Your commercial news round-up: budget, employment, Google, Costa

Reading time: four minutes

Rachel Reeves has announced that the autumn budget will be released at the end of November and TMW Solicitors LLP has outlined that changes to the Employment Rights Bill may cost businesses an extra £80 million annually. Meanwhile, Google has been fined $425 million in a data privacy case and Coca-Cola is reportedly considering divesting Costa coffee due to declining performance. Read on for more!

• Chancellor Rachel Reeves has announced that the autumn budget will take place on 26 November, which is a month later than last year. The budget will outline the government’s spending plans for hospitals, schools, the military, the police and more. Reeves stated that the budget will focus on “investing in our economy and ensuring that working people wherever they live in our country are better off". Shadow Chancellor Mel Stride commented that Labour is "stalling, leaving the Budget until as late as possible in the vain hope things might get better". However, treasury sources suggest that the end of November fits with normal timelines to allow the Office for Budget Responsibility to complete the 10-week process of producing a new economic forecast. Former Goldman Sachs chief economist, Lord Jim O'Neill, has stated, “rational analysts” are suggesting that the government focuses on three or four “big things that have to be tackled” – the pension triple lock, the housing market, welfare reform and NHS productivity.
   
• The employment team at TMW Solicitors has said that it expects clauses recently added to the Employment Rights Bill will add a further £80 million a year in costs to UK businesses. This is in addition to the existing government forecast, which predicts that employers will spend £5 billion annually due to the bill. Partner and employment law specialist at TWM Solicitors, Anthony Wilcox, said: “The Bill continues to become more and more complicated, and expensive, and that is unlikely to boost employment across the country.” The firm warned that, as the bill becomes more complex, companies may hold back on making new hires. For example, one new addition is set to ban non-disclosure agreements in cases of workplace harassment and discrimination, which is expected to cost around £30 million annually.
   
• Google has been told to pay $425 million for collecting millions of users’ data even after tracking features had been turned off, breaching the privacy assurances detailed in its settings. The fee is considerably smaller than the $31 billion in damages that were originally sought. The jury found Google guilty of two out of three claims but emphasised that the search engine hadn’t acted with malice. Google stated that it’ll appeal the ruling as the “decision misunderstands how [its] products work”. It explained that, when users turn off the ‘Web & App Activity’ setting, businesses using Google Analytics may still collect data. However, it highlighted that businesses using Google Analytics don’t identify individual users and respect user privacy. In another case this week, the court ruled that Google didn’t need to sell its Chrome web browser. The US department of Justice had originally stated that Google had to sell Chrome, as part of a case centred around its dominance as a default search engine on many products. Instead, the search engine has been barred from having exclusive contracts and must share search data with rivals.
   
• Coca-Cola is reportedly considering selling its coffee chain Costa Coffee , with one analyst estimating the chain could be valued at £2 billion, which is almost half of the £3.9 billion Coca-Cola paid for it in 2019. Coca-Cola CEO James Quincey stated that Costa isn’t “where we wanted it to be” and that the company is looking at how “we might want to find new avenues to grow in the coffee industry”. Coca-Cola is reportedly exploring potential options, including a potential sale, with investment bank Lazard, according to Reuters and Sky News. Analysts have suggested that several coffee chains are struggling due to changing trends, alongside the cost-of-living crisis and the rising cost of coffee. For example, head of financial analysis at AJ Bell, Danni Hewson, said: “A lot of gen Z, they're looking at matcha, they're looking at brews, they're more healthy.” As matcha becomes more popular, chains that specialise in it, like Blank Street coffee, are growing in popularity. In addition, many of Costa’s rivals, such as Starbucks and Pret a Manger, have added matcha to their menus to appeal to consumers. Meanwhile, vice chair of independent investment group Shore Capital, Clive Black, highlighted that smaller coffee shops are growing in popularity and eroding the market share of larger chains.

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