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Thursday's business and politics round-up

23 Feb 2017
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IoD in the news

The Guardian - UK to draw up response to foreign takeovers after failed Unilever bid 
Financial Times - A solid UK economy is showing a few cracks
Relocate Magazine - Business rates system ‘faces collapse’ under weight of appeals


Stoke up a UKIP fire

Voters in Stoke-on-Trent and Copeland will have their work cut out today, not only trying to decide which way to vote in these pivotal by-elections but trying to fend off Storm Doris as they head to the polls. Both by-elections, triggered by Labours’ resignations to take on non-political roles, will be a real test for Labour who will try to maintain their support in the north of England, and the Tories and UKIP who brought a serious challenge to the incumbents in Copeland and Stoke respectively.
 
Labour Party campaigners are optimistic of holding onto Stoke following the recent controversies surrounding UKIP leader Paul Nuttall, but are likely to be fearful of losing Copeland to the Tories. It would be the first time a governing party has won a seat from the Opposition in a by-election since the Tories won Mitcham and Modern in 1982. This result prefaced a landslide general election victory the following year.
 
Copeland and Stoke-on-Trent will be a real test for all parties with a stake in the game. For Labour they will bring to light whether Jeremy Corbyn is really as ‘out of touch’ with everyone outside of London, as has been suggested. For the Tories, it will test whether Theresa May can appeal to the wider UK population, including traditional Labour voters in Copeland. For UKIP, however, the Stoke-on-Trent by-election will be the party’s moment of truth – success in Labour’s heartland is crucial if the party is broaden its appeal beyond its anti-EU sentiment.
 
UKIP’s raison d'être has been campaigning against the European Union, and having now voted to leave the economic bloc – many have questioned whether it can continue or even grow to be a serious force in British politics. A victory in Stoke could secure its position. Until now, UKIP has only gained two parliamentary seats by virtue of the sitting MPs switching from the Conservatives. While one of those politicians, Douglas Carswell, remains at Westminister, the party has never won a by-election as a challenger to the incumbent.

Stoke-on-Trent constituents probably have by-election controversy fatigue, but Mr Nuttall does have Brexit on his side, as 69% of the constituency voted in favour of Brexit. That said, Theresa May's recent rhetoric seems to be convincing the British public of her intent to deliver on the referendum.

 
A victory in Stoke will show UKIP’s ability to oust Labour from its traditional strongholds and become the home of Britain’s working class. A defeat, on the other hand, may stoke up a fire that could burn the party to the ground.

Unilever gets its house in order 

Unilever has promised to boost profits and conduct a root-and-branch review of its business that could lead to asset sales just days after a takeover attempt from Kraft Heinz was withdrawn.
 
On Friday, Kraft confirmed its $143bn approach, only to back off barely 48 hours later after encountering strong opposition, not only from Unilever’s CEO and their board but also political resistance.
 
The Financial Times and CityAM today reports that the Anglo-Dutch conglomerate is under pressure to get its house in order, speeding up returns to shareholders following last weeks bid, which raised questions about structure and profitability.
 
Unilever said on Wednesday it would conduct “a comprehensive review of options available to accelerate delivery of value for the benefit of our shareholders”, which would be completed by early April.
 
The group acknowledged that it has been shaken into action by the takeover attempt and in a second statement said it would boost operating profit margins to meet “the upper end of its 40-80 basis points guidance”.
 
The announcement was welcomed as shares rose by 7% on Wednesday afternoon, returning to similar levels of last Friday when the news broke of Kraft Heinz’s takeover bid. 

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