Today's business and finance round up 5th December 2022
🔗John Lewis enters rental market with £500m joint venture
5th December 2022
Bite-sized business news from the UK and beyond
- John Lewis enters rental market with £500m joint venture
- Western ban and price cap on Russian oil takes effect
John Lewis enters rental market with £500m joint venture
On Friday John Lewis announced it had teamed up with asset manager Abrdn to build new rental homes.
How did we get here?
Being a retailer in the age of a declining high street has led John Lewis, the owner of the department chain and Waitrose supermarket, to pivot its business model. As more shopping moves online and away from physical stores, the company has set the goal of generating 40% of its profits from non-retail by 2030.
Last year the group collaborated with digital wealth manager, Nutmeg, to offer stocks and shares ISAs and general investment accounts. And already has credit services through its Partnership Card and also sells home, car and pet insurance.
Now it’s leveraging its position as one of the most trusted brands in the UK to move into property development.
The group plans to use Waitrose shops in Bromley and West Ealing, and an empty John Lewis warehouse in Reading, to build 10,000 new homes over the next decade. Not only will it develop and manage the homes for rent, but could also supply furniture and other services such as broadband.
Zooming out: The demand for rental homes is soaring especially as rising mortgage rates makes getting on the property ladder even harder. John Lewis said the UK build-to-rent residential property market is expected to double in size, with 30,000 new homes completed annually by 2026, according to research by the property firm Savills. With an estimated shortfall of 75,000 rental properties in London alone.
Other stories to keep you in the loop
- US jobs growth signals tough inflation fight ahead
- Train strikes: RMT rejects offer aimed at averting festive strikes
- Currys drops Royal Mail ‘for now’ as strikes threaten deliveries
- Social media app Parler says Kanye West deal off, as rapper says he ‘likes’ Hitler
- Wall Street bankers face bonus and job cuts
- Big advertisers including Amazon returning to Twitter
Western ban and price cap on Russian oil takes effect
From today Western allies will enforce two sanctions on Russia as retaliation for the war in Ukraine: The EU and UK will ban the import of Russian oil and the G7 group of leading world economies and Australia will pay no more than $60 per barrel for Russian oil.
How did we get here
Since Russia invaded Ukraine in February, the West has been trying to hurt the Russian economy by imposing sanctions. Reducing the country’s income from oil – its main export – was a clear way to hit Russia’s finances which fund the war in Ukraine. However it’s been difficult to agree on how as the EU was Russia’s biggest customer and there were concerns that an oil ban would send global prices soaring and therefore inflation even higher.
But after months of discussion a cap and ban is now in place
The $60 cap stops shippers and insurers – most of whom are based in G7 countries - from handling Russian oil sold for more which will impact what Russia can get from the rest of the market.
But Russia has repeatedly said it won’t sell oil to countries who implement a price cap. That could wreak havoc on global supply and spike prices. The cap can be successful only if China and India agree to support it, since they now buy the bulk of Russian oil.
Zooming out: China and India boosted their purchases of Russian oil after Russia’s invasion of Ukraine, and have benefited from lower prices. If they keep loading up on Russian oil, it’s unlikely that the G7 cap would really hurt Russia. And it doesn’t seem like they’ll support it.
Stat of the day
Interesting links from around the web