Category: Business

Norway Oil Fund Tapped For The First Time

The world’s largest sovereign wealth fund sees its first few withdrawals for the first time in decades.

Norway’s Oil Fund, which amounts to $890bn (£682bn), has seen some relatively small withdrawals.

Despite the small amount withdrawn, Norwegian investment officials and concerned political figures debate on the future of the fund. It has been used beyond the time intended.

“This fund is meant to last generations and yet we are tapping it already — many, many years before we were meant to. If we keep on spending as we are and the fund can’t earn decent returns then we could end up eating into it,” says one of Norway’s leading businessman, who did not want to be named.

Fund was made through surpluses from Norway’s Petroleum Industry

The Oil Fund was made out of Norway’s surplus in the petroleum industry for a time. It had also become one of the world’s largest investors in different trades and serves as a buffer for Norway’s possible future economic troubles particularly interest rates affecting future returns.

BI Norwegian Business School Professor Espen Henriksen said the withdrawals should be seen dramatically. However, he argues that low oil prices in the world and lower expected return of profit for investors may affect the future of the fund directly.

Higher government spending is also affecting the life of fund. Norway’s government is allowed to spend up to 4 per cent of the fund each year in its budget. Due to the profit of oil and gas with the former being generated through production tax and state company dividends, the fund may see lower income than it usually has.

Pessimism Invades Businesses After Brexit Vote Decision

Upon voting exit, it would seem businesses and investors have lost confidence in the economy and the UK’s current stature.

According to research from YouGov at the Centre for Economics and Business Research, pessimism had increased about 25% the week before the referendum to 49%. This would mean companies and investors are pulling back or scaling down their activities in the United Kingdom.

Scott Corfe, director at the CEBR, said that the figures indicated a “significant shock reaction” among UK businesses following the vote last month.

He said:

“Businesses are clearly spooked by the referendum result and they’ve reined in their intentions for capital spending. They’ve reined in their expectations for exports and domestic sales growth.

“And business confidence is a leading indicator for where the economy is heading over the coming quarters. What it suggests is that the economy is in for quite a significant slowdown over the next three to six months.”

As the pound took a beating after the initial Brexit shock, global markets are also destabilising. Japan’s Yen had increased after investors sought safety with the pound’s devaluation.

As uncertainty looms over the United Kingdom, several figures see positivity in the ‘brave new world.’

Former Senior Economist at the International Monetary Fund Ashoka Mody believes the Remain campaign’s message to stay echoes much about establishment of certain parties’ interests that they are left to defend such.

Mody said the idea of new deals and the deliberate reduction of value for re-negotiating terms are flaws in a system that could open new doors of possibilities for the country.

The Ramifications Of A Brexit

Financial Times Writers Emily Cadman and Shawn Donnan had imagined an end scenario wherein the United Kingdom had voted for an exit from the European Union.

While Vote Leave is rejoicing, the two writers believe that Europe would assert itself in the European Economic Area. Now, it is a European country that is not in the bloc. Along with others in the same market, it avoids being bound by agriculture, fisheries, judicial and foreign affairs policies. But it must cut through with unique deals.

Which might face difficulty. The two writers iterate that Europe may deliver a ‘hard bargain’ against a “Brexited” Britain when it comes to lowering tariffs and striking deals.

Despite having exited Europe, the United Kingdom still has to deal with European countries. But without its European Union leverage as it had in the past, it would mean huge penalties to the country if it were to leave.

While many say that the UK’s economic deficit to the EU would give it enough leverage, it isn’t enough to recompense the lost profits it could have by losing about half of the UK’s exports.

Britain’s services sector would also suffer. The financial markets would also face bigger challenges upon entry. About a tenth of the UK’s services industry the financial industry makes up. The lack of access to European Union markets, and even the absence of fluid passage as it does now, would hurt the country’s GDP.

Deal Is In Sight For Greece According To Prime Minister

Greek Prime Minister Alexis Tsipras said that the talks in Brussels on Greece’s debt crisis have been “constructive”. He had held a straight four-hour talk with EU’s Jean-Claude Juncker to finally make a plan as Greece’s bailout is set to expire in less than a month.

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Tsipras confirmed that Greece has rejected some proposals put forward by their creditors.

Eurogroup Chief Jeroen Dijsselbloem said that between Tsipras and Juncker, the talks have resulted to positive progress. They are set to meet again after a few days.

Greece has a £216 million IMF repayment due on Friday. Greece and its creditors are now close to an agreement regarding “primary surpluses” that would help Greece move forward “without the tough austerity measures of the past.”

Primary Budget Surpluses  is the amount when tax revenues exceed public spending. It is now one of the main sticking points in talks. Greece had been keen to agree for a lower figure.

French President Francois Hollande had earlier suggested that Greece and the EU were close to finally creating a deal. However, an EC Spokeswoman said to the press that there would be no “final outcome” from Wednesday’s talks.

Greece would be asked to post a budget surplus of 1% of GDP and 2% in the following year.

Greece To Be Grilled By EU Leaders Over Austerity

As Greece’s Prime Minister Attempts to finally break down the country’s strict austerity measures, EU prepares to grill the Greeks for the country’s past misgivings and ambitious requests. The latest Brussels summit is Greece’s few chances left to convince their creditors for additional time and avoid bankruptcy.

Greek Prime Minister Alexis Tsipras is the only one who could or could not convince EU to help the country float over its impending bankruptcy. After Greek Financial Minister Yanis Varoufakis’ failures to convince EU’s Finance Ministers, Greece sits at the brink of downfall.

Meanwhile, EU Parliament President Martin Schulz said that the Greek financial situation was dangerous. Greece needs more than €2-3 billion to help it avoid an bankruptcy. He added that it is only a short-term solution.

“So it would be good if Greece fulfils the obligations that it has agreed to – then further money will flow,” said Schulz.
“The willingness of the Greek government to cooperate must improve.”
Economic Chief of the EC Pierre Moscovici said:
“We completely support the objective of helping those who are most vulnerable in Greek society, those who have been struck by the crisis. But there must be consultations on new measures. We have to be able to evaluate the budgetary impact of the measures being proposed.”

UK SFO Closes Investigation on HP-Autonomy Fraud

The controversial $11.1 billion HP purchase of the UK developer Autonomy has raised many eyebrows. Meanwhile, the UK Serious Fraud Office had closed its investigation, citing the lack of information available to the SFO as its reason.

According to HP, due to many “accounting misrepresentations” at Autonomy, HP has taken a $8.8 writedown of its purchase of the software company. HP had claimed that its former executives and accountants have created a “multimillion dollar fraud” at the company.

The SFO has sent jurisdiction over to US Authorities whose investigations are ongoing.

The USEC and FBI are still conducting investigations regarding the matter.

Meanwhile, a counter-document in December 2014 surfaced, with Autonomy founder Mike Lynch saying that HP has made false representations to the market” over the writedown.

The document proved that HP has not determined whether hundreds of millions of transactions were improperly booked at the time it took its huge charge on Autonomy.

HP responded: “the same fertile imagination that was behind a massive fraud is apparently still hard at work making up stories. We would encourage Mr Lynch to spend as much time as possible with the authorities.”

HP also indicated its plans to sue Lynch, Former Autonomy Chief Financial Officer Sushovan Hussain and company Auditor Deloitte for fraud. All parties have denied wrongdoing.

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Iconic War Office To Be Sold To Private Sector

An iconic building, known as the War Office, where British leaders made plans during the two world wars and the Cold War, is being put up for sale by the government. This is the same building in which the likes of Winston Churchill and David Lloyd-George once had offices. Ministers hope the Whitehall building, with its great historic value, will sell for more than £100m. Defence Secretary Philip Hammond said civil servants would move to the main Ministry of Defence (MoD) building, and added that having defence staff under one roof would save £8m a year.

The War Office had its first brick laid in 1901 and, by the buildings completion, the Edwardian Baroque building had used 25 million bricks and many thousands of tonnes of Portland and York stone. The roof of the historic building has been host to grand sculptures symbolising Peace and War, as well as Truth and Justice – and Victory. In April 1910, as part of a parliamentary answer, the full cost of the “new” War Office was calculated as over £1.2m. There are many famous secretaries of state for war who worked there in its early years, including Lord Haldane, Lord Kitchener and Winston Churchill, while Lawrence of Arabia was also employed there to create maps of the Sinai region based on his earlier travels to the area.

A former civil servant in his younger days posted to the War Office in 1940 remembered being told there had been friction between the armed forces and civil servants in the same building. The War Office had been hit by German bombs during the Second World War several times, killing one person, but the building remained relatively unscathed. The War Office was refurbished in the mid-1980s, and was duly reopened in 1992, as the new headquarters of the defence intelligence staffs. The civil servants currently stationed in the building will move across the road to the MoD’s main building next year, after which the historic building will be sold.

With over 1,000 rooms, 2.5 miles of corridors and a central London location, it will most likely attract interest from prominent property developers and big hotel chains, who are no strangers to buying government property that’s being sold off as the coalition attempts to cut costs. The MoD is also planning to sell the abandoned Brompton Road Tube station, which, during World War II, was used as a command bunker for anti-aircraft defences.

Bing Search Engine a Competitor for Google?

Google may have a new competitor to contend with, as it watched its search share in the UK dip below 90 percent in October for the first time in five years. According to experts, if this share loss continues Microsoft’s Bing search engine will have overtaken Google by February 2016.

The threat is small, for now. Indeed, the dip might even be considered insignificant for some, as Google’s UK search share went from 90.74 percent in September to 89.33 percent, a fall of 1.41 percentage points. Bing, on the other hand, upped its share to 4.71 percent, an increase of 0.72 percentage points. Search engine Yahoo picked up almost all of the remaining percentage points of Google’s loss, with Ask and some other engines getting a small amount as well.

Although Bing is still losing millions every quarter, Experian, which owns the Internet tracking company Hitwise, notes that Bing has raised its search share by almost one full percentage point in 2012, with October representing a peak in search share percentage.

Experian suggests that one reason behind Google’s dip and Bing’s improvement is Microsoft’s launch of Windows 8 in October, where Bing is the default search engine.

Since Windows 8 was not officially launched until October 25th, it seems unlikely that there was enough time for Windows 8 users to suddenly switch from Google to Bing. However, this could affect the search share results of November, and Bing could see a further rise in percentage points if users keep it as their default instead of setting it to Google.

Experian digital insights manager James Murray suggests that one reason for the change is that people are changing their search patterns. Increasingly, people are searching through social media sites, with Facebook being the largest one. Facebook’s default search engine is Bing.

“That could be part of it,” says Murray. “People are looking these days for the best and most relevant search results. I think Bing, which has been a minor player, is starting to come to prominence.”