Last Pint Standing?

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1:19Hello, welcome to Wake Up To Money. Today is deadline day for anyone who comes under the new making tax digital rules. It's very easy to get things wrong and it's, you know, small mistakes. We will talk you through the changes affecting hundreds of thousands of people in the UK and why some are finding it a tough transition. Then Meta, which owns Facebook, Instagram, WhatsApp and Threads, has been fined, ready for a big number,$567 million in the US, 421 million quid. We will have our expert panel lined up to talk us through that and another very busy week. We'll bring you up to speed on everything from oil to Infantino, plus does vertical drinking, standing at or around the bar, encourage you to drink more excessively.

2:05The mighty stand-up beer is unmatched. Westminster Council has been accused of trying to put a stop to it, which it says it isn't, but we'll hear from punters and a pub boss. Wake Up To Money with Felicity Hanna. Really good morning to you. Welcome to Friday. Welcome to Wake Up To Money. Friday the 7th of August, just coming up to five minutes past five. Let's get straight into our panel this morning. I'm joined by Jonathan Lawson, Chief Executive of Buckham Group, which has over 120 pubs from London to the Channel Islands. You've got a brewery in Bristol. I mean, you guys get around. We do indeed.

2:44Morning, Fliss. Yeah, we do. It's a wonderful business. Actually, I was out in pubs all day long yesterday, which is fantastic. Oh, what a hard business life you've made. Yeah, I do always get that reaction. I promise I was working and our teams, as they have been all summer, were working incredibly hard yesterday. What's the weather been like for you? You've got some pub, some beer gardens, haven't you? So that must be quite helpful. Yeah, weather has overall been a real positive for us. We deliberately, a number of years ago, invested, particularly after the pandemic, in external spaces and probably 50 % of our seating and covers are outside.

3:21We have some big riverside pubs and some big pubs up on the countryside hills, etc. So you can imagine they've been very busy and very popular this summer. Riverside pub, August. Very, very nice indeed. Well, joining us this morning, Jonathan, to chat through it all is Sophie Wynn, Portfolio Manager and Strategist at BNP Asset Management. Morning, Sophie. Morning. And rounding out our panel here to provide analysis is Shelley and Horne, economist and partner at the business advisory firm S &W. Morning, Shelley. Morning. Right, there's loads to talk about. I will just say later on in the show, we are going to be talking about vertical drinking, mostly because I quite like it as a phrase.

4:00It's not how I've previously thought to say standing up at the bar. Jonathan, we will talk to you about that then. But essentially, this is the story that erupted yesterday. There were media reports that Westminster Council in central London was recommending not allowing vertical drinking or ordering at the bar as part of its new draft licensing policy. I should say, the council in question has said it's not trying to ban people standing by the bar and having a chat. But the guidance is about encouraging venues to manage their customers so people don't, for example, pack onto pavements and excessive drinking doesn't disturb people passing by.

4:37It did make us wonder, though, whether where you stand or sit makes a difference to how much you drink and how noisy you maybe get. So get in touch this morning. Let me know. You can text me on 85058. You can send me a WhatsApp message on 08085 909693. And if you're on social media, use the hashtag WakeUpToMoney and I will keep an eye on that. And Jonathan, we'll find out from you at the end of the programme if you think that standing up or sitting down makes a big difference. Because I think our listeners will be keen to know. But let's get started with some, well, two big breaking news stories actually this morning.

5:13We've got some news on Mesa and we've got some news on Infantino. So let's start with Meta. This is, of course, the company that owns and operates all the biggies or some of the biggies. Facebook, Instagram, WhatsApp threads. The business has been fined$567 million in the US, 421 million quid, after a judge ruled it had failed to warn the public about the dangers its platforms pose to children and used some really, really strong language in that criticism as well. compared it to pollution and said that the psychological harm and sexual exploitation of children to the pollution that must be abated.

5:54I should say Meta disagrees with the ruling, says it's going to appeal. But Sophie, a lot of people will have thoughts and comments on social media's impact on children. When it comes to the business impact on Meta, That is a pretty whopping fine, even for a company that large. I think from a pure corporate and price action perspective, it's the immediate impact, I think, is going to have a negligible impact on all this big tech share price. So it's not limited to meta. But I would say that Europe has been a bit ahead of this, given some of the social media bans that have already been made official.

6:46And for example, France, that has become the first European country to pass a law that is banning social media for children under 15. So it's even less than the recommendation from the ruling in New Mexico. So I think we're going into this direction. But overall, like from a price action perspective, I think it's going to have very limited impact. Well, I should say, actually, that the ruling is in addition to$375 million in fines that Meta was already ordered to pay in the case. So a total of$942 million. But Sophie, perhaps you're right. I mean, that is a huge amount of money, but perhaps not that huge in the context of a business like Meta.

7:30But Shelley, do you think these social media companies are maybe, they're a bit like the AI companies are today. Absolutely massive growth. And then governments trying to sort of frantically catch up. I agree with what Sophie was saying. In the overall scheme of things, the fines are not particularly large. And I think we are increasingly seeing these sort of digital giants coming in within the government's remit. So within the UK, Metro, the digital giants are within the new DMCC regime. that sits under the competition and markets authority and we've seen investigations there and fines coming out of that and we've also got the um uk's online safety act approach so metas now they're having to assess and mitigate risk for children and we're seeing some of the you know potential blocks and bans on how children can access social media i think what was different about this was that it wasn't necessarily about economic regulation and it wasn't about how they compete in the marketplace it was that the court accepted um that the platform can cause harm so it wasn't about economic harm and competition harm, but it was about actual harm to children.

8:33And I think what you might see is an increased litigation risk. So we already see in the UK a number of the digital giants being brought before the cat on these consumer actions. What we're going to see potentially is a new form of litigation coming out of this in the UK and in Europe. And actually, of course, Meta is currently facing thousands of lawsuits in the US over exactly these issues. You mentioned, by the way, the DMCC, I should say. Of course, that's the Digital Markets Competition and Consumers Act, which updates the rules for those digital tech companies. So, yeah, lots to think about there.

9:07I'm sure it's going to feed into the conversation about social media. Another big conversation this week, last week, a lot recently, of course, has been FIFA. Despite an apology from Gianni Infantino this week, there is news breaking that European teams could still be boycotting competitions, including the World Cup. UEFA says that FIFA's defence of its president changes nothing. It's obviously sent a letter withdrawing. The English FA has sent a letter withdrawing its support for Infantino in reaction to those plans to sell off stakes in the World Cup to private investors. And yeah, we're still hearing that UEFA might be putting its foot down on this.

9:51Jonathan, what's your view? because the World Cup must be pretty important business for you just as an important way of filling your bars. Yeah, we're not hugely sports-orientated in our business, but the World Cup has had a positive impact. We're always keen to support any events that bring friends, families together to watch major sporting occasions. It's always great when our national teams do well, I would add as well. So that's great to see. I mean, my reaction to this is as well is I think it's another indictment of something where the sport would be nothing without fans. And this seems to have nothing to do with the interests of fans.

10:36I think it would have been great to see the reaction that's come out of the actual people like UEFA and the FA. it would have been great from my perspective if a similar reaction had been there around the actual costs of tickets for genuine fans to go and watch the World Cup, which for me is the real issue. And the proposals by FIFA for me would only have made that more expensive to actually watch. And I think that for me is the key issue, which these games, these sports, they are nothing without fans. And if teams and businesses lose sight of that, then I think they're in trouble. Shelley and UEFA didn't mince its words.

11:15It said, first, the proposals to sell off the major competitions had to be withdrawn. And secondly, have to be withdrawn. And secondly, assurances have to be made that such attempts to disfigure the game in this way will never be made again. These conditions have not been met, they say. But Jonathan's making this point that it's about the fans, it's about the game, it's about the sport. But it's not like there isn't a lot of money and investment, Shelley, and in the beautiful game at the moment, is it? But this was just clearly a step too far. Yeah, I live in a household of football fanatics. So this is definitely something that sort of there's been a lot of discussion about around my dinner table.

11:55But I think Jonathan is right, you know, that football is just so valuable, sort of economically valuable. And there was a report from EY out not that long ago that I think showed that sort of the economic value of football to the UK was something like£10 billion a year. and that was just to the UK. So I think football is economically valuable and it's really socially invaluable as well. As nations, we love coming together to watch football. So it's got real sort of social and economic value. But what that means is it can also be monetized. There's no lot of competition in football. You've got these global sort of football giants and they're looking to sort of monetize that economic and social value.

12:27So you can see why this proposal on paper maybe looks lucrative. It's a great way to sort of generate money. But I think what was forgotten is it's not just the economic value here. as a social value too. And it really is part of society. And it's in some ways great to see, you know, the sort of the national clubs and the fans really standing up against this. And I suppose any argument where you can say it's going to generate more money, where's that money going to come from? Well, obviously fans or increased sponsorship. We've got a monopoly position when it comes to, you know, the football rights and the World Cup, etc.

12:59But, you know, to have that monopoly, you get to be able to generate those economic rents. And as you say, they have to come from somewhere. Yeah. And, you know, if you're able to sell off billions and billions of pounds worth, you know, there has to be that value to sell. So essentially you're selling fans value, player value, local club value, etc. to be able to monetise it. Well, lots of you getting in touch on everything that we're talking about this morning. Let's just get through a few of them. Somebody who doesn't give their name says, just wondering if the EU tried to find meta, how would Trump react?

13:27Mike says on vertical drinking and the question of whether you drink more standing up, says when we went out in the city of an evening early 80s, we often frequented the vertical refreshment company in Old Street. Good times. And Chris from, oh Chris, I'm going to butcher this place name. Albero Bello, I think, in Italy says in my much younger years, we always stood at the bar and definitely drank more than if we were sitting down. Here in southern Italy, there isn't really a massive bar culture. And people generally sit rather than crowd around the bar. Maybe part of the reason why we don't have the same alcohol-related social disorder as much down here.

14:03Maybe. Keep your thoughts coming this morning. 85058. Let's talk about oil. I feel like we do every Friday and have done for a while since February and will continue to do for a while. But essentially, progress talks this week sparked fresh hopes. There might be a peace deal struck. We could see the proper reopening of that key transit route, the Strait of Hormuz. that reassured investors after weeks of volatile oil prices and the price of a barrel of Brent crude, the way we kind of measure what oil prices are doing, that dropped to a three-week low on Monday, just below 71 US dollars. It's not there now.

14:41This morning, it stands at just over 83 dollars a barrel, showing how very volatile it can be. I mean, it was around 126 dollars at its peak at the end of April. and it's having a real impact on lots of different businesses, lots of different consumers. Charlotte Gregory is one partner at J.R. Gregory & Sons, which is a haulage company based in Wrighton, 11 towns in Shropshire. She was feeling the impact of the constantly fluctuating oil price. At the moment, just based on the recent hikes in the last two weeks, it's costing us an extra£600 a week and that's across two lorries. There's only obviously so much that different people can absorb, isn't there?

15:21when we had the fuel hike towards the beginning of the year, we put rates up to counteract that. But obviously, it's a very strained industry anyway. So you can carry on putting rates up, but it comes to a point where there's got to be an end to it because no one's going to end up making anything, to be honest. It's a massive problem because, like we all say, it always goes up so quickly. And you always think, is it ever actually this time going to get down to what we were seeing through the issues? Jonathan, I've said that every business is feeling this. Obviously, if you're in the industry of haulage, you're going to be feeling it particularly.

16:00But are you being hit by these volatile oil prices? Yeah, absolutely. I think the impact of these costs go right the way through our supply chain, not just in the way that they directly impact our operating costs, but those costs of our suppliers as well, who I would say work with this incredibly well to try and absorb as much as possible. I think as a consumer facing business, probably the bigger impact is actually just upon consumer confidence but you know our customers do what we all do which is go and fill up regularly the petrol pumps and where you've described the volatility in the price of crude etc what it's ultimately meant is that the price of the pumps has stayed higher for longer it doesn't tend to come down for those short periods it just stays high and that directly impacts customers' consumable income.

16:59And I would actually say this directly impacts their confidence, which for us is everything. Sophie, Jonathan's talking about the ripple effect throughout supply chains and customer confidence. But we're also seeing that through how investors are feeling, how the markets are reacting and sort of global economies as well. Yeah, definitely. I think the volatility of oil price has a real impact on consumer confidence, as it's been said. But I think on the other hand, having oil price at$83 per barrel when the Strait of Worms has been now closed for a little more than five months now, I think it's a real miracle.

17:47and at the moment there's barely any crossing of oil tankers which means that our global oil reserves are being depleted at a rather fast pace so I think the question going forward is going to be how low is going to be that psychological or operational level of oil reserve where you cannot draw more, in which case the$83 floor that we're currently seeing is going to be much higher. So from a market perspective, I think if you look at the price action of equity prices, so S &P or even our domestic UK equity markets, there's clearly some optimism of potential talks and the fact that straight-up almost could reopen and a swift recovery of flows.

18:41But I would say that the risk could be tilting to the downside in terms of economic growth, consumer confidence and inflation-wise. So something to be aware of. Shelyan, clearly tough for lots of different consumers and businesses and even governments. been pretty good for the oil companies, we found out this week, didn't we? We saw, what did we see? We saw BP's quarterly profit doubling, Saudi's Aramco profits up 33 % in the second quarter. The oil supply is very, very squeezed, but the profits are not. You're right. I think Jonathan and Sophie made good points about the effects of the oil price, not just being on the petrol pump prices, but it's really flowing through the economy.

19:32and it's creating these inflation pressures. And that's why we're seeing the Bank of England choosing to leave interest rates on hold, for example. So it really is exacerbating that cost of living crisis. But at the same time, you've got these oil companies that are reporting very high profits. And you said, I think BP's underlying profit and the profit attributable to shareholders more than doubled from the same quarter last year. And that was very much due to the higher prices coming out of the US-Iran conflict and also sort of trading and refining margins. So on one hand, you've got consumers sort of suffering from this cost of living crisis due to the oil price spikes.

20:05And on the other hand, you've got the energy giants who are seemingly making a lot more money from it. I'm just going to squeeze in some more messages about vertical drinking because I'm enjoying your thoughts on whether standing around, vertical drinking, standing at the bar, standing around the bar area encourages you to drink more excessively. Kate on social media says, I'm old and therefore it encourages me to drink less because I'll decide to go home and sit down. Keep your thoughts coming. I am enjoying these 85058. But we're talking about oil profits there. Let's talk about a different kind of profit.

20:38We had profits from the UK's four biggest banks, HSBC, NatWest, Barclays and Lloyds, collectively making over£29 billion in profit in the first half of the year. So pretty decent, I think most people would say. But with those soaring profits come, inevitably I suppose, calls for a tax increase on them. The TUC General Secretary, Paul Nowak, said that this is a chance for the new Prime Minister and Chancellor to show whose side they're on. It's time to increase the bank surcharge and tax banks to bring down energy bills. Sean covered this earlier in the week. He asked Sir Philip Auger, author and former city banker, whether policymakers might be considering a different way of taxing banks.

21:24That's highly likely, I would have thought. Highly likely. And the banks already pay a surcharge on top of corporation tax. That surcharge was cut by Rishi Sunak. Possibility that that could be increased again. But more likely, I think, is that the banks have deposited huge amounts with the Bank of England. The Bank of England pays interest back to the banks on that. I just wonder if the Bank of England might now start to cut the interest they pay to the banks. That would save the taxpayer huge amounts of money. Well, Jonathan, what's your take? Could a windfall tax be part of the answer? Could it maybe boost some of that consumer confidence you were talking about?

22:09Possibly. But I have to say that as a business leader, it just it does further concern me that we continually hear about new forms of business taxation it feels to me that a business level we're already heavily taxed within the UK economy with with high cost basis and an agenda about further taxation going into business to potentially support give Andy Burnham further wiggle room on public spending I would like to see a slightly different agenda actually. I'd like to see how we can hear a plan for economic growth that encourages investment and employment of which the banks do play a key role in that with business and how the government intends to live within its means from a public spending point of view.

23:01We are heavily taxed at a domestic level. I think we're heavily taxed at a business level. I don't necessarily think the answer is further business tax. Do you think that there's a bit of an issue for any government. And this is the issue that we've seen in recent years where the public, they do want spending. They will feel more confident if they could see, I don't know, new homes being built, potholes being filled in, if they could be confident that they could get a hospital appointment when they need one. But obviously then businesses are perhaps feeling under real pressure from the tax increases that they've seen.

23:39I mean, it's a difficult square to circle is a circle to square, isn't it, for any government, where there's this sort of crying out for more spending and also crying out for more chance for businesses to grow. Yeah, but I don't think it's difficult to square that off, actually, because I think there is a route, a positive route, at which you can gain additional tax revenues and to support further investment into the infrastructure of this country, which I would be wholeheartedly in support of around housing, communications, transportation, etc. But the most productive way of doing that is to drive GDP growth and encourages business like ours, which we have been doing for the last number of years, to invest into our business, to increase employment, which in turn will produce further tax revenues rather than having a youth unemployment rate of 16%.

24:33But we've got a very low rate of GDP. And what we need is businesses to have a high level of confidence to invest and grow, which in itself will produce more positive levels of tax revenue. When I look back at Wake Up To Money from this time, I think I'll just remember this is the conversation that I feel has just been the ongoing tension, hasn't it? Sophie, can you explain to us, though, why banks might have been making such huge profits? What is it about the current conditions that's made that possible? So if I look at the performance of banks' equities since the start of the year in Europe, it's actually the second best performing.

25:13So it's up 21 % since the start of the year. I think it's due to the fact that the interest rate environment is higher than before. But also the fact that the economy, the state of the economy is not bad. So despite the volatility on the oil price that we discussed, supply chain issues, I think overall the health of the economy, the bank lending conditions are also quite healthy. So the economic backdrop is definitely being supportive at this point. Shalyan, what do you think? Should banks be taxed? We've had a pretty resounding no from Jonathan. I'm probably going to go with a no, but what I'll say is you can see why the TUSC have said this.

25:56So banks have sort of disproportionately benefited from the higher interest rates that, you know, remain because of the, you know, the energy crisis, et cetera. The Bank of England haven't been able to cut those interest rates. And the banks have sort of disproportionately benefited from those higher interest rates while households have suffered and households are dealing with the cost of living crisis. So I can see why the TUC have said that. And as Jonathan said, you know, Andy Burnham's got some really ambitious spending plans, including on infrastructure, which is, you know, a great way to grow the economy.

26:23And every time I think I'm on the programme with you, Fliss, I say, you know, let's spend on infrastructure. Let's try and grow the economy and let's try and get the economic growth. And that's how we all feel better off. And that's how businesses boom and customers feel more confident. But the problem is that Andy Burnham hasn't got any money to spend. So we can't really, you know, he's committed to the Labour manifesto, which says you can't raise taxes on working people. You can't really borrow any more money. I think the government already pays out the equivalent of about£4 ,000 a year in interest debt repayment.

26:51So sorry,£400 ,000 per household per year equivalent goes on debt interest payments. So you can't really borrow a lot more. You can't push that debt repayment up anymore. So there aren't a lot of options available to him. So again, you could think about these sort of taxes on corporations. In reality, will he do it? I think the windfall tax is interesting because the trouble is when you tax companies, you're always sort of concerned that they might sort of stop investing in the UK and they might invest elsewhere. this is being proposed as a percentage of UK banking profits and not international operations so that would reduce the incentives the banks to relocate but it would create business uncertainty it would potentially lead to other sectors as well thinking do we invest in the UK do we not are we going to be sort of levied with these additional taxes and ultimately whether the government's yield actually whether it's sort of generated what's being mooted would really depend on sort of how the tax is designed how long it lasts how the banks respond and how other businesses respond.