Your commercial news round-up: Matt Hancock, Meta, Barclays, Vodafone, housing, legal hiring

Reading time: four minutes

This week we saw former Health Secretary Matt Hancock enter the jungle, alongside Euro 2022 winner Jill Scott and British Broadcaster Charlene White. Aside from catching up on the latest jungle antics each night, what other news should be on your radar? In this week's round-up, find out about the Meta layoffs, Barclays' payment protection insurance (PPI) breach, Vodafone’s sale of its mobile-phone masts business, housing prices and a look into law firms’ future employment plans. 

• Facebook owner Meta is set to cut 11,000 staff following a collapse in revenue. Mark Zuckerberg has said cuts are a result of overinvesting at the start of the pandemic, adding that the cuts are “the most difficult changes we’ve made in Meta’s history”. These cuts will be the first round of redundancies in the company’s history (equivalent to cutting one-in-eight staff) and come after its workforce peaked at 87,314 earlier in the year. Zuckerberg described the staffing issue as “inefficient”. The news of Facebook’s cuts follows major layoffs at Twitter, which saw staff numbers cut in half following Elon Musk’s acquisition of the tech giant. Macroeconomic turndown and increased competition within the tech space have been identified as the major reason behind staff cuts, due to the disastrous impact these have had on company revenue, with £69 billion being wiped from Meta in the past month.
   
• Barclays have been ordered to pay £1 million in compensation over a PPI breach. The banking giant will pay an average of £750 per person for up to 1,306 customers following a breach between 2014 and 2017. The pay-out was ordered after a report by the Competition and Markets Authority found that Barclays had failed to remind mortgage customers with PPI policies of the costs of their policy, the type of cover they had, and their right to cancel. This meant a significant number of customers who purchased PPI along with their mortgage loan may have continued their policy for longer than necessary or missed opportunities to find cheaper or better alternatives.
   
• Telecoms company Vodafone has agreed a partial sale of Vantage Towers, its mobile-phone masts business, to a consortium including private equity firms KKR and Global Infrastructure Partners (GIP). Vodafone’s current 81.7% stake is set to be placed into a joint-venture company Oak BidCo, which plans to then acquire the listed shares that account for the remaining 18.3% of the company. Vodafone also announced that it’ll be selling a stake in the Oak BidCo at €32 a share to the GIP-KKR consortium, which is set to end up with between 32% to 50% of the business; the final percentage will depend on the number of minority shareholders willing to sell their shares.
   
• The pound is plummeting while interest rates soar – is a mortgage crisis inevitable? And what will happen when house prices fall? The Bank of England has increased interest rates to 3%, which will in turn increase mortgage costs. However, before this latest increase some lenders were reporting house price falls. A decrease in house prices has the most immediate impact on people planning to move because the availability of properties will decrease and current homeowners will likely have less purchasing power. On the flip side, first-time buyers may be in luck as properties become more affordable making it that little bit easier to get a foot on the housing ladder – once they’ve secured a mortgage that is. Financial insecurity is another serious consideration. Around one-third of household wealth is tied into home values, so if house prices fall people may begin to feel less financially secure resulting in them saving rather than spending meaning less money is going into the economy.
   
• Law firms are avoiding making layoffs due to fears of repeating the mistakes made during the 2008 financial crash, according to analysis from Thomson Reuters. The world’s top law firms are continuing to hire staff while holding back on redundancies despite falling profits. Firms appear to be reluctant to make staff redundant as a result of the difficulties they had rehiring lawyers who’d been laid off in 2008. Rather than issuing redundancies, firms have adopted a ‘wait it out’ approach in light of the current economic situation, which has seen firm profitability drop over four consecutive quarters. Legal sector profits have consistently dropped over the past year, with losses attributed to rising costs and a significant drop in M&A activity. Despite this outlook, average profits per lawyer are still 17.6% higher than before the covid-19 pandemic.

Check the News every Thursday for this weekly commercial news round-up.

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