Your commercial news round-up: Boris Johnson, Bank of England, ‘Call of Duty’, British Airways, Kellogg’s

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Government resignations seem to have been coming at us left, right and centre this week as calls for Boris Johnson were eventually heeded. Elsewhere, measures to ensure UK banks strengthen their defence have been ordered, while Kellogg’s loses its court case against the government.

What else is in this week’s round-up? With a major training contract application deadline looming at the end of this month, what are you doing to improve your commercial awareness ahead of any interviews? Take a look at this week’s news round-up and consider the commercial impact of these stories.

• Prime Minister Boris Johnson is set to announce his resignation later today, following a surge in government resignations over the past few days. Although he is due to continue as prime minister until Autumn, a number of MPs are calling for a caretaker prime minister to replace Johnson to prevent him from leading the country throughout the summer. 

• The Bank of England has ordered lenders to increase the proportion of reserves they must hold against their lending to 2%. The change in capital reserves rules aims to strengthen banks’ defences ahead of the impending economic downturn. In its financial stability report, the central bank called on lenders to double the amount of money they must keep in reserve to ensure they are “large enough to create capacity for banks to absorb shocks, so they are able to continue to lend through downturns”. These changes, although are not due to come into effect until 5 July 2023, saw FTSE 100-listed banks, including HSBC, Barclays and Lloyds, fall by more than 2%.

Meanwhile, the euro fell to its lowest level against the dollar in 20 years earlier this week, with concerns over a recession in the euro zone building. As gas prices continue to rise and the war in Ukraine ongoing, the euro fell by around 1.5% to $1,0265 against the dollar. As the euro zone inflation hit 8.6% in June, the European Central Bank recently advised markets that it would hike interest rates for the first time in 11 years. The euro zone’s currency has lost 9% of its value against the dollar since the beginning of the year.

• The Competition and Markets Authority (CMA) is taking a close look at Microsoft following the biggest deal in gaming history, which saw it buy ‘Call of Duty’ maker Activision Blizzard for £57.8 billion earlier this year. The CMA has said it will make a call by 1 September on whether the acquisition will reduce competition in the UK. Microsoft has said it will “fully cooperate with the CMA’s merger review” while the Federal Trade Commission in the US has also announced that it’ll be taking a look at the deal. If it’s cleared, Microsoft will become the third-largest gaming company by revenue.

• A further 10,300 short-haul British Airways flights are due to be cancelled between August and the end of October, totalling 30,000 flight cancellations in the airline’s schedule from April to October this year. Heathrow, Gatwick and City airports will be affected by the cancellations. As demand for air travel bounces back after covid-19, the aviation industry is now facing “significant challenges” with staff shortages. British Airways said it’s “completely focused on building resilience into our operation to give customers the certainty they deserve”. However, Rory Boland, editor of Which? Travel called out British Airways for continuing to “promote and sell flights it could not fulfil”.

• Following a Royal Courts of Justice ruling, food manufacturing giant Kellogg’s will not be permitted to promote sugary cereals in supermarket special offers. Kellogg’s took the government to court following a change in rules for England that will see such restrictions placed on in-store promotions on food and drink that are high in fat, salt or sugar, including Kellogg’s Crunchy Nut Corn Flakes. However, the court ruled in favour of the government.

The cereal maker argued that the new rules ignored the nutritional value of added milk with managing director Chris Silcock stating: "It makes little sense to us that consumers will be able to buy other products, like donuts and chocolate spreads, on promotion – but not many types of breakfast cereals.” On the other side, a spokesperson for the Department of Health and Social Care said: "Together with the volume price restrictions, these changes will protect children up and down the country from products high in saturated fat, sugar or salt.”

Two weeks ago we reported that the food giant is due to split into three independent companies.

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