20th December 2022
Bite-sized business news from the UK and beyond
- Twitter users vote Musk out
- Banker bonus review underway
Twitter users vote Musk out
Yesterday Elon Musk’s Twitter poll, over whether he should step down as the company’s chief executive, closed with 57.5% of 17.5m users voting “yes” in favour.
How did we get here?
The two months since Musk (reluctantly) bought Twitter for $44bn have been marked by constant turmoil — from the chaotic mass firing of half the workforce to the U-turn on banning links of rival social media platforms over the weekend.
All of this has had serious financial implications
Tesla – the electric carmaker Musk also runs – has seen its shares slump over 50% this year as investors worry he has spread himself too thin. This meant Musk lost his crown as the world’s richest man with luxury goods boss Bernard Arnault replacing him.
Many big name advertisers have paused spending on the platform putting Twitter’s main source of income at risk - Musk said the company is losing $4m a day.
Musk faces $1bn in annual interest payments after loading Twitter with $13bn of debt to help fund his acquisition. Twitter has reportedly been seeking new equity investors to help fund the company.
Next steps: Musk promised to abide by the result even though he said no successor was planned. He has a track record for following through with Twitter polls but as of the time of writing he remains in post.
Other stories to keep you in the loop
- Chancellor sets out plan for spring budget on 15 March
- King Charles III bank note designs revealed by Bank of England
- First-time buyers mortgage government help extended
- BAE Systems to recruit 2,600 apprentices and graduates
- London fintech Updraft raises £108m to grow lending business
- Average interest rate for easy-access savings rises to highest since 2009
- Thurrock becomes latest council to declare effective bankruptcy
- Alcohol duty freeze extended until August
- 'Fortnite' maker Epic Games fined $520m after claims it exposed kids to harm
Banker bonus review underway
Yesterday a Bank of England report revealed that banker bonus caps led to some banks just restructuring compensation instead of lowering it. The study, which shouldn’t come as a big surprise, was released as part of the UK’s plans to abolish the rules.
How did we get here?
In 2014 the EU introduced caps to banker bonuses across the region believing that inflated pay packets led to excessive risk taking that caused the global financial crisis in 2008.
Under the legislation bonuses can’t exceed twice a banker’s salary. So if a bank wants to pay someone £3m, it has to pay a salary of at least £1m.
But the British financial services sector has long opposed the rule, arguing that it undermines London’s position as a global banking centre. Now the UK has left the EU it’s able to revoke the conditions with the aim of making the country a more appealing destination to work.
The idea was floated when Boris Johnson was prime minister but was canned as he feared the backlash of increasing banker pay during a cost of living crisis.
But his successor Liz Truss, and later Rishi Sunak, has called the City of London ‘the jewel in the crown’ of the UK economy and is keen to boost the country’s appeal to international talent.
Next steps: The Bank of England has begun a consultation with the City which runs until March 2023 with new rules set to start in 2024.
Stat of the day
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