A 'painful' budget is coming

Leading the agenda

_{Sir Keir Starmer predicts ‘painful’ budget in Downing St speech}

📍 Top line: Prime Minister Keir Starmer delivered a punchy speech from Downing Street yesterday where he predicted that October’s Budget would make 'big asks’ of the public. Without laying out exact details, the PM stated that Brits would have to ‘accept short-term pain for long-term good’.

🗣️ What else was said? The PM attributed the necessity of a tough Budget to Conservative financial mismanagement, claiming that the Labour government had inherited a £22bn ‘black hole’ in public finances. Starmer continued his critique of Rishi Sunak’s government with regards to recent widespread rioting in the UK, accusing the previous executive of facilitating a rise in populism.

💰 Tax rises coming? Sir Keir reiterated his election campaign promise not to raise National Insurance, income tax, or VAT. However, Chancellor Rachel Reeves has suggested that some taxes may increase and has not ruled out changes to inheritance tax, capital gains tax, or pension tax relief.

Business

Government waters down plans for workers’ ‘right to switch off’

📍Top line: The government is reconsidering plans to give employees the legal right to ‘switch-off’ outside of office hours. Originally hoping to implement legislation which would enable workers to ignore out-of-hours demands, the government will instead pursue a ‘code of practice’ for businesses.

❓Why the change of tack? The move is part of Sir Keir Starmer’s efforts to prove to business executives that Britain remains a strong place to invest, according to Bloomberg. With the economy set to suffer a slowdown, the government is keen to keep companies happy although the change of agenda will upset union leaders.

💥 Impact for employees: Legislation would have entitled people to seek compensation and facilitated further legal action if a worker’s right to disconnect was violated. Guidelines for a code of conduct, however, have no legal power leaving the responsibility of adherence in the hands of companies.

Elsewhere in business:

🇬🇧 Luxury goods brand Burberry, historically a staple of British high-end fashion, is expected to end its fifteen year stay on the FTSE 100 index following a slump in stock value. According to FTSE Russell, the company will most likely drop down to the FTSE 250 in September’s rebalance although final changes will be confirmed next week.

✈️ Ryanair CEO Michael O’Leary has proposed a two-drink limit per passenger at airport bars to tackle the rise in drunken disorder on flights and at airports. O’Leary highlighted that incidents of in-flight violence, including assaults on cabin crew and conflicts between passengers, have become increasingly frequent this summer, often exacerbated by a mix of alcohol, drugs, and pills.

Economy

Pound hits two-year high against dollar

📍Top line: The British pound surged to a two-year high against the dollar yesterday and also strengthened against the euro. Sterling reached a peak of $1.3246, the highest since March 2022, before settling at $1.3222, up 0.25%.

💷 Why the surge? Despite a recent rebound, the dollar has been under significant pressure in August due to fears of a recession. Traders have become increasingly confident that the Federal Reserve will cut rates later this year in response to financial struggles. 

☀️ Last minute holiday: It’s good news for any Brits looking for a last hurrah before the end of the summer holidays, Sterling is also up against the euro! Caused by the British economy outperforming the euro zone, the common currency was down at 84.45p, its lowest since August 1st. Anyone for a quick weekend getaway?

Elsewhere in the economy: 

🛍️ In a landmark ruling, more than 3,500 current and former workers at Next have won a significant legal battle for equal pay after a six-year fight. The employment tribunal determined that store staff, predominantly women, were unjustly paid lower wages than warehouse employees, where the workforce is more evenly split between men and women.

🇩🇪 Germany’s GDP contracted by 0.1% in the second quarter of 2024, adding weight to fears over a potential recession. The slump has been credited to a reduction in household consumption and businesses’ reluctance to invest in new projects during an extended period of financial uncertainty.

Job of the day

Social media giant TikTok has launched its London-based Marketing Assistant Internship for 2025. The position is available to anyone set to graduate with a bachelor’s degree in 2026. As part of the team you will be supporting the marketing team across various disciplines, from video creation to events management. Apply here now.

Tech

^{Ex-Peleton CEO says he has lost all his money}

📍Top line: John Foley, the former CEO and co-founder of Peloton, has revealed that he has lost nearly all of his wealth and has been forced to sell most of his possessions. Foley, who co-founded Peloton in 2012, saw his personal fortune skyrocket during the COVID-19 pandemic as Peloton bikes became highly sought-after with people stuck at home. In an interview with the New York Post, Peloton co-founder John Foley stated his billionaire status unravelled rapidly following his departure from the company.  

📉 Fall from grace: At Peloton’s peak, Foley was worth $1.9 billion but his fortune had slipped to $225 million by the time he stepped down as CEO in 2022. Matters continued to worsen for Foley as he was forced to ‘sell almost everything in [his] life’. He recently sold both his house in the Hamptons and a Manhattan townhouse for $51 million and $35.5 million respectively.

📈A comeback? Foley, who said he loves ‘an underdog story’, is now focusing his efforts on a new retail business, Ernesta. He believes that he can turn his misfortune on its head and secure a free cash flow of $500 million for the company by the end of decade.

Top line:

📱 Meta CEO Mark Zuckerberg has expressed regret over bowing to White House pressure to censor COVID-19 related content during the pandemic and not publicly discussing it sooner. The billionaire founder of Facebook stated that the Biden Administration successfully coerced the company into taking down relevant content, including posts deemed ‘humour and satire’.

🤖 Klarna, the Swedish buy now, pay later company, is planning to significantly reduce its workforce by nearly half as it increasingly relies on artificial intelligence, according to the FT. This move comes as the company prepares for a potential stock market flotation.

On this day

In 1866: The United States formally declared the end of the American Civil War.

Beyond The Biz

🇺🇦 Ukrainian President Volodymyr Zelensky has announced that the recent incursion by Ukrainian forces into Russia's Kursk region is part of a broader "victory plan" that he intends to present to U.S. President Joe Biden next month. 

🏟️ The opening ceremony of the Paris Paralympic Games starts this evening at 19:00. The 17th iteration of the games will run until September 8th and will feature over 4,000 athletes competing in 549 medal events. Channel 4 will be airing most of the Paralympics, with coverage starting at 18:30 today!

🍕 A Barbie-branded phone has been launched in the UK with the aim of helping young people to reduce their reliance on smartphones. Mobile phone manufacturer HMD have collaborated with toy brand Mattel to create a basic, retro-style handset without a front camera and no access to social media platforms retailing at £99.

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