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UK economy grew less than thought in spring

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UK economy grew less than thought in spring

UK economic growth between April and June was less than previously estimated, according to official figures.

Gross domestic product (GDP) – which measures all the economic activity of companies, governments and people in a country – rose by 0.5%, down from an initial reading of 0.6%.

The manufacturing and construction sectors fell by more than first thought.

The data has emerged as the Labour government, which has made economic growth one of its key policies, prepares to announce its first Budget in four weeks’ time.

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The Office for National Statistics (ONS), which published the figures, said the production of transport and related equipment tumbled by 3.1% between April and June after a long period of growth.

It was first estimated to have fallen by 0.7%.

The ONS said there was evidence to suggest that factories had reduced manufacturing as they prepared for the shift to making electric cars.

Construction also dropped due to a continuing decline in building new homes. However, the ONS said there were some signs this was beginning to ease.

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Paul Dales, chief UK economist at Capital Economics, said the downward revision “shouldn’t make the Bank of England worry too much about the economy running out of momentum”.

However, he added: “It may add to the Bank’s view that interest rates need to be reduced further.”

The Bank of England cut interest rates for the first time in nearly four years in August, to 5% from 5.25%.

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Samsung accused of obstructing Fortnite downloads

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Samsung accused of obstructing Fortnite downloads

Epic Games has accused Samsung of making it too difficult to download its massively popular video game Fortnite on certain mobile devices.

In a legal complaint it said it would file on Monday, it says people have to go through “21 steps” before they can play the game on a new Samsung product, including viewing security warning screens and changing settings.

Epic claims this means 50% of people who try to install the game on these devices give up before they complete the process.

It says this process takes 12 steps, rather than 21, for other Android phones and tablets.

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Epic has blamed a Samsung feature called Auto Blocker for the issue, which is turned on by default on Samsung’s latest products.

The tool is intended to block “malicious activity” and prevent app installations from unauthorised sources.

But Epic claims Auto Blocker is affecting Fortnite downloads, and says that goes against competition laws.

Apps on Samsung or Google’s stores can be downloaded in just a couple of clicks, as the firms have already approved them.

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But Fortnite must be downloaded from Epic’s own store – which triggers Samsung’s Auto Blocker feature to kick in with warnings about it.

Epic claims both Google and Samsung know Fortnite is a legitimate app, and so there should not be any warnings flagged.

That’s because it used to be available on Google Play – the official app store for Android-powered phones – and Samsung has even previously collaborated with it, running Fortnite competitions and creating digital skins for the game’s characters.

The BBC has approached Samsung and Google for comment.

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Fortnite’s developer has previously taken Google and Apple to court over disagreements about the way the tech firms operate their app stores.

The game returned to EU-registered iPhones in August after Apple was ordered to open up its app marketplace, but it still can’t be played on iOS in the UK.

Epic boss Tim Sweeney said he was “very sad” to be initiating more legal action.

“The fight against Samsung… is new, and it really sucks,” he said.

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“I did not think we would end up in this place.”

He claimed Epic would have “made a lot more money” had it chosen not to pursue its previous legal action, but said he wanted to create a “truly level playing field” for developers.

The game developer says it wants Samsung to introduce a process by which all legitimate third-party app developers can apply to be whitelisted from Auto Blocker but is has been unable to reach an agreement.

Fortnite was removed from Apple and Google’s app stores in 2020 after Epic introduced its own in-app payments system.

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And the developer won a lengthy court battle against Google over app store dominance in December 2023, with a jury deciding that Google had been operating a monopoly.

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Rightmove urges REA to submit ‘best and final’ offer as it rejects £6.2bn bid

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Rightmove urges REA to submit ‘best and final’ offer as it rejects £6.2bn bid

“The last few weeks have been very disruptive as well as unsettling for our colleagues,” said Rightmove chair Andrew Fisher.

The post Rightmove urges REA to submit ‘best and final’ offer as it rejects £6.2bn bid appeared first on Property Week.

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Qantas adds A380 to Johannesburg route for the first time

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Qantas adds A380 to Johannesburg route for the first time

The move will add 130,000 seats per year to the route, as well as seeing the return of the carrier’s first class cabin and a doubling in the number of premium economy seats available

Continue reading Qantas adds A380 to Johannesburg route for the first time at Business Traveller.

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AI is fuelling an Asia grid investment boom

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Renewable energy sources are generating a record percentage of the world’s electricity. With nearly a third of the world’s total coming from cleaner sources, installations of wind and solar facilities are also growing at record rates.

The lack of power grids to support this rate of growth means that a large chunk of this electricity may start going to waste. A surge in power demand fuelled by artificial intelligence-related sectors could supercharge a buildout of the world’s transmission networks — and that will boost key suppliers of the kit needed.

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Almost 3,700 gigawatts of new renewable capacity is expected to come online over the five years to 2028 around the world, according to the International Energy Agency. In Asia, companies are starting to invest heavily to get power grid infrastructure up to speed to meet this new capacity as demand from AI-related sectors offers the prospect of a quick pay-off.

Operating and training generative AI services is highly energy-intensive. AI data processing requires significantly more power than traditional data-centre activities. Some studies estimate that generative AI systems use about 33 times more energy than machines running task-specific software.

Justifying the investment decision to build out grids has become easier, given that near-guaranteed demand. Japan’s largest electric utility company, Tokyo Electric Power Company Holdings, for example, will spend more than $3bn to build up its transmission infrastructure by financial year 2027 through its subsidiary Tepco Power Grid — tripling its level of investment.

This year, it launched a large-scale substation — its first in more than two decades — in Inzai, in the Chiba prefecture east of Tokyo. This coincides with the construction of several data centres in the area including by Google’ and Japanese IT group NEC.

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Line chart of Forward price/earnings showing Powered up by grid investment

A local beneficiary from the investment in power transmission and distribution networks is conglomerate Hitachi, whose power grids business makes hardware for electrical grids and load-dispatching systems. Recent earnings already reflect growing demand for power transmission solutions, with group net profit for the June quarter more than doubling to $1.2bn.

Shares of Hitachi are up 80 per cent this year, and trade at 26 times forward earnings — about triple the levels of two years ago. In the US alone, the grid connection backlog increased 30 per cent last year. As renewable energy capacity continues to grow, grid integration and energy storage solutions will become increasingly lucrative sectors.

june.yoon@ft.com

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Is acting for overseas clients worth it?

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Is acting for overseas clients worth it?

Global Communication From United Kingdom (World Map Credits To NASA)Picture the scene. Mrs Smith, a longstanding client, has just announced she’s moving to Japan.

What do you do? Wish her well and wave sayonara, or continue to manage her investments?

I’m sure most of you will be wondering why on earth you would give up a successful relationship – but have you considered the implications of acting for someone residing outside the UK?

Advising in Europe

Since we left the EU, the ability for UK-based firms to advise clients who live in other countries has essentially been removed.

However, if your client is an EEA/EU resident, there are a couple of exemptions you may be able to utilise to continue to act on their behalf:

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  1. UK soil exemption: Your client may live abroad but if your advice and the regulated activity takes place exclusively during visits to the UK, the exemption is permitted. You need to keep clear records of the client’s location during any contact, as even an email or phone call made while the client was outside the UK could be considered cross-border activity.
  2. Reverse solicitation: A less common and, in some cases, riskier option is to cite reverse solicitation, which, when used correctly, it is valid under EU and UK law. British firms have every right to provide services to EU clients that act exclusively on their own initiative to seek financial advice. However, this exemption has limitations and seeking legal advice is recommended before proceeding on this basis.

An option for clients moving overseas temporarily is to consider giving a trusted person living in the UK power of attorney. The donor decides who to appoint and when it can be used – for example, only for the provision of financial management when they are living or working overseas.

The regulatory position

While the FCA may regulate the product you want to provide the client, if they live outside the UK, they are not within its jurisdiction in relation to your advice.

Therefore, you need to consider if the service can be justified, in terms of the cost to your firm and the client, and the effort required to comply with local legislation.

The problem is that the ‘characteristic performance’ of the service determines where the activity is seen to be undertaken. For discretionary investment management firms, it is slightly easier, as decisions are made by you in the UK, but advisers act on the instructions of the client and, for regulatory purposes, these activities are determined by the client’s location at the time the advice is given.

As a general rule, you cannot market or solicit for business outside the UK unless:

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  • You have written evidence of exemption from the host state
  • You have been granted the relevant local authorisation

Practical considerations

You may be thinking the need to gain overseas authorisations is a mere technicality, but are you prepared to take the risk? Would you have PI cover if a complaint from an expat was to arise?

Although the chances of being caught may be low for one-off or irregular work, the FCA would hold a dim view of firms knowingly operating overseas in breach of local regulations.

There are other aspects to consider, too. For example, if you are providing an ongoing service, can you meet your Consumer Duty obligations? What would happen if you needed to make an urgent change and the client couldn’t come back to Britain? You really need to consider the outcomes for non-UK clients and whether they will receive fair value when judged against your wider target market.

Do your research

If you find yourself in the unenviable position of having to decide whether to continue acting for an emigrating client, it might be worth seeking the opinion of a solicitor or the financial regulator in the country concerned.

They will be able to confirm if there are local exemptions or if authorisation is needed. You also have to track down providers willing to facilitate an investment for clients without a UK base.

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If you determine advice has been provided outside the UK, without the local regulatory permissions, you may need to consider making a declaration to the FCA. You may also need to check if your PI insurer will cover the transaction.

For precise details about serving clients overseas, it is always worth consulting the FCA’s handbook or seeking legal advice.

Vicky Pearce is a director at B-Compliant 

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This Tory conference reads like a familiar story, risking a longer spell in opposition

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This article is an on-site version of our Inside Politics newsletter. Subscribers can sign up here to get the newsletter delivered every weekday. If you’re not a subscriber, you can still receive the newsletter free for 30 days

Good morning from Birmingham. The Conservative party’s first conference since entering opposition finds the party in a state of suspended animation. All four remaining leadership candidates know that a mistake this week, or a particularly good speech, could change the dynamic of the contest. As it stands, though, it looks like a very familiar story.

Inside Politics is edited by Georgina Quach. Read the previous edition of the newsletter here. Please send gossip, thoughts and feedback to insidepolitics@ft.com

Call of the wild

This is the third party conference I have attended in which the party hosting it has just entered opposition: 2010, when Labour’s 13-year period in government had come to a close the previous spring, 2015, when the Liberal Democrats had been reduced to just eight seats in the wake of their five-year stay in coalition, and now 2024.

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And all three of those conferences had a similar mood on their first day. Despite having gone down to a historically bad defeat, each party was surprisingly chipper. All felt that the new government was struggling to find its feet. (And, to be fair, in all of those cases they were right.) All were rather enjoying opposing painful cuts in the new government’s budget. And all hoped that come the next election they would be back in business. (Which they weren’t.)

In 2010 and 2015, the Labour party and Lib Dems respectively picked a leadership candidate who disavowed their record in office and moved the party closer to its activist base. Both parties did pretty poorly in the election that followed. The Labour party lost seats in 2015, and the Lib Dems lost votes.

At Conservative party conference so far, the candidates who are currently leading the pack to succeed Rishi Sunak as Tory leader are offering a similar diagnosis. Robert Jenrick, the bookmakers’ favourite, told party members that they lost the election in part because they lacked “the ballast of knowing what this party believes in”, and said that the Tory party needed to get back “some religion”. His rival Kemi Badenoch is telling members that they lost because they did not lead and became too obsessed with focus groups: the usual message when a party wants an excuse to ignore the voters it lost and vanish into the wilderness. At one fringe meeting, party members were encouraged to purchase hats with the slogan “Make the Tory party Conservative again”.

This is a party that looks pretty set upon doing what first-term oppositions always do: deciding that it lost because it wasn’t sufficiently like itself, and then losing the next election. Now, of course, it’s true to say that this doesn’t always happen. Both Labour in 1970 and the Conservatives in 1974 moved away from the centre and returned to government after a single term in opposition. That happened in part because the 1970s were a period of repeated geopolitical shocks, but you can see how the 2020s might end up being a similar decade.

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At this Conservative conference, and at Labour conferences after their defeats in 2010 and 2015, the success of Margaret Thatcher, whose reaction to defeat was to move the Conservative party away from what was then considered the centre of British politics, has been frequently cited.

But in general, what happens to most opposition leaders who go to bed thinking they are Thatcher is that they wake up and realise they have ended up more like former Labour leader Michael Foot: that their party has lost again and is going to have to wait another five years to get back into office.

Now try this

The trouble with Birmingham is it has any number of terrific restaurants that insist on being closed on Sundays. If it hadn’t been a Sunday, I would have gone to the delightful Adams yesterday, but as it was, I got room service and watched a below-average movie (The Intern) on Netflix.

Top stories today

  • Labour MP resigns over ‘hypocrisy’ | Keir Starmer is to tighten up UK rules on declaring ministerial “freebies” after a Labour MP quit the party denouncing the prime minister’s acceptance of free gifts and his “cruel” decision to cut winter fuel payments.

  • Manoeuvres in the dark | A company funnelling cash to Conservative leadership candidate Tom Tugendhat was set up last November, months before the general election was called.

  • Pension decisions | Rachel Reeves is unlikely to cut pension tax relief for higher earners in her Budget next month because it would hit teachers, doctors and other better paid public sector workers, according to a report released today.

  • Stop the fighting | Rishi Sunak has used a farewell address to party members to warn that the Tories will be consigned to the margins of politics for good unless they end their internecine feuding. The speech came as it emerged Sunak’s key lieutenant Oliver Dowden, former deputy prime minister, has been interviewed in the official investigation into betting on the date of the general election.

  • Row over Kemi comments | Tory leadership contender Kemi Badenoch has suggested that maternity pay in the UK is “excessive” and that people had more children before it was widely introduced, before rowing back on her position.

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