economy. Between April and June GDP – the value of all the goods and services – rose 4.8%, according to data from the Office for National Statistics (ONS).This means the UK is now just 4.4% smaller than it was in the final three months of 2019, before the pandemic.

Why is this important?

The 4.8% economic expansion compared to the 1.6% contraction across the first three months of the year when the UK was still in lockdown.The bounce back in activity was driven by the reopening of the high street, restaurants and bars as consumers rushed out to make the most of their newfound freedom. The advertising sector also grew strongly with a 14.7% increase through June as businesses looked to capitalise on consumer spending.The ONS said the UK’s growth for the period was faster than those recorded by the US, France, Germany and Spain. However the UK’s economic contraction was sharper than most developed countries, who are now closer to their pre-pandemic level.France's economy is 3.3% below pre-pandemic levels, Germany is 3.6% below and Italy's GDP is 3.8% lower. The US economy is now 0.8% larger than before Covid.

TakeawayThe pace of recovery in the UK economy has been extraordinarily fast. It took five years for the economy to recover output lost in the 2008-9 financial crisis. The damage caused by the pandemic has been far worse and the recovery far quicker.Further variants and rising infections are the biggest threats to the recovery. Policymakers are hoping that the UK’s rapid vaccination rollout will leave it in a good position to avoid any more lockdowns.

CHINAChina plans long term crackdown on business

China is getting tough on business. This year it has already made moves to regulate huge swathes of the economy like cryptocurrency, gaming and education.The Chinese Ministry of Culture and Tourism has even banned the use of songs at karaoke bars that contain “illegal content,” like those that violate the country’s religious policies or glorify violence.And it’s not stopping there.Yesterday Beijing released of a wide-ranging five-year blueprint for greater control of the Chinese economy.The 10-point plan, which runs to 2025, references Chairman Mao as China celebrates the 100th anniversary of the nation's Communist Party.It says new rules will be introduced covering areas including national security, healthcare, technology and monopolies in the world's second largest economy.The threat of government regulation so far this year has weighed on the share price of Chinese companies listed in China, Hong Kong and the US, costing investors around $1 trillion.

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