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Ford’s Bridgend Closure to affect employment rate in the UK

Mirror News Desk




On Thursday, the American multinational automaker Ford announced to close its Bridgend plant in South Wales in 2020, due to the lowering demands for some of its automobile’s engines. The step taken by the company is a big challenge for its workers, as they risk losing their jobs with the closure.

Ford’s Bridgend engine plant, which is a manufacturing facility of Ford in Europe -selling automobiles and commercial vehicles, once provided innumerable jobs to the workers in the country. It also built around 2.7 million automotive engines in 2018. However, analysts have anticipated that its closing would make about 1,700 people jobless.  

As a turnaround of its European operations, Ford would promote closure of many other plants along with the discontinuation of loss-making vehicle lines. In the same context, due to lowering demands, Ford has decided to end its production of 1.5-litre petrol engine by February 2020.

The expected pre-tax amount to cover the closing of Bridgend plant is approximately 650 million US dollars. The move has attracted criticism from trade union that has largely rejected the idea of the closure. The members have blamed the company for involving such extreme measures that could adversely affect the lives of the workers. They united in an effort to stop the closure, whilst taking the matter to the Welsh Assembly.

In the past two years, there has been a continuous decline in the sales of Ford cars, which has further affected its output and investment throughout the Europe.

Observing the future disadvantages of Bridgend plant, considering the current situations, Ford’s Europe President Stuart Rowley said, “Changing customer demand and cost disadvantages, plus an absence of additional engine models for Bridgend going forward make the plant economically unsustainable in the years ahead.”

As a result, Ford is in process of making some profits in other countries to reverse the losses in deteriorating European markets.

People who have been working hard to produce hybrid technology and electric vehicle components alongside manufacturing of third party vehicles to identify new opportunities have not been successful.

Due to the declining demands, the Closure of Bridgend plant also brings in more confusion for other automobile companies. Jaguar Land Rover and Honda have claimed that approximately 9,000 jobs would be lost if they close their British Plant in 2021, depreciating car sales and employment rate in the country.

Closing of the Bridgend’s Ford plant is expected to bring further downfall to the sales of cars in the country. Amid the Brexit crisis, the automobile companies have feared that a no-deal Brexit would definitely bring tariffs and customs checks to the vehicles, engines, and components, which would further raise costs and investments amid the decreasing demands.

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Pound Sterling Rises with Achieved Brexit Deal between UK and EU

Mirror News Desk



Pound Sterling

Brexit has played an important role in manipulating the British currency pound sterling. The currency has jumped and fallen innumerable times with the fluctuations in deals that now seems to have achieved an important stance in the country.

Whenever the country has shown signs of moving towards a no-deal Brexit or leaving the EU without a deal, it has only led to the weakening of the currency. On the other hand, its value has simultaneously increased with Britain’s positive approach towards Brexit.

Earlier on Thursday morning, pound sterling fell as Northern Ireland’s Democratic Unionist Party (DUP), which has been backing the Conservatives in government for a long time said that they could not back a Brexit deal in its proposed current form.

Though DUP leader Arlene Foster said that her party was willing to continue working with the government to try and secure a deal they could back, it led to the downfall of pound sterling. One of the major reasons for their non-support over the current deal was the government’s stance on Northern Ireland border.

As known, Prime Minister Boris Johnson earlier wrote a letter to the EU Council asking them to remove the Irish Backstop from the withdrawal agreement, claiming that it was “anti-democratic and inconsistent with the sovereignty of the UK as a state”.

Though Johnson said that he was ready for the negotiations following the Brussel summit, he failed to earn Northern Ireland’s trust. The Irish leaders thereby aimed at getting a more appropriate deal that would work for Northern Ireland and protect the economic and constitutional integrity of the UK.  

With DUP’s final decision, the critics expected that the government would come up with a proper plan to get an agreement before the European Council summit that was scheduled for Thursday so it could be put before the parliament later this week.

This morning in Brussels, the hard efforts of pushing the EU to compromise on the final and outstanding issues resulted in agreed Brexit deal between the UK and the EU’s negotiators. The deal saw more than one percent surge in pound sterling, climbing above $1.29 against the dollar.

Moreover, the British currency also rose against the euro, though it failed to hang on to its initial gains due to the DUP party’s acts of opposing the deal.  

In response to the Brexit talks, European Commission President Jean-Claude Juncker said the deal was “a fair and balanced agreement for the EU and the UK and it is testament to our commitment to find solutions”.

Since Europe is home to various people originating from different countries, the UK’s exit from the EU through deal or a no-deal Brexit will impact each and every one differently. From stocks to house buildings and even banks, Brexit will have an alternate impact in each sphere.

Many expect that the deal achieved today could enhance the economic growth, interest rates and continued rise in pound sterling, the question is whether it could actually pass in the House of Commons on Saturday?

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London Stock Exchange Takeover by HKEX Fails despite £32 Billion Bid

Mirror News Desk



London Stock Exchange

The Hong Kong Exchanges and Clearing Limited (HKEX) has ceased its £32 billion venture to purchase the London Stock Exchange (LSE) citing a lack of sufficient support for the deal as the main reason. With this deal withdrawn, the HKEX has also failed to create one of the world’s largest financial marketplaces.

As soon as the news of failed the merger and acquisition (M&A) between the HKEX and the prized LSE made the news, LSE registered a drop of 6 percent to close £69.94. On the other hand, HKEX shares saw a growth of 2.7 percent following the failed M&A.

Moreover, HKEX released a statement on Tuesday morning in regards with dropping the multibillion-dollar bid and said, “The board of HKEX continues to believe that a combination of [London Stock Exchange Group] and HKEX is strategically compelling and would create a world-leading market infrastructure group.

“Despite engagement with a broad set of regulators and extensive shareholder engagement, the board of HKEX is disappointed that it has been unable to engage with the management of LSEG in realising this vision, and as a consequence has decided it is not in the best interests of HKEX shareholders to pursue this proposal.” 

American banker David Schwimmer was leading the negotiations for the LSE. With failed M&A between the HKEX and the London Stock Exchange, the latter can now pursue its takeover of Refinitiv for £22 billion.

Speaking in regards to the failed M&A between HKEX and LSE, chief market analyst Michael Hewson at CMC Markets said, “In reality the HKEX deal was never a realistic possibility when set against a hostile management at the London Stock Exchange and a Chinese regulator who were lukewarm at best.”

“Even if HKEX had decided to up their offer, the deal was of questionable merit, given the problems in Hong Kong right now, along with the exchange’s management structure, which raised concerns about Chinese possible government influence.”

On the other hand, Don Robert, the chairman of the London Stock Exchange claimed that the takeover of LSE by HKEX would not have been suitable for the LSE. He reasoned that the HKEX has ties with the Hong-Kong government and has board inclined towards the Hong Kong government.

Furthermore, it won’t be claim that seeing the current turmoil of Hong Kong due to pro-democracy protests, there remains questions on territory’s future as strategic gateway for financial investment.

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Rise in Inflation and Economic Recession Expected with No-Deal Brexit

Mirror News Desk



No-Deal Brexit

No-Deal Brexit crisis that has drenched the British currency and poorly affected the economy is once again in controversy. The continuous delays in the UK’s withdrawal from the European Union, with or without a deal has brought uncertainties, as citizens have sought to doubt the government’s way of handling the entire deal.

Noticing the government’s efforts in mitigating the crisis, the critics believe that the No-Deal Brexit might take place by next year. If this happens, then there are chances that the country would be dragged into a recession and pushed for higher inflation.

As of now Prime Minister Boris Johnson has been playing a tough role in getting the country out of the Brexit crisis on its withdrawal date i.e. October 31. But the failed negotiations indicate towards the fact that the withdrawal deadline that has already been extended twice, would once again drag the UK for another three months’ extension.

The MPs have recently passed a law asking Johnson to seek an extension to the Brexit deadline if he fails to pass a deal in Parliament or get MPs to approve a no-deal Brexit by October 19.

The critics believe that post the deal’s extension, if the UK leaves the EU without a deal on January 31, it could lead to a 0.2 percent contraction in the output in 2020. It might also follow an election that sees Johnson’s Conservatives winning the most seats and forming a government.

To begin with, the present uncertainties already have a huge impact on the British economy, which has led to a continued downfall of Pound Sterling. Though the government has been aiming for progresses, the never-ending obstacles are still in their way.  

Previously, the prime minister played an important role in suspending the Parliament amid the Brexit negotiations, a move which was condemned as “unlawful” by the Supreme Court. Saying that it was hindering the MPs duties in the run-up to the Brexit deadline on October 31, the court revoked the Parliament’s five-week suspension.

The new predictions by Bloomberg show that the UK’s crashing out of the EU with a No-Deal Brexit in January would deliver a huge blow to the economy. Despite that, they believe that it wouldn’t have as severe impact as compared to the government’s decision of moving out without a deal on October 31

Moreover, the Bank of England’s (BoE) Michael Saunders said that the Brexit uncertainty that has marked the weakening of the UK’s economy over recent quarters, could trigger interest rate cut. The drop in the pound, along with an increase in tariffs, will lift inflation to 2.8 percent.

In a similar context, the British multinational investment bank Barclays said that there is a wide range of potential paths for the economy. If the UK secures a deal, it would definitely help investment and economy.

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Ex Head Aivar Rehe of Estonia’s Danske Bank Found Dead amid Scandal Inquiries

Mirror News Desk



Danske Bank

Last updated on October 3rd, 2019

The former head of one of the Danske Bank branches, which has been involved with world’s largest money laundering scandal, was found dead on Wednesday.

Headquartered in Copenhagen, Danske is also a major retail bank in the northern European region with over 5 million retail customers. The death of the ex-boss of Danske Bank’s Estonian branch raises huge questions on police’s handling of the case as Aivar Rehe’s role was central to the scandal inquiry.

Aivar Rehe worked as a boss in the Estonian branch between 2007 and 2015. While Rehe was in charge of the Danske Bank’s Estonian branch, a suspicious payment totalling 200 billion euros ($220 billion) were moved from the bank. In all, Rehe became one of the people, who were being questioned as a witness during an investigation by Estonian prosecutors, while the case was opened in December 2018 against 10 former bank employees.

According to a report filed with the police, Rehe and his whereabouts remained missing since he left his home in Estonia’s capital, Tallinn, on Monday. As he was only questioned as a witness and not the suspect in the continuing investigation related to Danske Bank’s scandal, his all of a sudden death has further complicated the investigations related to Estonian operations in the entire Europe.

Not only that, Denmark’s largest lender is under investigation in several countries, including United States, Denmark, Britain and Estonia, where the governments have been checking whether the Estonian branch failed to alert authorities about suspicious transactions.

Now that one of the important witnesses is no more, it is more of a challenge for the investigators to resolve the mystery. Since, Rehe’s corpse that was found near his house on Wednesday, does not have any signs of violence or that of an accident in it, the police said that there would not be any investigation on his death.

What has more complicated the situation are Frankfurt prosecutors’ comments who claim to have raided the Deutsche Bank’s headquarters in the German financial capital in search of information related to Danske Bank, in the name of attempting to cooperate with them.   

The Danske Bank officials extending their condolences to Rehe’s family, said, “We are sad to receive the news that the former chief of our Estonian brand, Aivar Rehe, is dead. Or thoughts go out to the family.” However, what lies in the citizens’ mind is a suspicious question of could Rehe’s death in any way be related with the huge money laundering scandal, while they wait for more revealing in the case.

The entire scandal once again puts questions on the reliability of the Danske Bank, which has millions of retail customers in the entire Europe.

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KPMG Warns No-deal Brexit will Cause Biggest Crash in Housing Prices

Mirror News Desk



no-deal Brexit

According to the leading accountancy firm KPMG, if Britain undergoes a no-deal Brexit on October 31, the housing markets of London and Northern Ireland might come crashing down. KPMG asserted that following the no-deal, the house price crash might vary from 5.4 percent to 7.5 percent.

The analysis made by the firm also reflected the probable chances of depreciation of 10 percent to 20 percent in housing prices, if the reaction towards a no-deal is more than expected.

Following the G7 Summit in August, Johnson shifted the responsibility of no-deal Brexit over his European Council counterparts.

KPMG, after assessing the highly exposed condition of the market, released the statement in lieu of the series of warnings regarding the no-deal Brexit. The firm also said that if Britain is unable to strike a new withdrawal agreement with Brussels by October 31, the house prices would slash down across various regions of Britain over next year.

Chief economist of the firm at UK, Yael Selfin, in lieu of the firm’s statement said, “A no-deal Brexit will see households’ finances more under strain, with any rises in earnings likely to be more subdued and higher inflation depressing their purchasing power even further.”

“Add to that a rising unemployment rate and an overall decline in confidence as a result of the initial disruption, [and] you can see why people would hold off making any major financial commitments, which would trigger a larger correction in house prices.”

One of the Big Four, KPMG, also claimed that if Boris Johnson successfully strikes a withdrawal deal with the EU and avoids a no-deal Brexit by the set deadline, the slash in house prices can be avoided. Instead, there would be a steady growth in housing prices ranging from 1.3 percent to 2.4 percent across London in 2020.

Last year, the Bank of England formulated a hard-Brexit scenario and claimed that it can lead to the depreciation of a maximum of 35 percent in the housing market, although the interest rates will continuously change.

Chairing the Housing division of the UK at KPMG, Jan Crosby claimed that no-deal Brexit might lead to a steep crash in the housing prices and further affect the sales. He explained the reason as alerted owners who are waiting for the risk surrounding the market to end.

He further said that this move will “make government housing delivery targets impossible to achieve and slow new building across the sector.”

Even though the chances for a no-deal Brexit are relatively higher than Britain leaving the EU with a deal, the MPs at House of Commons still have a week to pass the legislature to block a no-deal, after returning from the summer break. With every section of the market claiming that a no-deal Brexit would be bad for the growth of the UK, will Johnson be able to strike a withdrawal deal, preventing Britain from the downfall?

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