Rain Newton-Smith, then chief economist of the Confederation of British Industry (CBI), speaks during its annual conference in November. Photograph: Bloomberg/Getty Images
Rain Newton-Smith, then chief economist of the Confederation of British Industry (CBI), speaks during its annual conference in November. Photograph: Bloomberg/Getty Images
New CBI boss says she is 'profoundly sorry' to women let down by group
On her first day as director general of the crisis-hit CBI, Rain Newton-Smith said she is “profoundly sorry” to women who have been let down by the business group.
She took over amid the fallout of a series of sexual misconduct allegations. The new boss also said in a series of tweets that she believes in the work of the trade group and is determined to “rebuild and reimagine” the organisation.
Newton-Smith was the CBI’s chief economist until recently when she left to join Barclays, and also used to work for the Bank of England.
You will have heard about the crisis that has shocked & saddened us all at the CBI. I want to recognise the courage of the women who came forward & say how profoundly sorry I am for how our organisation let you down. I hope to reward your bravery by finding a better path forward.
The CBI has provided support for business in every region, every nation, every size, every sector, through every supply chain. Through the pandemic, war in Ukraine, and the ongoing cost-of-living crisis to help people and business thrive.
We know there is so much to do to win back the trust of our members, our colleagues and wider society. But I believe in the work of the CBI & our people, and I am determined to rebuild and reimagine our organisation to be regain that trust.
On her first day as director general of the crisis-hit CBI, Rain Newton-Smith said she is “profoundly sorry” to women who have been let down by the business group.
She took over amid the fallout of a series of sexual misconduct allegations reported by the Guardian. The new boss also said in a series of tweets that she believes in the work of the trade group and is determined to “rebuild and reimagine” the organisation.
Newton-Smith was the CBI’s chief economist until recently when she left to join Barclays, and also used to work for the Bank of England.
Her comments came as Emma Walmsley, the chief executive of GSK, Britain’s second-biggest drugmaker, condemned the allegations of sexual misconduct that have thrown the future of the CBI into doubt as “extremely shocking” and “pretty repulsive”. Walmsley spoke as GSK reported its latest quarterly results.
The UK’s competition regulator has blocked Microsoft’s attempted takeover of Activision Blizzard, the developer behind hit video games such as Call of Duty, in what would have been the largest acquisition in gaming history.
The Competition and Markets Authority (CMA) prevented the $68.7bn (£55bn) cash purchase because of concerns it would squash the cloud gaming market.
European stock markets are in the red, as investors remain nervous about the banking sector. The UK’s FTSE 100 is 45 points, or 0.6% lower at 7,845. Germany’s Dax has lost 0.6%, France’s CAC fell more than 1% and Italy’s FTSE MiB is down 0.9%.
On Wall Street, the Nasdaq gained 0.9%, the S&P 500 edged 0.1% higher and the Dow Jones is flat.
Thank you for reading. We’ll be back tomorrow. Take care! – JK
US durable goods orders jump, trade deficit shrinks
Durable goods orders in the US jumped 3.2% in March from February, but this was mainly because Boeing booked 38 aircraft orders.
The journalist and analyst James Picerno tweeted:
New US orders for durable goods surged in March, but don't get too excited: nondefense ex-aircraft order, a proxy for business investment, fell for a second month (and are down in 4 or the past 5 months), suggesting headwinds for the economy are blowing: pic.twitter.com/4EL2B4wLgI
Andrew Hunter, deputy chief US economist at Capital Economics, has sent us his thoughts.
The 3.2% m/m jump in durable goods orders in March mainly reflects a stronger-than-expected gain in the more volatile commercial aircraft component, with the details suggesting that business equipment investment contracted again in the first quarter.
After Boeing booked 38 net aircraft orders in March, up from only two the previous month, the value of commercial aircraft orders jumped by nearly 80% m/m after seasonal adjustment, easily offsetting a 0.1% fall in motor vehicle orders.
The 0.3% m/m rise in core non-transport orders was also stronger than the small fall we had pencilled in, but the underlying details weren’t nearly as strong, with both orders and shipments for non-defence capital goods (ex-aircraft) falling by 0.4% m/m, and prior months’ readings revised lower.
Even allowing for a further recovery in transport investment, as motor vehicle sales picked up, we estimate that first-quarter business equipment investment fell by 5% annualised. That isn’t quite as bad as we had expected, but the capital expenditure intentions surveys have generally continued to weaken. And while it was never likely that the banking turmoil last month would strike an immediate blow to investment, we expect tighter credit conditions to drive sharper declines over the coming months.
Meanwhile, the advance trade report showed a narrowing in the goods deficit to $84.6bn in March, from $92.0bn, driven by a 2.9% rebound in exports.
Hunter said:
Despite a strong rise in exports to the US already reported in the Chinese trade data, the US data show that goods imports fell by 1.0% m/m. The strength of exports means that net trade probably didn’t subtract as much from first-quarter GDP growth as we had thought and, alongside the durable goods data, suggests the main risks to our forecast that growth was 1.8% annualised (data due on Thursday) lie slightly to the upside. But that doesn’t change our view that a much sharper slowdown lies ahead.
Plans for minimum service levels during rail strikes could worsen industrial relations and outcomes for passengers, train operators have told MPs, while unions said the proposed laws were a “recipe for disaster”.
Questioned by the transport select committee, Mick Lynch, the general secretary of the RMT union, said the proposals in the strikes (minimum service levels) bill were “not going to work”. He said the draft legislation, now in the House of Lords, would leave employers in an “invidious position” of having to sack workers who refused to break a strike.
“It will be unsafe,” Lynch said. “Conscripting people to go past their own picket lines and operate complex signalling systems or drive a train is a recipe for disaster.”
The measures contained in the bill would give ministers powers to decide minimum service levels during strikes in parts of the public sector, including schools, health and emergency services as well as rail.
Rail bosses and union leaders told MPs that in many places a significant proportion of staff across different parts of the railway would be required to work, even to operate a small number of trains.
Managers at the train operators said it was unclear what service they would be expected to run, whether priority routes or a proportion of the timetable.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said:
The CMA has concerns that the deal could undermine fair competition in cloud gaming if the Xbox maker decides to make Activision’s games exclusive to its cloud gaming platform. Cutting alternative distribution off at the knees is seen as a step too far for the UK authorities. Scepticism among shareholders about the proposed takeover was already rife, the CMA is not the only regulatory body to be sniffing around the deal. Microsoft has plenty of financial resource to appeal the decision, with over $50bn of net cash languishing on the balance sheet.
There’s no guarantee that the CMA will bend on this one, but a compromise is possible. This could see Microsoft take on some areas of Activision and not others, but ultimately the final shape of the deal is hard to map. Microsoft needs this deal to help stoke growth in the wake of disappointing personal computer sales, with the gaming market a far more high-growth area, which would supplement the group’s leading AI position.
Activision’s incredible haul of intellectual property is a big factor in this situation, but more broadly, as cloud gaming continues to grow and regulators learn as they go, tougher regulations and frustrating corporate outcomes are likely.
Microsoft bid for Call of Duty maker blocked by UK regulator
In big corporate news, the UK’s competition regulator has blocked Microsoft’s attempted takeover of Activision Blizzard, the developer behind hit video games such as Call of Duty, in what would have been the largest acquisition in gaming history.
The Competition and Markets Authority (CMA) prevented the $68.7bn (£55bn) cash purchase because of concerns it would squash the cloud gaming market.
The tie-up would have created a gaming behemoth, merging Activision’s plethora of “AAA” titles, which also include World of Warcraft, Hearthstone, Candy Crush Saga and Overwatch, with Microsoft’s burgeoning stable of first-party developers, its Xbox consoles and its control of PC gaming.
There’s more fallout from the comments made by the Bank of England’s chief economist Huw Pill yesterday.
He said British households “need to accept” they’re poorer and stop pushing for wage rises because they push up inflation. The general secretary of Unison, the UK’s largest union with more than 1.3 million members working in public services such as schools, the NHS and the police, Christina McAnea, said:
Huw Pill is living on another planet. On his comfortable salary, he clearly has no idea of the impact soaring prices are having on working people and their families.
Millions are barely getting by, unable to pay their bills or cover the astronomical rises in grocery prices.
Holding back wages won’t help. If workers don’t have the cash to spend, the economy won’t grow.
Low pay is prompting thousands of staff to desert the UK’s public services for better wages elsewhere. Without decent pay rises, the UK will never get back on its feet.
New CBI boss says she is 'profoundly sorry' to women let down by group
On her first day as director general of the crisis-hit CBI, Rain Newton-Smith said she is “profoundly sorry” to women who have been let down by the business group.
She took over amid the fallout of a series of sexual misconduct allegations. The new boss also said in a series of tweets that she believes in the work of the trade group and is determined to “rebuild and reimagine” the organisation.
Newton-Smith was the CBI’s chief economist until recently when she left to join Barclays, and also used to work for the Bank of England.
You will have heard about the crisis that has shocked & saddened us all at the CBI. I want to recognise the courage of the women who came forward & say how profoundly sorry I am for how our organisation let you down. I hope to reward your bravery by finding a better path forward.
The CBI has provided support for business in every region, every nation, every size, every sector, through every supply chain. Through the pandemic, war in Ukraine, and the ongoing cost-of-living crisis to help people and business thrive.
We know there is so much to do to win back the trust of our members, our colleagues and wider society. But I believe in the work of the CBI & our people, and I am determined to rebuild and reimagine our organisation to be regain that trust.
The CBI has released its latest retail sales survey, which has been running for 35 years and is the oldest in the UK. It was better than expected and suggests retailers saw an uptick in sales in April, perhaps helped by the 10.1% increase in benefits, including the state pension, at the start of the month.
As well as the rise in the reported sales balance to +5 from +1 in March, the sales-for-the-time-of-year balance — which has a slightly better relationship with the official data than the main balance — increased to a 17-month high of +21 in April, from +12 in March, remaining well above its average of -2 in the prior 35 years.
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said:
The boost from the hike to benefits, however, will prove to be temporary, given that the real value will decline again over the coming months as prices continue to rise. In addition, both business surveys and the Insolvency Service’s data on redundancy notifications suggest employment will merely flatline over the coming months…
Households’ real disposable incomes will hold broadly steady in Q2, before a recovery takes hold in Q3, supported by a drop back in energy prices. What’s more, households’ real spending likely will recover more slowly than incomes, given that consumers’ confidence still is weak by past standards and households that have whittled down their savings will wish to replenish them.
Note too that home-owners that do not have to refinance imminently likely will step up their debt repayments so that they can cope with the jump in monthly payments when they do eventually refinance. Accordingly, we think that the volume of retail sales will end the year up just 1% year-over-year.
Andrew Pepper-Parsons, head of policy at the UK whistleblowing charity Protect, said:
There are some positives in the response from the CBI. Their investigators have suggested that culture should be seen as a strategic issue and a key business risk for the board. They also plan to introduce training for all staff and create a new reporting line for staff to raise whistleblowing concerns.
Gaps do remain though - a reporting line alone won’t work unless it is backed by effective investigations that have staff confidence. It may be also advisable to have advice and support processes for staff who are uncertain about raising concerns within the CBI in the future.”
There are clear lessons for other employers to learn from the CBI’s “terrible mistakes”. Reforms are coming about because concerns about sexual misconduct were raised in the press. Effective whistleblowing arrangements should mean organisations are able to address concerns raised internally with them swiftly and effectively. Whistleblowers who don’t have confidence will go to the press or regulators and, as we have seen, this can destroy reputations.
GSK boss calls CBI claims 'absolutely shocking' and 'repulsive'
On a call with journalists to discuss the first-quarter results, GSK’s chief executive Emma Walmsley was asked why the company had not terminated its membership of the CBI following the allegations of sexual misconduct reported by the Guardian.
After the exodus, the CBI announced on Friday night that it was suspending all membership and policy activity until an extraordinary meeting in June, when members will vote on its future and purpose.
On Monday, the CBI admitted in a letter to its members that it had failed to “filter out culturally toxic people” from its ranks, leading to “terrible consequences” including allegations of sexual harassment.
Walmsley said today:
I want to reiterate for GSK and for me personally we have a categoric zero tolerance approach to any form of sexual harassment in the workplace or be it anywhere else. There’s no question that the allegations around the CBI are extremely shocking, pretty repulsive. and certainly I applaud whole-heartedly those who have the courage to speak up in a difficult environment.
We obviously saw the open letter and the summary of recommendations and certainly I would agree that seeing culture as a strategic matter – something I have been extremely clear about at GSK – and also having proper profoundly robust handling of complaints including confidential channels to raise them are absolutely key.
Referring to the formal investigation conducted by the law firm Fox Williams on behalf of the CBI, which reported its conclusions and recommendations to the CBI board, the GSK boss said:
They [the CBI] need and absolutely must implement steps to drive profound change at pace carefully and thoroughly.
They took the decision to suspend all activity appropriately which makes other points a bit moot currently. We will see what happens on the progress in the next coming months and once we have seen what corrective action is in progress we will reassess what our position may or may not be going forward.
