The UK stock market began the week well, with share prices moving up in tandem with the oil price, which rose above $51 on Wednesday. But things turned sour thereafter, leaving the FTSE 100 index clinging to a 0.4% gain at Thursday’s close. A slump in the share prices of house-builders contributed to the downturn.
What’s behind this loss of confidence in bricks and mortar? An Englishman’s home may be his castle, but house prices in the UK appear to be under siege. The Royal Institute of Chartered Surveyors (RICS) said on Wednesday that it expects prices to fall in the next three months – the first downturn for four years. One factor in this is the prospect of Brexit; we’ve recently had George Osborne’s claim that leaving the European Union could knock as much as 18% off UK house prices. And Mr Osborne has dented the market himself with his surprise increase in stamp duty. There’s also the distinct possibility that house prices have simply been too high for too long. But as the RICS acknowledged, the modest declines that its members foresee will hardly help first-time buyers.
The circus comes to town
If you thought British business was dull, that impression would have been shattered this week. We were treated to some extraordinary and entertaining exchanges in the committee rooms of the House of Commons, as two prominent businessmen came under fire from MPs.
First up was Mike Ashley, owner of Newcastle United and founder of Sports Direct. On Tuesday, he faced a grilling from the business, innovation and skills select committee over allegations that Sports Direct had imposed inhumane working conditions on staff at its Shirebrook distribution centre. Mr Ashley admitted that some staff had been paid less than the minimum wage. “I’m not Father Christmas,” he said.
Committee members also asked whether Sports Direct had outgrown its founder: “If you’ve gone from a dinghy to an oil tanker, shouldn’t you get someone who can drive a tanker?” “Possibly,” said Mr Ashley. Not that it appeared to bother investors: Sports Direct’s share price rose by more than 5% on Tuesday.
Then, on Wednesday, MPs grilled BHS executives over the collapse of the firm. Darren Topp, the former chief executive of BHS, alleged that Dominic Chappell, the former owner, had threatened to kill him and had claimed to have been in the SAS. Mr Chappell denied the allegations. It was an amusing sideshow – but hardly one that will raise a smile with the 11,000 BHS employees who now face unemployment and a yawning pension deficit.
Tilting at Tesco
After challenging bookshops, Netflix and Top Gear, Amazon is now turning on the supermarkets. On Thursday, the e-commerce giant announced the launch of Amazon Fresh, which will deliver groceries to its customers’ homes, initially in the southeast. Will this venture prove quixotic? Or will Amazon manage to lance yet another high-street incumbent?
And finally …
Anyone who’s done much train commuting in the UK has heard “leaves on the line” blamed for delays time and again. “Monkey on the roof” is a somewhat less familiar corporate excuse. Still, that’s what KenGeN – Kenya’s leading power provider – offered to explain a major outage. According to the company, the sneaky simian managed to trip a transistor – causing a nationwide power cut.
After KenGen’s travails with an intruder going ape, we trust that other power companies are doing whatever is required to insulate themselves from capuchin capers, mandrilling, Bandar-log-ins and macaque attack.
