It will be remembered as the year Theresa May triggered article 50 and began the official countdown to Britain’s departure from the European Union.
It was also the year of two budgets, one general election and the first UK interest rate rise in a decade. The year was littered with resignations, gaffes, boardroom bust-ups and takeovers, and if you had about $15,000 (£11,200) to spare you could buy one whole bitcoin. Take a look back at some of the significant stories of 2017.
1. Bitcoin … up, up and away
One of the most fascinating stories of 2017 was bitcoin and its inexorable rise. The cryptocurrency became harder to ignore as the year went on, at one point surging from $9,000 to above $11,000 in less than 24 hours. The value of bitcoin has risen 900% this year, making it 2017’s fastest growing asset and prompting critics to declare it a classic speculative bubble that could burst like the dotcom boom. In September the boss of JP Morgan said bitcoin was a fraud that would blow up, fit for use only by drug dealers, murderers and people living in places such as North Korea, and he compared it to the tulip bubble of the 1600s. Sir Howard Davies, chairman of the Royal Bank of Scotland, likened it to Dante’s inferno: “Abandon hope all ye who enter here.” In December however, bitcoin took a step towards legitimacy when the Chicago Mercantile Exchange, the world’s biggest exchange, offered bitcoin futures, allowing traders to bet on the future price. One bitcoin is now above $16,000. Dante’s inferno or sound investment? Bitcoin is one to watch in 2018.
2. Blankfein causes a Twitter stir
This year Lloyd Blankfein embraced Twitter, six years after first joining the site. While he might not be as prolific on Twitter as the likes of Donald Trump, averaging two-and-a-half tweets a month since his debut in June, the boss of Goldman Sachs made them count. Topics ranged from US immigration to a second EU referendum and terrorism on both sides of the Atlantic. Perhaps most eye-catching was a tweet on 19 October that captured the mounting anxiety felt in the UK about the potential relocation of thousands of lucrative City jobs to other European cities.
Simple, but effective: it was retweeted and liked thousands of times and timed perfectly to add to the pressure on Theresa May before a summit in Brussels. Other highlights included a picture of himself with Jack Dorsey, the co-founder and chief executive of Twitter, with the tag line: “And they say I don’t know Jack!” His last tweet before Christmas was dedicated to Brexit and his apparent reluctance to accept it as a done deal. Commenting on a poll that suggested Britons now backed remain over leave by 10 points, he wrote: “#Brexit decision belongs to UK citizens, and I’m not one. But GS built its Euro biz in the UK on certain assumptions, pays taxes and employs thousands of UK citizens concerned about the economy and their futures. On their behalf, at least, I have to be interested in the outcome.” .
3. The return of the rate rise
It was a long time coming. In November the Bank of England finally raised interest rates, for the first time in more than a decade. The last time rates were raised was July 2007, when the benchmark cost of borrowing was increased to 5.75% from 5.5%. At that time, Sir Mervyn King was in charge at Threadneedle Street, Barack Obama had only recently said he would run to be US president and Gordon Brown had replaced Tony Blair as prime minister. Fast-forward a decade and, even after the quarter-point rise, rates remain very low, at 0.5%. But the move by the nine-strong monetary policy committee – led by the Bank’s governor, Mark Carney - was significant nonetheless. An estimated 2 million mortgage holders had not experienced a rate rise since taking out their loan. They might have to get to used it, after the MPC indicated another two rate rises were likely over the next three years, in the absence of a Brexit shock. Policymakers on the MPC must now gauge whether indebted households will be spooked by the prospect of higher rates or take it in their stride.
4. The super rich get richer
The already very rich got even richer in 2017, so much so that UBS, the Swiss bank that advises many of them on where to put their money, said the world was witnessing a new “gilded age”. The richest 1% of the world’s population – 7.6 million people – made so much money this year that for the first time their share of all the world’s wealth ticked over 50%. The 1% are collectively worth $140tn (£106tn) – 50.1% of all the money in the world. Their share has increased from 42.5% at the height of the 2008 financial crisis, while the “squeezed middle” are struggling to stand still and more than 2 billion of the world’s poorest have effectively zero assets. Josef Stadler, UBS’s head of global ultra high net worth, said vast amounts of wealth were being held in only a few hands, in an echo of the “gilded age” at the turn of the 20th century when families such as the Carnegies, Rockefellers and Vanderbilts controlled vast fortunes. “Wealth concentration is as high as in 1905, this is something billionaires are concerned about,” Stadler said. He said the rich increasingly wanted to show they were using their wealth for good and hopefully avoid a “strike back” from the hard-pressed majority.
5. Treasury committee shows its teeth, Hogg goes
The Treasury committee proved in March that it had teeth as it played a key role in the resignation of Charlotte Hogg as the Bank of England’s deputy governor for markets and banking – a month after her appointment. Her mistake was her failure to declare a potential conflict of interest, after it emerged her brother worked for Barclays. Hogg ran into difficulty at the Treasury committee hearing to confirm her appointment, typically a run-of-the-mill event but not so on this occasion. The verdict of MPs on the committee, chaired at the time by Andrew Tyrie, was damning. It concluded Hogg’s “professional competence falls short of the very high standards required to fulfil the additional responsibilities of deputy governor for markets and banking”, leaving her position untenable. It was a rapid fall from grace and clearly frustrating for Mark Carney, the Bank’s governor and a supporter of Hogg. As the events played out, Tyrie demonstrated his effectiveness in a role he would later relinquish as he stood down as an MP at the general election in June.
6. Airline mayhem – Monarch and Ryanair
Monarch Airline passengers arrived at airports on Monday 2 October to find their flights cancelled and holiday plans disrupted. The collapse into administration of Britain’s longest-surviving airline brand left 110,000 customers to be brought home on specially chartered planes, while a further 750,000 were told their bookings had been cancelled. Problems in the low-cost airline industry in 2017 were not limited to Monarch. Ryanair announced the cancellation of thousands of flights affecting a total of 715,000 customers, blaming a lack of available pilots owing to a rota “mess up” – a mess that quickly escalated into a dispute between the airline and its pilots over employment terms and conditions. Never one to shy away from controversy, the chief executive, Michael O’Leary, applied his own style of diplomacy to the situation, accusing pilots of being “precious about themselves” and “full of their own self-importance”. However, in December O’Leary announced he would recognise pilot and cabin trade unions, something that would have been unthinkable in his pomp.
7. Farce ensues at the LSE
The year’s most extraordinary boardroom spat took place at the London Stock Exchange Group. A row broke out between the chairman of London Stock Exchange and Sir Chris Hohn, whose hedge fund Children’s Investment Fund Management (TCI) owns 5% of LSE. When LSE announced in October that its chief executive, Xavier Rolet, would be leaving at the end of 2018 after an impressive run for a decade or so in the job, TCI was convinced he was being pushed out and the battle began. TCI called for an emergency shareholder vote to keep Rolet on and instead force out Brydon. The situation escalated to the extent that Mark Carney, the governor of the Bank of England, was reluctantly drawn into the mess. He told reporters he was “mystified” by the row over the departure. Crucially, Carney said Rolet had “made an extraordinary contribution … [but] everything comes to an end”. A day later, LSE said Rolet had agreed to leave with immediate effect. Nevertheless, Hohn pursued the immediate removal of Brydon and led a sizeable rebellion in which 21% of shareholder votes were cast against the chairman at an extraordinary general meeting. With 79% of the vote, however, Brydon survived.
8. Uber’s annus horribilis
In June Uber’s co-founder and chief executive, Travis Kalanick, stepped down, bowing to calls from five of Uber’s largest investors. Kalanick had been under pressure since February when a former employee published a blogpost describing a workplace rife with gender discrimination and sexual harassment. He was replaced in August by Dara Khosrowshahi, formerly the chief executive of travel company Expedia. Khosrowshahi had barely started his role when Transport for London dealt a fresh blow to the firm by refusing to issue it a new licence to operate in London. TfL came to the damning conclusion that Uber was not a “fit and proper” private car hire operator. Hundreds of thousands of furious London customers signed a petition and some of the capital’s MPs said the move removed choice for Londoners. But Uber remains free to operate in London – where it has 3.5 million users – until it has exhausted the appeals process, something which could take months if not years. In November Uber attracted more criticism when it admitted 2.7 million people in the UK were affected by a 2016 security breach that compromised customers’ information, and in the same month Uber lost an appeal on a tribunal case brought by two drivers last year, who argued they should be classed as employees rather than self-employed. A terrible year was topped off this month when a European court of justice ruling went against Uber by declaring it was a transport services company that must abide by the same regulations as other cab firms.
9. A day in the life of Mike Ashley
Mike Ashley is known for his unconventional approach to business matters but revelations in the high court in July gave a new insight into the modus operandi of the Sports Direct owner. According to evidence submitted by Jeff Blue, a former banker, Ashley regularly held senior management meetings during “lock-ins” at the Green Dragon pub in Alfreton, near Sports Direct’s warehouse. One such meeting ended with Ashley vomiting into a fireplace in the middle of the pub after downing 12 pints and chasers in a drinking competition with a young analyst. “Mr Ashley ... vomited into the fireplace located in the centre of the bar, to huge applause from his senior management team.” Blue claimed that at another boozy pub meeting, in 2013, Ashley agreed to pay him £15m if he could help double Sports Direct’s share price within three years. Sports Direct’s shares hit the £8 price target in February 2014, and Ashley paid Blue a £1m bonus in May the same year, but said it was discretionary and not a downpayment on the alleged £15m deal. Ashley won the court case, with Mr Justice Leggatt ruling that no one would have thought what Ashley had said in the pub was “serious”.
10. Murdoch breaks up his empire
Rupert Murdoch’s career has been defined by deals that expanded his realm, but December saw the announcement of a deal that diminished it. Disney said it would buy the bulk of the tycoon’s 21st Century Fox media and entertainment business, including a 39% stake in Sky, in a $66bn (£49bn) deal. This was, effectively, a circling of the wagons for the 86-year-old as he fell back on a group of assets that comprised Fox News and, in the separately listed News Corp, newspapers including the Sun and the New York Post. The deal, if cleared by competition regulators in the US and UK, also clarified the issue of succession. Lachlan Murdoch, the 46-year-old eldest son, was left as executive heir to the remaining empire while 45-year-old James Murdoch, who runs 21st Century Fox, is set for a role at Disney or faces the prospect of starting a new venture outside of the family firm. Fox’s proposed takeover of the 61% of Sky it does not own is also set to fall by the wayside. It will be a significant reshaping of Murdoch’s empire.
11. Brexit gets real
2017 was the year that the scale of the Brexit challenge started to emerge. Theresa May triggered article 50 and the official two-year countdown to the divorce began. In talks between the UK’s David Davis and the EU’s Michel Barnier, progress appeared painfully slow. Businesses became increasingly anxious about just how messy this divorce might be. Trade bodies argued that their members would put on hold investment plans for 2018 without clarity on a deal. Meanwhile the City said contingency plans for moving thousands of jobs abroad would become reality in the absence of detail on a deal. Britain’s slide down the G7 league table of growth this year added to concerns that the negative effects of the Brexit vote were starting to take hold. News that a breakthrough on phase one of the talks had finally been achieved in early December, meaning negotiations could begin, was met with relief but not jubilation. The message from business was clear: the hard work starts now.
This article was written by Angela Monaghan, for theguardian.com on Thursday 28th December 2017 07.00 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010