3 October 2018

Scott Reid

3 October 2018

Good morning,

“They want us to be robots!”

So said staff at Amazon’s newest acquisition in the grocery market, Whole Foods, where workers suggest the new boss is trying to cut jobs and reduce wages as they reshape the chain in the mould of a warehouse production line, the Guardian reported on Monday.

That complaint, however, yesterday ran a little hollow as the company announced it is raising its minimum wage to $15 an hour in the US, and between £9.50 and £10.50 an hour in the UK effective from 1 November.

But those celebrating yesterday’s announcement should be considering at what cost a wage increase comes. Well, around $1 billion to be exact, if the average hourly rate for 250,000 of Amazon’s employees was raised by $2 on an equal basis. A drop in the ocean for Jeff Bezos, the world’s richest man and a company approaching a $1 trillion valuation, right? 

Not so. Amazon is notoriously tight-fisted as it operates on a razor tight low margins profits model. It follows a simple business logic that lower costs means lower prices for its customers. And given the company has already announced plans to cut its holiday workforce by nearly 20% this year, it seems likely that its hiring policy might be first to take hit.

All in, today’s announcement is a smart move for a well-known Scrooge of the business world. Washington, as London or even Edinburgh, seemed hell-bent on criticising the tech giant’s approach to employees’ salaries, so it pays to be seen to be on the front-foot by volunteering better terms. 

Then again, a more cynical commentator might point out that Amazon does want its staff to be actual robots after all. In that case, coughing up more for your staff today seems a little less daunting if your workers aren’t likely to kick up a fuss over pay, or even loo-breaks, tomorrow.


Theresa May is expected to prioritise the integrity of the Northern Irish border over the UK’s ability to strike new trade deals after Brexit as she makes her keynote speech to the Conservative Party conference later today. Today’s speech is seen as the last chance for the prime minister to rally her party behind her Chequers vision for Brexit before the European Commission gives its final verdict on the proposals a week today. (£)

Meanwhile, Northern Ireland’s Democratic Unionists have warned they will vote down any Brexit deal which creates a customs border in the Irish Sea. The suggestion by Commons leader Nigel Dodds at the Conservative Party conference yesterday appears to contradict the terms of the previously-arranged Irish border backstop with the EU, which party leader Arlene Foster insisted would leave Northern Ireland “semi-detached”. 

The NYTimes reports that the Trump family’s tax affairs are being reviewed by the New York state authorities following allegations of fraud. In an exhaustive special investigation, the paper alleges that the president received at least $413 million in today’s values from his father’s real estate empire, conspired through shell tax operations and falsified under-valuations of real estate holdings during the 1990s.

Business & Economy

Tesco has reported a 24.4% lift in underlying group-wide profits to £933 million during the first half of this year. In the UK and Ireland alone, Tesco also saw sales rise by 2.3% during the second quarter and a 47.6% jump in first half operating profits, £97 million of which has been linked with its purchase of wholesaler Booker in March.

Shares in Funding Circle dropped more than 20 per cent at points in conditional dealing yesterday ahead of the start of full trading for the P2P lender’s £1.5 billion flotation on the LSE today. The Times reports that the fall is linked with an over ambitious valuation of almost 20 times revenues where other financial services businesses traditionally trade at around three or five times. The success of this IPO, and of Aston Martin which also enters the FTSE today, is being touted as a test for further potential “unicorn” flotations on the LSE, including fintech start-ups Monzo and Transferwise. (£) 

Sky News reports that JD Sports Fashion and Sports Direct are competing with Halfords in a bidding-war to take control of Evans Cycles. The high street sports chains are both thought to have tabled indicative offers for the cycle retailer this week, joining existing offers by Halfords and a number of financial investors. Evans Cycles has reported losses of more than £8 million in the last two years, and is said to need more than £10 million of fresh capital.

BMW told Sky News that it is planning for a “hard complicated Brexit”, which could mean it moves all production out of the UK in the event of a no-deal Brexit. Speaking at the Paris motor show, chief financial officer Nicolas Peter said rumours of a UK government plan to revert to WTO rules after Brexit, but offer a bespoke zero-tariff deal to European car makers was all but impossible.


Falls across several sectors led the FTSE 100 to an overall loss yesterday, as a more strident tone over the possibility of a hard Brexit coming out of the Conservative party conference failed to lift investors’ moods. By close of play, the London market was down 21 points of 0.3% to finish at 7,474.55. This was matched by similar falls in sterling, which finished the day 0.4% lower against the dollar to $1.30, and 0.3% lower against the euro at €1.12.

In corporate news, both Royal Mail (down 8.38%) and Ryanair (down 1.22%) continued to nosedive, following their respective shock profit warnings on Monday. The hit to Ryanair in particular affected confidence in other airline stocks including easyJet (down 1.35%), where investors sold shares despite an agreement it had agreed with Virgin Atlantic over connections at London Gatwick.

Higher education publisher Pearson (down 3.87%) also suffered after research published by the ONS showed that additional earnings premium from taking a university degree had fall from 41% in 2004 to 24% in 2016 as the number of graduates has surged. A spokesperson from broker Liberum suggested investors were likely spooked by any potential fall in new students the findings may precipitate, citing falling numbers in the US between 2010 and 2018.

The oil giants were exceptions to an otherwise gloomy day, however, where a rise in the price of a barrel of brent crude above $85 led to gains for BP (up 0.29%), Shell (up 0.26%) and Premier Oil (up 2.50%) 

The latest Nationwide UK house price survey also struck an optimistic note, showing that home values rose by two per cent year-on-year in September.

Esure Group
UK Economic Announcements
(00.01) BRC Shop Price Index
(09.30) PMI Services
(15.30) Crude Oil Inventories (US)

Goodwin Plc

Intl. Economic Announcements
(08:55) PMI Composite (GER)
(08:55) PMI Services (GER)
(09:00) PMI Composite (EU)
(09:00) PMI Services (EU)
(10:00) Retail Sales (EU)
(12:00) MBA Mortgage Applications (US)
(14:45) PMI Composite (US)
(14:45) PMI Services (US)
(15:00) ISM Non-Manufacturing (US)

Columns of Note

Ambrose Evans-Pritchard writes a personal testimony in the Daily Telegraph that Supreme Court nominee, Brett Kavanaugh, “lack judicial character and is unfit to serve”. Evans-Pritchard describes an encounter with Kavanugh in the mid-1990s when he was an Assistant Independent Council for the Starr investigation probing the Clintons, alleging he wilfully covered up evidence of homicide, witness tampering, and a conspiracy to violate civil rights in an FBI investigation. 

After months of delays, Katherine Griffiths writes in The Times that a reformed lenders’ financing group paid for RBS is finally inviting applications for grants from a £775 million fund. Griffiths predicts that the so-called Alternative Remedies Package, which is intended to benefit “the market as a whole”, will only incite a catfight among the big banks and questions over the needs of the British banking industry. She suggests greater investment in analytics would be a welcome start to help the likes of start-up Metro to roll out a greater physical presence beyond the computer screen or streets of the capital. (£)

Did you know?

Chindōgu is the Japanese art of creating gadgets that aren't useful, but aren't exactly useless either. Examples have included a train nap cap, sweet shoes, the butter stick, easy eye drop glasses, the umbrella tie and the baby mop. 

Parliamentary highlights 


House of Commons
In recess until Tuesday 9 October

House of Lords
In recess until Tuesday 9 October

Scottish Parliament

Portfolio Questions

Education and Skills

Justice Committee Debate


Members’ Business
75th Anniversary of Age Scotland – Sandra White


Scottish Parliament
General Questions

First Minister’s Questions

Members’ Business
Challenge Poverty Week – Elaine Smith

Ministerial Statement
Health and Care Update

Scottish Government Debate
Women and Girls in Sport Week