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Huawei crisis deepens as UK tech firms shun company; Pound's pain continues - business live Pound hits lowest level since early January as Brexit crisis rages - business live
(32 minutes later)
My colleague Andrew Sparrow is tracking all the action at Westminster, as the PM’s future hangs in the balance...(not for the first time, of course)
May fails to quell Brexit plan backlash amid reports cabinet has turned against her – live news
These tweets sum up the crisis facing Theresa May this afternoon, and explain why the pound is sliding....
RECAP: The situation PM faces this afternoon following conversations with sources:1. 1922 exec meets at 4 with some now hell bent on changing rules to shift PM2. Scottish Sec to see PM to discuss her future 3. Delegation of leave ministers also seeing PM to express their anger pic.twitter.com/h8XJPWaxId
More significant are plans for a group of Brexit-backing Cabinet ministers to see the PM this afternoon. One cabinet source says: "If you don't do it today, she's safe for two weeks."
Minister: “it’s over. You may not see the result today but it’s happened. You might have to wait till Friday for the podium but she’s done.”
The pound is coming under renewed pressure, hitting a new four-month low against the US dollar.
Sterling fell as low as $1.2625, its lowest point since the 4th of January. It’s also down further against the euro, at €1.132.
Traders are reacting to a flurry of reports that some cabinet ministers are plotting to force Theresa May to step down, rather than allowing her to bring her Brexit vote to parliament next month.
The Evening Standard says plotting is underway with relish (we mentioned earlier that several ministers were late for PMQs).
Cabinet ministers were this afternoon discussing sending a delegation to tell Theresa May she should resign after botching her “last chance” at a Brexit deal.
At least four ministers were said to be in talks about calling time on the Prime Minister after her attempt to get cross-party backing for a new plan hit a wall of opposition.
Environment Secretary Michael Gove gave an apparent hint that a big Commons vote on the Withdrawal Agreement Bill, due in the week of June 3, should be pulled.
Sources said several Cabinet ministers agreed with him that the vital Bill should be kept back for a new Tory leader to manage.
My colleague Heather Stewart has also heard that “something’s up”, with Scottish secretary David Mundell planning to have a little chat with the PM later.
Theresa May still doughtily defending her bill in the Chamber - but one cabinet source says, “something funny going on here... may move very fast.“
Understand David Mundell has asked for a meeting with the PM later, because of concerns about how May has presented the second referendum issue. He feels any hint the government backs a PV gives the Scottish Tories a massive headache with the SNP.
With mobile operators shunning its phones, and ARM dramatically blocking work with the firm, Huawei’s problems are deepening.With mobile operators shunning its phones, and ARM dramatically blocking work with the firm, Huawei’s problems are deepening.
The crisis escalated last week when it was placed on a US trade blacklist, preventing the firm buying goods and services from American firms without government permission.The crisis escalated last week when it was placed on a US trade blacklist, preventing the firm buying goods and services from American firms without government permission.
That prompted Google to cut ties with the company on Sunday night, restricting its access to the Android operating system. Current phones shouldn’t be affected, but it could stop Huawei using Android for new handsets - a very serious blow.That prompted Google to cut ties with the company on Sunday night, restricting its access to the Android operating system. Current phones shouldn’t be affected, but it could stop Huawei using Android for new handsets - a very serious blow.
Here’s our news story on EE’s decision to drop Huawei phones like a hot potato:Here’s our news story on EE’s decision to drop Huawei phones like a hot potato:
EE drops Huawei phones from its 5G network launch lineupEE drops Huawei phones from its 5G network launch lineup
In another blow to Huawei, two of Britain’s mobile operators have decided not to offer its handsets to customers joining their new 5G networks.In another blow to Huawei, two of Britain’s mobile operators have decided not to offer its handsets to customers joining their new 5G networks.
EE announced this morning that it will launched the UK’s first ultra-fast 5G network later this month, in Belfast, Birmingham, Cardiff, Edinburgh, London, and Manchester.EE announced this morning that it will launched the UK’s first ultra-fast 5G network later this month, in Belfast, Birmingham, Cardiff, Edinburgh, London, and Manchester.
It had planned to offer Huawei handsets, but has temporarily suspended that plan - following America’s ban on the company dealing with US companies. That ban could prevent Huawei updating phones running Google’s Android operating system.It had planned to offer Huawei handsets, but has temporarily suspended that plan - following America’s ban on the company dealing with US companies. That ban could prevent Huawei updating phones running Google’s Android operating system.
Steve Ranger of technology site ZDNet has the details:Steve Ranger of technology site ZDNet has the details:
EE CEO Marc Allera said EE had put the Huawei 5G devices “on pause” until it has more information and confidence that the handsets would be supported for the lifetime of the devices.EE CEO Marc Allera said EE had put the Huawei 5G devices “on pause” until it has more information and confidence that the handsets would be supported for the lifetime of the devices.
But the vendor’s equipment is still in EE core network; the UK government is currently deciding whether Huawei kit should be allowed in the nation’s 5G networks.But the vendor’s equipment is still in EE core network; the UK government is currently deciding whether Huawei kit should be allowed in the nation’s 5G networks.
Vodafone as also decided to suspend Huawei from its range for 5G handsets, with a launch planned for this summer.Vodafone as also decided to suspend Huawei from its range for 5G handsets, with a launch planned for this summer.
Huawei has confirmed that ARM has suspended work with it, and blamed “politically motivated” decisions -- namely America’s decision to blacklist it last week.Huawei has confirmed that ARM has suspended work with it, and blamed “politically motivated” decisions -- namely America’s decision to blacklist it last week.
A spokesperson for the Chinese tech firm says:A spokesperson for the Chinese tech firm says:
“We value our close relationships with our partners, but recognize the pressure some of them are under, as a result of politically motivated decisions,“We value our close relationships with our partners, but recognize the pressure some of them are under, as a result of politically motivated decisions,
We are confident this regrettable situation can be resolved and our priority remains to continue to deliver world-class technology and products to our customers around the world.”We are confident this regrettable situation can be resolved and our priority remains to continue to deliver world-class technology and products to our customers around the world.”
The Financial Times reports that the ARM ban will hurt Huawei:The Financial Times reports that the ARM ban will hurt Huawei:
Huawei confirmed that it had been informed over the weekend that Arm would stop doing business with it. The company’s current chip set, Kirin 980, is built on Arm designs and will not be affected for about a year, it said.Huawei confirmed that it had been informed over the weekend that Arm would stop doing business with it. The company’s current chip set, Kirin 980, is built on Arm designs and will not be affected for about a year, it said.
More here:More here:
Huawei describes the Kirin 380 as the “most powerful and intelligent” mobile chip of its type ever. It includes 6.9 billion transistors in an area of less than 1 square centimetre - confirming that Moore’s Law is alive and well.Huawei describes the Kirin 380 as the “most powerful and intelligent” mobile chip of its type ever. It includes 6.9 billion transistors in an area of less than 1 square centimetre - confirming that Moore’s Law is alive and well.
Huawei adds:Huawei adds:
Kirin 980 can quickly adapt to AI scenes such as face recognition, object recognition, object detection, image segmentation and intelligent translation with the power of a dual-core NPU achieving 4500 images per minute which is an improved 120% recognition speed. So whether it’s dancing to a fast song or quickly running in front of the camera, the Kirin 980 can focus on the joints and lines of the human body in real timeKirin 980 can quickly adapt to AI scenes such as face recognition, object recognition, object detection, image segmentation and intelligent translation with the power of a dual-core NPU achieving 4500 images per minute which is an improved 120% recognition speed. So whether it’s dancing to a fast song or quickly running in front of the camera, the Kirin 980 can focus on the joints and lines of the human body in real time
ARM has issued a brief statement on the Huawei ban, saying:ARM has issued a brief statement on the Huawei ban, saying:
“ARM is complying with all of the latest regulations set forth by the U.S. government.“ARM is complying with all of the latest regulations set forth by the U.S. government.
No further comment at this time.”No further comment at this time.”
The crisis facing Huawei has deepened today, as British chipmaker ARM suspended business with the Chinese company.The crisis facing Huawei has deepened today, as British chipmaker ARM suspended business with the Chinese company.
ARM took the move after America put Huawei on its “banned entity” list, which forbids US companies to supply it with technology.ARM took the move after America put Huawei on its “banned entity” list, which forbids US companies to supply it with technology.
ARM - one of the success stories of British technology in recent decades -- reportedly believes it is affected by the US ban as some of its processor designs were developed in California and Texas.ARM - one of the success stories of British technology in recent decades -- reportedly believes it is affected by the US ban as some of its processor designs were developed in California and Texas.
The BBC, which broke the story, says the ban could present Huawei with “insurmountable” problems. That’s because ARM’s designs are widely used, and licensed by other semiconductor providers.The BBC, which broke the story, says the ban could present Huawei with “insurmountable” problems. That’s because ARM’s designs are widely used, and licensed by other semiconductor providers.
An internal memo has told ARM employees to halt “all active contracts, support entitlements, and any pending engagements” with Huawei and its subsidiaries.An internal memo has told ARM employees to halt “all active contracts, support entitlements, and any pending engagements” with Huawei and its subsidiaries.
So potentially, Huawei could be unable to use ARM-based chips in its smartphones, or network equipment.So potentially, Huawei could be unable to use ARM-based chips in its smartphones, or network equipment.
An exclusive from @DaveLeeBBC - UK chip designer ARM has sent a memo to its staff telling them to suspend business with Huawei in a move that could threaten the Chinese firm's ability to create its own smartphone chips https://t.co/778iE5TUnlAn exclusive from @DaveLeeBBC - UK chip designer ARM has sent a memo to its staff telling them to suspend business with Huawei in a move that could threaten the Chinese firm's ability to create its own smartphone chips https://t.co/778iE5TUnl
The sight of Theresa May hanging onto her premiership by her fingernails is hurting sterling, says Fawad Razaqzada, analyst at foreign exchange firm Forex.com.
It looks like the Conservatives have had enough of their Prime Minister, as calls grow ever louder from her own party to quit. Although Mrs May looks dejected, she will not bow out without a fight. She still fully intends to put her Withdrawal Agreement Bill to a vote in the Commons in the week beginning June 3 for one last time.
This time, she has promised to offer Parliament a choice on customs arrangements and a vote on a second referendum, if they pass her withdrawal agreement bill. Essentially, the deal is very similar to the previous three that have already been rejected and offers nothing significant to appease hard line Brexiteers.
John Goldie, FX Dealer at Argentex, fears that the pound will suffer more volatility, as a no-deal Brexit becomes a bigger risk:
“Historically, we are at significantly low levels and have been since the Referendum. In the short term risks remain for the pound and are unlikely to go away anytime soon.
The withdrawal agreement will go back to the Commons at the start of next month – coincidentally the same week Donald Trump is in town – and more imminently we have the EU elections which it seems like the Brexit party are going to dominate in. The risk of No Deal was at its highest just before Christmas where the low was cemented around 1.25. This is the closest we have been to that since the turn of the year.”
The pound has continued to slide on the foreign exchange markets, as Brexit uncertainty bubbles away.
Sterling continues its record-breaking losing run against the euro, down half a eurocent at €1.1320. That’s a new three-month low, and the 13th daily fall in a row - the worst since the euro was created 20 years ago.
The pound has also fallen further against the US dollar, down half a cent at $1.265.
Traders are reacting to the looming prospect that the government’s Brexit deal is rejected for the 4th time by parliament soon. Theresa May has just faced MPs at Prime Minister’s Questions, with little sign of support.
No cheers, no jeers, no booing even, just the worst sign for a prime minister possible in the chamber- a consistent dull muttering. They’re not even listening any more.
Several Brexit-supporting cabinet ministers were late for PMQs, as plotting reaches fever-pitch.
Hearing there are "ongoing conversations" among cabinet ministers about whether there is any point at all in pressing the wab to a vote. "Today could be fluid", says one cabinet source. All eyes on the PM's statement this afternoon.
Pizza club absent from frontbench as PMQs gets underway. Karen Bradley has moved to fill Andrea Leadsom’s usual seat
Financial analyst Frances Coppola certainly isn’t convinced that Brexit uncertainty drove British Steel to the wall.
The fact the company is now being liquidated means it is effectively insolvent, suggesting more deep-seated problems.
OMG. British Steel has gone in to compulsory liquidation, not administration as was predicted. In other words it is totally bust and short-term loans would not have saved it. Just like Carillion.
I agree. British Steel tried to coerce the government into supporting them by arguing that their problems were due to Brexit uncertainty, but I don't believe it. Compulsory liquidation means they are completely bust. Can't see Brexit slowdown causing that.
Greybull Capital has insisted that Brexit uncertainty, not mismanagement, caused British Steel’s demise.
A spokesperson says:
“Having rescued the business from closure over three years ago, we have worked hard to bring this important company back on its feet. Since 2016 we have arranged a financing package of more than £500 million, appointed a new and talented management team, helped the business open up new markets and reduce costs whilst addressing long-term underinvestment.
“The turnaround of British Steel was always going to be a challenge, and yet the business overcame many difficulties, and until recently looked set for renewed prosperity.
That “until recently” probably refers to the shortfall of EU carbon credits to cover its emissions.
The statement continues to blame political instability:
“The Workforce, the Trade Unions and the Management team, have worked closely together in their determination to strengthen the business, however, the additional blows dealt by Brexit-related issues have proven insurmountable.
We are grateful to all those who supported British Steel on the attempted journey to resurrect this vital part of British industry. We are now focused on assisting all involved as best we can through this process.”
Here’s our news story on today’s rise in inflation:
Higher energy bills and transport costs drive up UK inflation
British Steel's owners charging firm £20m a year in fees and interest
British Steel’s liquidation has already sent shockwaves through the sector.
Industrial and property group Hargreaves Services warned investors this morning that its revenues and profits would be hit if British Steel failed. Its share price has slumped by 15% this morning, to a two year low.
Tens of thousands of jobs could be threatened across the UK economy, at companies which worked with British Steel.
Mike Cherry, National Chairman at the Federation of Small Businesses, says many small businesses will be “very concerned”.
“The closure will have a huge knock on impact across the communities surrounding the company’s plants. A raft of small firms like caterers, cafes, cleaners, shops and visitor attractions, all of which employs their own staff, rely heavily on British Steel.
“Businesses throughout the supply chain will need guidance and support as the situation develops.”
The first potential casualty in the supply chain- Hargreaves Services warns of profit hit from possible British Steel... https://t.co/lMNAr6pycy #BritishSteel
Greybull Capital, the private equity firm which owned British Steel, is facing serious questions over the company’s collapse.
Greybull bought the business for £1 in 2016, and have since taken millions out of the company in management fees.
My colleague Nils Pratley points out that management hasn’t always gone smoothly either:
A fortnight ago the government agreed a £120m loan to cover British Steel’s cost of buying carbon credits under an EU-scheme to limit emissions. At the time it seemed a respectable use of public money since the delay in the UK’s exit from the EU meant the allocation of credits to all UK companies had been temporarily suspended.
But the FT later reported that Greybull had already sold surplus allocations in what appeared to be an a badly timed trade. Other UK steel producers, note, have not asked for loans to get over the permit obstacle. Again, there is an issue of trust with Greybull.
Who are the villains of the British Steel crisis? | Nils Pratley
Devi Shah, Partner at law firm Mayer Brown, hopes that some jobs at British Steel can be saved:
The immediate priority will be to seek a buyer, and secure the future of as many employees as possible, especially since this is an area where options for those affected will be limited, and the repercussions are likely to be felt across the region.
British Steel’s collapse is the biggest industrial insolvency since Rover in 2005, says Freddy Khalastchi, business recovery partner at accountancy firm Menzies LLP.
He fears the worst for the company...
“Unfortunately, the writing has been on the wall for some time and the business has been struggling to compete in a market flooded by cheap imports from China. The business has also experienced a slump in orders due to Brexit.
“In the past we might have expected the Government to intervene to protect a major industrial employer and key supplier to the UK defence sector. However, we are in uncertain times and it is not clear whether it will be possible to tap into Brexit mitigation funds in this case. The fact that British Steel recently borrowed more than £100m from the Government to pay an EU carbon bill and avoid further fines also suggests further intervention may be unlikely.
“Having failed to secure a last-ditch £30 million rescue package, regrettably there is unlikely to be a way back from the brink on this occasion.