Business Review from the Economist
Bailout test: Santander buys Banco Popular
Santander, Spain's biggest lender, bought Banco Popular, a distressed rival, in the first test of a new scheme in Europe to bail out banks. The inability of Popular to reduce its pile of toxic debt led to a rapid decline in its share price. The Single Resolution Board, an independent agency of the European Central Bank, declared that Popular was about to fail, opening the way for a managed sale to Santander for one euro. The new scheme is designed to prevent taxpayers from picking up the tab for a bank rescue. Instead, some of Popular's bondholders have taken a hit and its shareholders have lost their shirts. In Italy, the government's plan to bail out Monte dei Paschi di Siena was approved by the European Union.
More than 60 countries signed an agreement to clamp down on companies' tax-avoidance practices, such as shifting titular headquarters to low-tax jurisdictions. By some estimates the pathbreaking pact, advanced by the G-20 and OECD, could raise an extra 10 percent in tax revenue. The United States has not signed up, but the deal will affect its big multinationals, such as Amazon and Apple.
President Donald Trump proposed privatizing the U.S. air-traffic control system, calling for it to be put in the hands of a not-for-profit organization outside government control. Trump said this will improve air-traffic technology and reduce delays. He is supported by many big airlines, but whether his plan flies depends on winning over its opponents in Congress.
An electrical engineer contracted by British Airways to work at its data center was blamed by the airline for causing a computer glitch that grounded all its flights. Willie Walsh, the chief executive of BA's parent company, said the engineer had disconnected the power and then turned it back on in an "uncontrolled fashion." But IT experts are deeply skeptical that such a simple explanation accounts for the chaos.
The OECD forecast that the world economy will grow by 3.5 percent this year, which would be the fastest pace since 2011. But the organization downgraded its estimate of the U.S. GDP growth rate to 2.1 percent from the 2.4 percent it projected in March. It also said that although a modest cyclical expansion was underway worldwide, this would not be enough to sustain hefty improvements in living standards. In a separate report, the World Bank predicted global growth of 2.7 percent.
Uber has fired 20 employees after an internal investigation carried out by a law firm reported its findings into claims of harassment. At least 90 other members of staff are either still being investigated, in workplace counseling or have received a warning. A separate report from a law firm led by Eric Holder, a former U.S. attorney general, into Uber's culture has been handed over to the board.
Research by PwC into global media trends revealed several firsts. It found that advertising revenue from the internet beat that from television last year; that newspapers got more of their income from circulation than from ads; and that streamed music outstripped downloaded songs. This year it expects the proceeds from streaming videos on the web to overtake sales from DVDs.
Global politics from the Economist
Britain votes: May loses turf but holds PM
Theresa May, the Conservative prime minister, called last Thursday's election seven weeks ago to give herself a stronger mandate for negotiating Brexit. Instead, the party lost its overall majority and May formed a new government only with help from Ulster's Democratic Unionists. Britain's rumbling revolt has left no one in charge. Jeremy Corbyn's grip on Labour has been strengthened, but the party is far from winning a majority. The Tories remain the biggest party, but May is a busted flush and has no obvious successor.
Saudi Arabia, Bahrain, the United Arab Emirates and Egypt all severed diplomatic relations with Qatar, and cut land, air and sea links with the Gulf state. They accused it, without providing evidence, of supporting and promoting terrorism. President Donald Trump tweeted his approval, despite the fact that Qatar hosts a large U.S. air base.
In a rare terror assault on Iran's capital, Islamic State in Iraq and Syria claimed responsibility for two attacks in Tehran, one at the Iranian parliament and one at the tomb of Ayatollah Khomeini, in which at least 12 people were killed.
South Korea's new president, Moon Jae-in, suspended the deployment of THAAD, an American missile shield, for at least a year. China opposes the shield and has stepped up the pressure on Seoul recently, threatening sanctions.
More than 100,000 people in Hong Kong joined a candlelit vigil to mark the anniversary of the crushing of the Tiananmen Square protests in Beijing in 1989. On July 1, Xi Jinping is expected to pay his first visit to the territory as China's president, to mark the 20th anniversary of Chinese rule.