3rd October 2022
Bite-sized business news from the UK and beyond
- Another tricky week ahead for government
- How Elon Musk and Twitter fell out
Another tricky week ahead for government
After financial markets were rattled by the chancellor’s mini budget, the government will be hoping to reinstate confidence in their economic plan this week at the party conference.
How did we get here?
10 days ago the chancellor announced the biggest package of tax cuts since 1972 with the intention of kickstarting the UK economy. However markets were spooked by the borrowing needed to fund the policies and feared it would lead to even higher inflation and interest rates that could hurt rather than stimulate the economy.
It led to a rollercoaster week in the finance world including the pound falling to record lows against the dollar, rocketing interest rates on government bonds and emergency intervention by the Bank of England to shore up pension funds. See here for a recap.
On Friday the prime minister and chancellor held emergency talks with the Office for Budget Responsibility – the independent body that scrutinises government spending plans and forecasts economic output and inflation. Usually the OBR releases its forecasts in tandem with budgets however this offer was declined by chancellor for the mini budget which unnerved the markets.
Following the meeting, there was disappointment that the OBR will hold off releasing forecasts until late November when the chancellor will unveil his detailed economic plans.
What next: This week the prime minister and chancellor will address Conservative party members at the annual gathering in Birmingham. The world outside the conference hall will be listening and will be hoping to be reassured that the economic plan is sustainable.
Liz Truss has acknowledged that the messaging of the mini budget could have been handled better. But she’ll have her work cut out to convince the country. Not since the late-1990s has the Tory party been over 30 points behind Labour in opinion polls. Already, YouGov reports that more than half of Brits think Liz Truss should resign as prime minister.
Other stories to keep you in the loop
How Elon Musk and Twitter fell out
Text messages made public as part of Elon Musk’s court fight with Twitter (along with being highly entertaining) shed insight into his early motivations for buying the business and show how Silicon Valley heavyweights rallied to his cause.
A trial, starting on 17 October, will decide whether the world’s richest man will have to complete the $44bn acquisition of the social media company he has agreed to. Musk could be required to testify as early as this week
Why it matters: The until-now private communications are a window into how quickly (and casually) billion-dollar deals can get done between the world’s wealthiest people.
Early in the process, an advisor to FTX co-founder Sam Bankman-Fried says the crypto billionaire could chip in to back Musk’s bid: “~$1-3b would be easy and ~$3-8b I could do,” the advisor texts.
Several weeks later, another tech billionaire Larry Ellison offers to invest “a billion… or whatever you recommend.”
The texts also reveal how the relationship between Musk and Twitter CEO Parag Agrawal deteriorated over a matter of weeks, leading to Musk trying to take the company private before ultimately bailing on the deal.
Initially the pair bonded over their shared passion for engineering before things took a turn for the worse.
In one exchange, Agrawal reprimands Musk for tweeting “Is Twitter dying?” to which Musk responds “What did you get done this week? I’m not joining the board. This is a waste of time.”
Later Musk complains that Agrawal is not working hard enough, and “doing occasional Zoom calls while drinking fruity cocktails at the Four Seasons” in Hawaii.
Bottom line: The texts show that Musk appeared to genuinely believe that bots are a big problem for the platform (the main issue he’s cited for backing out of the deal), but his takeover bid didn’t include any conditions around bots and spam accounts, so it’s not likely to do much for his case.
Stat of the day
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