5th January 2022
Bite-sized business news from the UK and beyond
Good morning RIP Blackberry. After 22 years yesterday marked the end of an era for the iconic phone as its manufacturer pulled the plug on its software. Once the smartphone of choice for celebrities, bankers and politicians, at its peak in 2011 50m units were sold.
- Consumers saving less and spending more
- Former Silicon Valley darling found guilty of fraud
Consumers saving less and spending more
What’s going on?
Brits splashed the cash just before Christmas with figures from the Bank of England revealing that credit card spending reached a 16-month high in November while savings dipped.
Why is this important?
We may still be in the midst of a pandemic and there are warnings of a cost of living crisis this year but UK consumers spending patterns are returning to pre-Covid levels.
Following the first lockdown in March 2020 families cut back on credit card spending due to concerns about job security and a weaker economy.
Data from the Bank of England showed that households borrowed £1.2bn in November, £900m of which was on credit cards. That was the highest since July 2020 and in-line with pre-pandemic levels.
Economists say that the uptick in borrowing could have been driven by consumers pulling forward their Christmas shopping amid reports of product shortages caused by supply chain disruptions.
People are also saving less with £4.5bn set aside in November, a steep drop from the 12-month average of £11.2bn. It’s thought the trend reflects rising confidence in rich consumers to spend more while poorer households reduce savings to cover rising bills.
Despite the buoyant November credit numbers, economists warn that the emergence of Omicron and the instatement of plan B measures could have dampened spending in December as households responded to increasing economic uncertainty.
Former Silicon Valley darling found guilty of fraud
On Monday Theranos founder Elizabeth Holmes was found guilty on four charges of defrauding investors by a US jury. Holmes was once named the youngest female self-made billionaire and graced the cover of high profile magazines.
So how did she get to a criminal trial?
Back in 2003 19-year-old, Holmes, dropped out of Stanford University to start the healthcare firm.
Theranos claimed it invented a machine that could test for diseases with a single drop of blood. It was aiming to transform the health industry by performing life saving tests in convenient locations like the supermarket, at a fraction of their usual costs.
The company raised closed to $1bn from big name investors like the Walmart founders the Walton family and media mogul Rupert Murdoch. At its peak Theranos was valued at $10bn. Holmes also drew a lot of attention as a female tech founder in a largely male dominated Silicon Valley.
Theranos was notoriously secretive, sharing very little about its technology with the public or medical community.
But in 2015 things started to unravel after a whistle-blower report in the Wall Street Journal exposed that the tech did not work. In 2018, Theranos shut down.
Holmes faces up to 20 years in prison but is likely to appeal the verdict. She's always maintained that she wasn't defrauding investors and was genuinely trying to build transformational technology.
Holmes has been held as an example of how the ‘fake it until you make it’ culture in the start up world can go awry. The outcome of her trial could shape the way Silicon Valley evaluates start ups in the future.
Stat of the day
In 2021 TikTok overtook Google to become the world’s favourite site
Other stories to keep you in the loop
- Nationwide customers face more payment delays
- Lloyds to take minority stake in banking loyalty app Bink
- Travel stocks help FTSE rally on first day of new year trading
- Serbian cable-TV tycoon snaps up Southampton FC in £100m deal
- A record 4.5 million Americans quit their jobs in November
- Toyota dethrones GM as number one US automaker
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