Brussels accuses Apple of breaking EU rules; German business morale darkens – business live

Bloomberg has hosting a debate now between business secretary Kemi Badenoch and her Labour opposite number, Jonathan Reynolds.

Reynolds speaks first, declaring that there’s no reasonable argument for the Conservative’s to remain in office.

He says:

The last 14 years have been marked by political chaos, by economic stagnation and – too frequently – by improper behaviour.

Business and investors need stability, and that only comes with a change to a Labour government, Reynolds pledges.

Reynolds adds that Labour have an agenda to get Britain moving: planning reform, an industrial strategy, ambitions on green energy, and a “pragmatic, good-faith” relationship with the EU.

He adds reforming the apprentive levy, business rates, and an agenda for small businesses, to that list of plans.

Reynolds says Labour is hugely appreciative of the support it has received from businesses, adding:

Together we can turn the page on the last few years, look to the future, and start to rebuild Britain.

London Tunnels, a company that plans to turn Second World War tunnels in the UK capital into a tourist attraction, has ditched plans to float in the City.

Instead, London Tunnels has decided to raise money by floating on the Amsterdam stock exchange.

London Tunnels plans to restore the Kingsway Exchange Tunnels in Central London, originally built in the early 1940s, and designed to shelter people during the London Blitz.

Back in January, it announced it intended to float on the London Stock Exchange, saying it was right that the tunnels – which it has agreed to buy – should be listed in London.

But it has now dropped those plans in favour of an IPO on Amsterdam’s Euronext, in a blow to the capital’s public markets.

London Tunnels hopes to raise £30m, and be valued at £130m.

The float prospectus, though, warns that its plans could be delayed if it can’t get the full planning permission it needs to turn the tunnels into a tourist attraction that can accommodate three million visitors per year.

Other risks include the possibility that it doesn’t manage to acquire the leasehold of the Tunnels, or that the “structural integrity of the Tunnels” may be affected by their age or other factors.

Full story: Apple found in breach of EU competition rules

Lisa O’Carroll

Apple has been found to be in breach of sweeping new EU laws designed to allow smaller companies to compete and allow consumers to find cheaper and alternative apps in the tech business’s app store.

The European Commission, which also acts as the EU antitrust and technology regulator, said it had sent its preliminary findings to Apple following an investigation launched in March.

In preliminary findings, against which Apple can appeal, the European Commission said it believed its rules of engagement did not comply with the Digital Markets Act (DMA) “as they prevent app developers from freely steering consumers to alternatives channels for offers and content”.

In addition, the commission has opened a new non-compliance procedure against Apple over concerns its new contract terms for third-party app developers also fall short of the DMA’s requirements.

More here:

Back in the UK, the Institute for Fiscal Studies is warning that the UK’s public finances face a “toxic mix”, with debt at a 60-year high, taxes near an all-time high, and public services visibly struggling.

In its analysis of the political parties manifestos, the IFS says spending on many public services will likely need to be cut over the next five years if government debt is not to ratchet ever upwards or unless taxes are increased further.

The IFS say this is due to high debt interest costs, a growing welfare budget, and rising spending on health and defence.

It accuses the two main parties of largely ignoring these raw facts.

IFS director Paul Johnson explains:

We need more efficient and effective public services. We need a government laser-focused on improving our economic performance. It’s good to see those facts acknowledged. But on the big issues over which governments have direct control – on how they will change tax, welfare, public spending – the manifestos of the main parties provide thin gruel indeed. On 4 July we will be voting in a knowledge vacuum.

If – as is likely – growth forecasts are not revised up this autumn, we do not know whether the new government would stick roughly to the day-to-day and investment spending totals set out in the March Budget, or whether they would borrow more or tax more to top them up. If they were to stick to spending plans we do not know what would be cut. If taxes are to go up, we do not know which ones. We certainly don’t know how they would respond if things were to get worse.

The choices in front of us are hard. High taxes, high debt, struggling public services, make them so. Pressures from health, defence, welfare, ageing will not make them easier. That is not a reason to hide the choices or to duck them. Quite the reverse. Yet hidden and ducked they have been.

You can watch the IFS’s briefing here.

Today’s Ifo business confidence survey shows that the German recovery is still stuttering, says Carsten Brzeski, global head of macro at ING.

Brzeski explains:

Germany’s most prominent leading indicator, the Ifo index, dropped to 88.6 in June, from 89.3 in May.

After three consecutive increases at the start of the year, business confidence has weakened again, illustrating that the cyclical bottoming out will not automatically be followed by a strong recovery. Today’s Ifo index weakening was exclusively driven by declining expectations, while the current assessment component remained unchanged, albeit at a low level.

A strong rebound for this year remains highly unlikely, Brzeski fears, citing the Euros as an example:

To some extent, since the start of the year, the German economy has gone through similar phases as the German national football team at the European Championships so far: too much enthusiasm about a good start to the tournament only because the years before had been miserable: a painful reality check in the first 89 minutes in the match last night against Switzerland, followed by a blast of euphoria after scoring in the very last minute.

Euphoria after a draw, not after a win; it’s a new reality, both in German football and for its economy.

Elsewhere in Europe, gloom is rising at German companies.

German business morale has fallen this month, according to the Ifo Institute for Economic Research, whose business climate index has fallen to 88.6 points this month, down from 89.3 points in May.

IFO reports that business expectations have weakened, at a time when Germany’s economy is struggling to overcome stagnation.

The report found that factories are being hit by a fall in orders, an issue which is also hurting building firms.

Clemens Fuest, president of the ifo Institute, explains:

In manufacturing, the business climate declined after three rises in a row. Companies were again more skeptical for the months ahead. They were particularly concerned by the declining order backlog, but were somewhat more satisfied with current business.

In the service sector, the index rose. Service providers assessed their situation more positively. The outlook for the second half-year also continued to brighten. Sentiment in the hotel sector, in particular, improved, while the hospitality sector expressed dissatisfaction.

In trade, the business climate deteriorated considerably. Regarding expectations, skeptical sentiment increased markedly. Assessments of current business have been corrected downward. Both wholesalers and retailers were equally impacted by the negative development.

In construction, the index rose slightly. This was thanks to less pessimistic expectations. However the current situation was assessed as worse. A lack of orders remains a core problem.

Today is a very important day for the effective enforcement of the Digital Markets Act, declares Margrethe Vestager, Executive Vice-President in charge of competition policy at the EC.

Vestager says:

Our preliminary position is that Apple does not fully allow steering. Steering is key to ensure that app developers are less dependent on gatekeepers’ app stores and for consumers to be aware of better offers.

We have also opened proceedings against Apple in relation to its so-called core technology fee and various rules for allowing third party app stores and sideloading. The developers’ community and consumers are eager to offer alternatives to the App Store. We will investigate to ensure Apple does not undermine these efforts.