Brexit day, India budget, Boeing and Facebook results
The FT's Josh de la Mare previews some big stories the FT will be watching this week, including the exit of the UK from the EU, India's federal budget as the economy slows, and full-year results from Facebook and Boeing
Written by Simon Greaves, Amy Kazmin, Tim Bradshaw, Peggy Hollinger and David Bond. Studio filmed by Nicola Stansfield and Rod Fitzgerald. Produced by Josh de la Mare.
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Here are some of the top stories the Financial Times will be watching this week. Brexit becomes reality. The UK leaves the European Union on Friday, January the 31st. India puts out a budget to deal with its slowing economy. Boeing post results and looks ahead to a year in which it will attempt to recover from two fatal crashes of its 737 Max aircraft, and we'll also see full-year results from Facebook.
First, on Friday, January the 31st, the United Kingdom formally leaves the European Union after a turbulent year in which the British parliament repeatedly refused to approve a withdrawal agreement negotiated by former prime minister Theresa May. This bitter impasse ended with a general election on December the 12th, and Boris Johnson's resounding victory and pledge to implement Brexit by the end of January.
After three and a half years, the UK will finally and formally leave the EU on Friday night. For Boris Johnson it will be a moment of triumph. His successful election campaign in December was driven by his promise to get Brexit done, and for those Brexiteers who feared the results of the referendum in 2016 could be overturned, it will be a cause for celebrations, but in many ways, not much will actually change after Friday. As part of Johnson's withdrawal agreement with Brussels, all current trading arrangements remain the same until the end of December 2020. Yes, the UK will be out of the EU's political institutions and will no longer have a seat at the table in Brussels, but for companies and individuals living and working in the UK, things will stay the same. The focus will now switch to the difficult trade talks to come, and with Johnson rolling out another extension, the prospect of another cliff edge at the end of the year looms large.
India's finance minister, Nirmala Sitharaman, presents the country's federal budget on Saturday as the economy is set to grow at its slowest pace in 11 years. Economists have become concerned about whether the government of Prime Minister Narendra Modi can reinvigorate growth at a time when it's preoccupied with pushing through its Hindu nationalist agenda.
The Indian government will present its budget for the next financial year amid deepening economic gloom. GDP growth has been falling steadily and was just 4.5 per cent of GDP in the third quarter of 2019. All eyes are now on the Modi government to see what measures it will propose to get the faltering economy back on track. Many believe that New Delhi needs to step up its own infrastructure investment and revive weak consumer demand by putting more money into the hands of the rural poor, but the government's finances are also under pressure after several years of sharply increased government spending. Tax and disinvestment revenues have fallen short, and New Delhi is likely to overshoot this year's fiscal deficit target, raising doubts about how much space it has for additional stimulus.
When aircraft manufacturer Boeing brings out full-year results on Wednesday, investors will be scrutinising them carefully after a year in which two crashes of the company's 737 Max planes, in Indonesia and Ethiopia, killed 346 people and led to the worldwide grounding of the 737 Max. The company's new CEO, David Calhoun, faces an uphill struggle to repair relationships with regulators and the public, as well its shareholders.
Dave Calhoun is expected not to talk about new initiatives. He's very clearly going to emphasise he wants to focus on the company's existing programmes, but most importantly, on the return to service of the 737 Max. Most analysts are expecting Mr Calhoun to announce several billion dollars in extra charges for the 737 Max grounding and for compensation for airlines who have really been hurting very badly not having access to this aircraft.
One thing they won't be expecting is any dividend cut to make up for the costs of the 737 Max grounding. Mr Calhoun made it very clear that hell would almost have to freeze over before Boeing would even consider a dividend cut. He also said that Boeing would go back to the drawing board on the next generation aircraft that they've been working on for the last couple of years. They would have to take a new approach to design after the 737 Max tragedy.
Finally, Facebook posts full-year results on Wednesday. Going into the corporate reporting season, tech stocks are trading at all-time highs, and the social Media Group is no exception.
While it is still some distance from joining Apple, Microsoft, and Google in the trillion dollar club, Facebook finally this month surpassed its mid-2018 share price peak, before the impact of the Cambridge Analytica scandal and other privacy crises really started to hit its stock. The fallout from those issues will only continue as we approach another US presidential election later this year, especially over issues such as fact-checking and political advertising, but investors' renewed optimism is not just because they've finally come to terms with the billions of extra dollars that Facebook is having to invest in filtering out fake and harmful content from its apps. There is also a growing recognition that when it comes to online advertising, the duopoly of Facebook and Google is looking increasingly hard to break.
Regulators may try, but in the meantime, Facebook's fourth- quarter results this week are expected to show continued progress in making money from new areas such as Instagram stories and commerce. But investors will also want to hear the latest on its monetisation plans for WhatsApp, its digital currency project, Libra, and how it will fend off competition from Amazon in advertising and tiny video app, TikTok, among younger audiences.
And that's what the week ahead looks like from the Financial Times in London.