It was a year of shrugged-off shocks, which saw the Murdochs return and Sir Philip Green’s £1 BHS deal come back to haunt him
JANUARY Global markets suffered the biggest New Year sell-off since 2000: some $8trn was wiped off the value of shares globally, owing to fears about the falling oil price and faltering Chinese growth. Having hit a 12-year low of less than $28/barrel, the price of oil was forecast to plummet to $20 or lower if Opec members failed to agree production cuts. Warning of a deflationary crisis, RBS economists predicted a “cataclysmic year ahead”. In Britain, a potential EU departure was dubbed the greatest economic danger; bookies put the odds of a UK exit at 36%. Goldman Sachs, Jpmorgan and Morgan Stanley pledged large sums to the nascent In campaign – evidence, said some Eurosceptics, of a conspiracy between big banks and big government. James Murdoch’s return to Sky as chairman, four years after the News Corp hacking scandal, prompted speculation that the Murdochs were gunning to take full control of the broadcaster. Chinese gaming company Beijing Kunlun bought a 60% stake in the gay dating app Grindr – demonstrating the broadening reach of Chinese investment cash.
FEBRUARY Google’s parent, Alphabet, overtook Apple as the world’s most valuable company, with a $568bn capitalisation. Fears of a “profitability crisis” owing to very low interest rates prompted a dramatic global sell-off of bank shares: worries centred on Germany’s largest lender, Deutsche Bank, which made a record loss in 2015. Boris Johnson’s decision to join the Leave campaign saw the pound slump 2% to a seven-year low of $1.40 against the dollar. Some predicted a 15%-20% fall if Britain were to vote Out in June. The London Stock Exchange and Deutsche Börse proposed a £21bn “merger of equals”, headquartered in London. The stateowned Chinese chemicals group Chemchina smashed the record for the country’s biggest ever foreign takeover bid, with a $43bn offer for the Swiss agribusiness giant Syngenta.
MARCH Sir Philip Green’s £1 deal to offload BHS came back to bite him. Less than a year after its sale to Retail Acquisitions (an outfit run by the twicebankrupt former racing driver Dominic Chappell), BHS entered administration. Its fight for survival hinged on resolving a £571m hole in its pension fund. Green, who paid himself and wife Tina more than £400m in dividends during his tenure, offered to contribute £80m. Thomas Piquemal, EDF Energy’s finance chief, resigned, sparking renewed doubts about the viability of Britain’s proposed £18bn new nuclear power station at Hinkley Point. Piquemal warned that the project could bankrupt EDF, despite Government guarantees offered to the French state energy giant and its Chinese partners. Retail giant Amazon struck up an online joint venture with Morrisons, to the chagrin of the grocer’s existing partner, Ocado. Sainsbury’s responded with a £1.4bn deal to buy Argos owner Home Retail. In a “testy” session with MPS, the Bank of England governor, Mark Carney, denied that his assessment that Brexit was the UK’S “biggest domestic risk” had been influenced by Downing Street. The Chancellor, George
APRIL A spring stock market rally took hold amid hopes that the long-running rout in commodity markets was over. Simmering problems at Tata Steel erupted into a full-blown crisis: the company threatened to sell its entire UK business, including the loss-making Port Talbot plant, jeopardising 11,000 jobs. The Government said that, if necessary, it would consider partnationalisation. The Treasury published a 200page dossier estimating the cost of leaving the EU at £4,300 annually per household by 2030. Tough new rules on US tax “inversions” saw Pfizer terminate its planned $160bn “Viagra-botox merger” with Dublin-based Allergan. More than 500 banks were embroiled in the Panama Papers affair, highlighting the common use of offshore tax regimes for rich clients. Margrethe Vestager, the EU Competition Commissioner, widened her anti-trust crusade against Google, accusing it of abusing its dominance of the Android operating system. Marks & Spencer chief Marc Bolland quit after a losing six-year battle to turn around the chain’s non-food arm. WPP boss Sir Martin Sorrell defended his £70m pay package, employing the L’oréal defence: “Because I’m worth it.”
MAY The Tory MP Jacob Rees-mogg called for Mark Carney’s sacking – claiming that he had undermined the independence of the Bank by colluding with the Government on “Project Fear”. Former M&S boss Lord Rose came under fire for running a listless Britain Stronger in Europe campaign, but RBC Capital Markets noted that financial markets had “all but discounted” the prospect of a Leave vote. Apple shares hit their worst losing streak since 1998, following the first ever drop in iphone sales. MPS widened the scope of two inquiries into BHS’S collapse, ordering Goldman Sachs to account for its role in the £1 sale; there were calls to strip Sir Philip Green of his knighthood. Donald Trump, the new Republican presidential candidate, indicated that he might replace Janet Yellen as chair of the US Fed if elected. In a landmark decision for Britain’s nascent shale industry, councillors in North Yorkshire voted in favour of Third Energy’s plans for exploratory fracking in Ryedale.
JUNE After months of evasion, Sports Direct boss Mike Ashley submitted to a grilling by MPS over the retailer’s working practices. He admitted workers at the firm’s Derbyshire warehouse hadn’t been paid the minimum wage, and apologised for conditions likened to those of a “labour camp”. BHS went into formal liquidation after administrators failed to find a buyer –
the biggest high-street casualty since Woolworths in 2008. Microsoft tabled a surprise $26bn bid for the business social network Linkedin. The Libyan Investment Authority began a colourful $1.2bn suit against Goldman Sachs, alleging its officials had been duped into poor investments after being plied with lavish meals and prostitutes. (Goldman was later cleared.) As the referendum approached, the chancellor declared that an Out vote would mean a punishing Emergency Budget. But to his and almost everyone’s else’s surprise, Britain did indeed vote Out. The shock outcome sent currency and stock markets reeling. Sterling lost 10% of its value overnight, hitting a 30-year low against the dollar. Global stock markets lost a record $3trn in two trading days.
JULY The pound continued to fall, but the FTSE 100 rebounded strongly; for many Footsie firms, weaker sterling being a boon. But the domestically-focused FTSE 250 was badly hit and commercial property funds suffered an investor stampede. Some suspended redemptions. BOA Merrill Lynch called the vote “the biggest electoral riposte yet to the age of inequality”. This theme was taken up by the new PM, Theresa May, who pledged a radical business shake-up, including curbs on executive pay and plans to put worker reps on boards. A proposed crackdown on foreign takeovers of critical assets was immediately tested by Softbank of Japan’s £24bn bid for UK chip-maker ARM – which was waved through. Nintendo shares more than doubled in a month after the launch of the latest gaming craze, Pokémon Go.
AUGUST The Bank of England launched a £170bn stimulus – the largest since the financial crisis – and cut interest rates to 0.25%. The bond-buying programme hit an early glitch when gilt holders refused to sell, driving yields even lower and prompting further debate about the damaging impact of QE on savings and pensions. The Italian PM, Matteo Renzi, readied a s5bn rescue deal for the world’s oldest bank, Monte dei Paschi di Siena, when it failed stress tests: bad loans across the Italian system were estimated at s360bn. Uber abandoned a ruinously expensive turf war in China, agreeing a sale to Didi Chuxing. China stepped up pressure on Theresa May’s Government to okay the £18bn Hinkley Point nuclear power project; May imposed safeguards, but hit the button.
SEPTEMBER Markit surveys of manufacturing, services and construction suggested that Britain would “avoid recession”. The new International Trade Secretary, Liam Fox, argued that UK companies had grown too “fat and lazy” to be effective exporters; bosses, he said, preferred “playing golf”. The biggest anxiety among City firms was whether a new trading deal with the EU would include “passporting rights”; there were fears of an exodus if not. The German company Bayer sealed the largest takeover deal of 2016, with US GM specialist Monsanto, creating a $66bn giant controlling more than 25% of the world’s seeds and pesticides. But globalisation looked in retreat: senior EU figures declared that Europe’s controversial TTIP trade deal with the US had “failed”, and both US presidential candidates indicated they would scrap America’s TPP deal with Asia. The Bank of England launched Britain’s first polymer £5 note; vegans were horrified to learn that the new notes contained traces of animal fat. Deutsche Bank’s shaky finances were whacked by a $14bn US fine for misselling mortgage-backed securities.
OCTOBER Tesco scuffled with Unilever over the price of Marmite, raising the prospect of steep food-price hikes consequent to the sharp drop in sterling. Nissan declared it would build two new car models in Sunderland; the Government denied it had struck a sweetheart deal to protect the carmaker from tariffs post-brexit. Ministers’ “Hard Brexit” rhetoric was cited as a factor behind a destabilising “flashcrash” in the pound. A spate of explosions forced Samsung to scrap its new Galaxy Note 7 smartphone. Cyrus Mistry, the CEO of Tata Sons, was ousted and replaced by family patriarch Ratan Tata. The planned Ceta trade deal between the EU and Canada was nearly torpedoed by opposition from the Belgian region of Wallonia. Mark Carney extended his term as governor by one year to 2019, so as to see out Brexit negotiations.
NOVEMBER The feared “Trump Slump” following Donald Trump’s presidential victory didn’t materialise. US stocks hit new records as investors focused on the upside of a promised infrastructure splurge and red-tape bonfire, rather than the downside of Trump’s protectionist policies. The result had most impact on bond markets, which suffered a $1trn rout as a “reflation” trade took off. An Indian government anti-corruption drive, involving the abrupt withdrawal of higher value rupee notes, brought chaos. The new Chancellor, Philip Hammond, relaxed fiscal rules in his Autumn Statement and pledged a £23bn fund to boost infrastructure. A Green Paper on corporate reform watered down the PM’S promises of sweeping change. Oil prices leapt 9% to more than $50/barrel after Opec’s members clinched their first deal in eight years to cut output.
DECEMBER The No vote in Italy’s referendum sparked turmoil in Italian banks laden with bad loans. Tata Steel confirmed it would invest £1bn in Port Talbot and keep production going for at least five years. Rupert Murdoch’s 21st Century Fox bid an opportunistic £11.2bn to buy the 61% of Sky it doesn’t already own. The Trump-inspired party on Wall Street continued: Softbank announced a $50bn investment in US companies. Trump’s nominated treasury secretary, Steve Mnuchin – one of several financiers and business leaders in the new cabinet – said he would set in train “the largest tax change” since the Reagan era. The US Fed raised interest rates by a quarter-point – it was only the second hike since 2006.