SoftBank halts plan for Arm IPO in London

This is an audio transcript of the FT News Briefing podcast episode: SoftBank halts plan for Arm IPO in London

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, July 19th, and this is your FT News Briefing.

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Trouble in Westminster is jeopardising plans for a big tech listing in London. And whoever replaces UK Prime Minister Boris Johnson has a heavy economic lift. Our chief economics commentator Martin Wolf joins us today to talk about the challenges. Plus, a high cost, high-stakes and high-heeled legal battle has ended. We’ll tell you who won. I’m Marc Filippino, and here’s the news you need to start your day.

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Japanese tech investor SoftBank has paused its plan to list its British chip design firm Arm on the London Stock Exchange. British officials, including Prime Minister Boris Johnson, had lobbied for the listing, but the current turmoil in British politics has put a damper on things. Here’s the FT’s Anna Gross.

Anna Gross
For a while there, it was looking like Masayoshi Son, who is SoftBank’s chairman and CEO, was looking more favourably at dual listing for the company, so in both, in New York and London. But now, as you know, the UK government is in chaos. Johnson has said he will resign, and two of the key officials that have been really instrumental in talks with SoftBank have also resigned their posts. And so people who are close to Arm and SoftBank are saying that they’re pausing discussions while they wait for a new government to come in and they wait for the dust to settle to pick up those negotiations again.

Marc Filippino
Now how big a deal would this listing be for the UK and how big of a deal would it be if SoftBank decides not to list Arm on the London Stock Exchange?

Anna Gross
Well, I don’t want to overplay how big a deal it would be. I mean, a lot of bankers that I speak to are like, Arm was never gonna list in London. It was always gonna list in New York where it gets better, you know, tech stocks tend to get better valuations and there’s more liquidity. Ultimately, it will just be a real hit to the reputation of the UK and to the London Stock Exchange because it will send the signal that it’s not a particularly good home for big and really successful tech companies.

Marc Filippino
Anna Gross is the FT’s telecoms, media and technology correspondent. Thanks, Anna.

Anna Gross
Thanks, Marc.

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Marc Filippino
Speaking of political turmoil in the UK, conservative lawmakers are narrowing down the field of candidates to replace Prime Minister Boris Johnson. Here are two of them at a recent TV debate, foreign secretary Liz Truss and former chancellor Rishi Sunak.

Liz Truss
In 70 years, that is not going to drive economic growth.

Rishi Sunak
I’d love to stand here. I’d love to stand here and say, look, I’ll cut this tax, that tax and another tax.

Marc Filippino
Now, whoever takes over as prime minister will have to manage an economy gripped by inflation and stagnating growth. To talk more about these challenges, I’m joined by the FT’s chief economics commentator Martin Wolf. Thanks for joining us, Martin.

Martin Wolf
It’s a pleasure.

Marc Filippino
So Martin, the UK economy not in great shape, hasn’t grown much in the past 15 years. It’s got the second lowest productivity among G7 nations. And Boris Johnson, a lot of people would argue, has added to the problems we’re talking about.

Martin Wolf
Boris Johnson, in a way, exploited it because he saw the opportunity opened up by the Brexit referendum. And the opportunity was created by the dissatisfaction of so much of the public with the experiences they were having, which the conventional orthodox conservatives were unable to do anything about it. So he came along and said, Brexit is the answer. And I think it’s pretty unambiguous by now, six years after the referendum, that this has made things worse because we’ve added some very deep, long-term structural problems. We’ve added to those the immense shock of Brexit.

Marc Filippino
So policy-wise, what’s the biggest challenge for the next prime minister? What could they do first and foremost?

Martin Wolf
The immediate problems are they’ve got to resolve Brexit at last. They got elected to get Brexit done, and we’re just about to start another trade war in all probability after repudiating the agreement that Boris sold Brexit over, namely the Northern Ireland agreement. Then they’ve got this giant cost of living crisis, but most of which they aren’t sort of responsible. They aren’t responsible for Bank of England mistakes, but above all, they’re not responsible for the vast rise in global prices, particularly of energy. But it’s gonna cost a lot of money to do that, and that’s important. They’re gonna have to back the Bank of England on controlling inflation, even though that will be terribly unpopular and could lose them the election because it’s likely to be a big slowdown. And then in the long term, they’re gonna have to have serious policies to restore growth to our economy.

Marc Filippino
Are any of the candidates advocating for the kind of policy that you think would benefit the country?

Martin Wolf
No, I think basically they’re ignoring all the real issues. They’re engaged in fantasy economics. Tax cuts will solve everything, which is a misunderstanding at fourth hand of what Margaret Thatcher believed in quite the wrong context. I think this is ruinous for the country. Started with Brexit, and it’s continuing now with this, basically this auction of tax cut promises. And in this context, from my perspective, the least unsavoury candidate by far is Sunak. Because at least he recognises that policy has to add up in a very simple way, even if he’s not offering anything interesting or new or thoughtful. But at least he recognises there has to be a certain sobriety in running a country like ours.

Marc Filippino
Can you give me an economics 101 about why cutting taxes in an environment like this would be harmful to the British economy?

Martin Wolf
I think we, again, we have to distinguish the short run from the long-term. I think it’s perfectly sensible to use fiscal policy to cushion the blow to spending, particularly on those whose real incomes are really dramatically reduced by these huge price increases of food and energy. That’s why the focus should be on spending in this context, not on tax cuts. And the idea that they will pay for themselves is certainly wrong. And so my minimal suggestion is if you’re going to propose long-term tax cuts now, we must assume revenue will fall. We can’t afford larger, longer term fiscal deficit, structural fiscal deficits than we already have. So they’ve got to say, what spending are they going to cut and who it will hurt? And they’re not being honest about this, so it’s not a serious discussion.

Marc Filippino
Martin Wolf is the FT’s chief economics commentator. Thank you as always, Martin.

Martin Wolf
Pleasure.

Marc Filippino
To stay up to date on the prime minister race, check out the FT’s election tracker. We’ve put a link in the show notes.

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Even if you don’t wear high-heeled shoes, you might know the name Manolo Blahnik.

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That’s Carrie Bradshaw, the main character in the TV series Sex and the City. She was obsessed with these famously high-heeled and famously expensive shoes. But behind the scenes, the British designer was fighting with a businessman in China for the rights to the Manolo Blahnik name. A costly legal battle went on for 22 years, and a Chinese court just handed down a ruling in favour of the company. So now Manolo Blahnik can strut its brand in the world’s fastest growing luxury market.

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Before we go, a heads-up that I’ll be hosting a Twitter space about the US Supreme Court’s lurch to the right. I’ll be joined by Jill Abramson, former executive editor of The New York Times, and our own journalists, including Stefania Palma, Caitlin Gilbert, Steff Chávez and Kiran Stacey. Sign on at 10am east coast time, that’s 3pm London. Our Twitter handle is @FinancialTimes. I’ll share the link on my Twitter account, and we’ll also have a link in the show notes.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.