Month: May 2024

Elon Musk’s artificial intelligence start-up, xAI, has successfully raised $6 billion from prominent investors including Andreessen Horowitz and Sequoia Capital.
This latest round of funding boosts the company’s valuation to an estimated $24 billion, positioning it as a significant player in the AI landscape.
The newly acquired funds will be instrumental in bringing xAI’s first products to market, building essential infrastructure, and accelerating research and development in future technologies. Musk’s venture released its inaugural generative AI model, named Grok, last November. Grok, a term derived from the Martian word for “understanding intuitively” from Robert A. Heinlein’s science fiction novel *Stranger in a Strange Land*, aims to set new standards in AI capabilities.
Launched in July 2023, xAI positions itself as a formidable competitor to Microsoft-backed OpenAI and Alphabet’s Google. Elon Musk, aged 52, co-founded OpenAI in 2015 with Sam Altman, a notable American entrepreneur and investor. Generative AI models, like those developed by OpenAI, can produce text, images, videos, and other data in response to user inputs. ChatGPT, OpenAI’s flagship generative AI chatbot, launched in November 2022, is recognized as the fastest-growing consumer application in history, boasting over 100 million users.
Musk, however, left OpenAI’s board in 2018 due to disagreements over the company’s direction. xAI’s Grok model, initially released to subscribers on X (formerly Twitter), was followed by Grok-1.5V this year, incorporating enhanced image capabilities.
In addition to Andreessen Horowitz and Sequoia Capital, other notable investors in xAI’s series B fundraising round include Fidelity Management & Research Company, Valor Equity Partners, Vy Capital, and Saudi investor Prince al-Waleed bin Talal. Musk revealed on X that xAI’s pre-money valuation stood at $18 billion, bringing the start-up’s value to $24 billion post-investment.
xAI’s mission, as outlined in a blog post, focuses on developing advanced AI systems that are “truthful, competent, and maximally beneficial for all of humanity.” The company aims to understand the true nature of the universe, aligning with its broader vision of technological advancement.
In March, Musk filed a lawsuit against OpenAI and Sam Altman, alleging that they violated the company’s founding agreement by prioritizing profit over humanity’s benefits. This legal move underscores the competitive and philosophical rifts in the rapidly evolving AI sector.
The fundraising success of xAI mirrors a broader trend of substantial investments in AI start-ups, driven by the immense computational resources required to train advanced AI models. Nvidia, a leading supplier of AI chips, recently reported a 262% increase in revenue, reflecting the soaring demand for AI-specific processors.
OpenAI, based in San Francisco, reportedly reached a valuation of approximately $80 billion in February and has secured $13 billion in funding from Microsoft, highlighting the fierce competition and high stakes in the AI industry.
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Elon Musk’s AI Start-Up xAI Raises $6bn in Funding

Labour has gained the endorsement of a coalition of 120 business leaders, who argue that the UK needs a “new outlook” to overcome a decade of economic stagnation.
In a letter to The Times, these executives describe the economy as suffering from “instability, stagnation and a lack of long-term focus” and view the upcoming election as an opportunity to transform the country.
The signatories include senior figures from various sectors, including finance, technology, and retail, all advocating for change to help the UK achieve its full economic potential. Notable names among the signatories are former executives from JP Morgan, Heathrow, Aston Martin, JD Sports, Iceland, and WPP, along with high-profile figures like Wikipedia founder Sir Jimmy Wales and renowned chef Tom Kerridge. The founder of a childcare company, where the prime minister’s wife previously held shares, is also among the supporters.
This endorsement follows extensive efforts by Rachel Reeves, the shadow chancellor, and Labour leader Sir Keir Starmer, who have been courting business support ahead of the general election. The Labour Party aims to position itself as the pro-business party, a title traditionally claimed by the Conservatives, who have long used endorsements from business leaders to bolster their economic credibility during election campaigns.
The endorsement also mirrors the result of a survey by the British Business Excellence Awards that found that 40 per cent of the 1,000 business owners which took part in the Trends Research poll intended to vote for labour in the General Election.
Since taking on the role of shadow chancellor, Reeves has actively engaged with City and business leaders, recently saying that Labour would be more pro-business than during Tony Blair’s tenure, promising to stimulate private sector investment.
Key signatories of the letter include:
Andy Palmer, former CEO of Aston Martin
John Holland-Kaye, former CEO of Heathrow
Andrew Higginson, chairman of JD Sports
Charles Harman, former vice-chairman at JP Morgan Cazenove
Charles Randell, former chairman of the Financial Conduct Authority
Sir Malcolm Walker, founder of Iceland
Rachel Carrell, founder of Koru Kids, a company where Akshata Murty, Sunak’s wife, previously held shares, also signed the letter.
The letter states: “We, as leaders and investors in British business, believe it is time for a change. For too long, our economy has been beset by instability, stagnation and a lack of long-term focus. The UK has the potential to be one of the strongest economies in the world. A lack of political stability and the absence of consistent economic strategy have held it back. The country has been denied the skills and infrastructure it needs to flourish.”
The letter continues: “Labour has shown it has changed and wants to work with business to achieve the UK’s full economic potential. We should now give it the chance to change the country and lead Britain into the future. We are in urgent need of a new outlook to break free from the stagnation of the past decade and we hope by taking this public stand we might persuade others of that need too.”
At an event on Tuesday, Reeves is expected to state: “If we can bring business back to Labour, then I know we can bring business back to Britain — to bring investment back to Britain. To bring growth back to Britain. To bring hope back to Britain.”
This endorsement marks a significant boost for Labour, highlighting a growing desire among business leaders for a change in economic strategy and political stability to unlock the UK’s full potential.

The Lib Dems told BBC News that businesses are “crying out for stability and certainty after years of the Conservatives’ chaos and mismanagement”.
Adding: “The Liberal Democrats would launch an industrial strategy to boost investment and reform the broken business rates system to support our high streets”.

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Labour wins endorsement from 120 business leaders

Wealthy landowners are hastily transferring their estates to their children ahead of the general election, driven by fears that a Labour government might tighten inheritance tax reliefs.
Joseph Adunse, a partner at Moore Kingston Smith and adviser to landed estate owners, has said that concerns about potential tax bills have prompted many to expedite property transfers. “There’s obviously concern about whether or not there is enough funding for Labour’s plans. People do and have given away some assets and wealth in readiness for any changes, effectively to reduce the value of estates that will potentially be within scope,” he explained.
Under the current rules, inheritance tax is charged at 40% on estates valued over £325,000, increasing to £500,000 if a home is left to children or grandchildren. Agricultural property relief offers up to 100% relief from inheritance tax for those passing on farmland and farmhouses, while business property relief provides similar benefits to prevent businesses from being sold or split up upon the owner’s death.
In 2021, Rachel Reeves, the shadow chancellor, indicated that Labour might review “every single tax break” if they came to power, including reliefs for farmers. However, shadow Defra secretary Steve Reed confirmed last December that the party does not plan to change inheritance tax rules that prevent farms from being divided upon the landowner’s death. Despite this, a recent report from the Institute for Fiscal Studies (IFS) recommended abolishing certain tax reliefs, including agricultural and business exemptions, to raise £3bn for the economy. The report suggested that capping these reliefs at £500,000 per person could generate an additional £1.8bn in tax revenue by 2029-30.
Adunse noted that individuals with significant wealth, particularly those with estates valued at more than £20m, are scrutinising the rules closely. Gifts given away during a person’s lifetime are typically exempt from inheritance tax, provided they are made more than seven years before death, while transfers between spouses are always exempt.
A recent survey by accounting firm Saffery and Historic Houses revealed that over half of property owners with estates worth more than £1bn view minimising tax as the primary reason for succession planning. This surge in estate transfers comes after a record year for inheritance tax receipts, driven by tax threshold freezes and rising home values. Figures from HM Revenue and Customs showed that receipts for the tax increased by nearly 14% this April compared to last year, bringing in £700m.
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Families Rush to Transfer Property Amid Fears of Labour’s Inheritance Tax Crackdown

The government’s flagship City reform initiatives, including the rollout of the British ISA and the Pisces private market, face uncertainty following Prime Minister Rishi Sunak’s decision to hold an early election in July.
Over the past two years, ministers have pursued significant changes to City policy, but consultations on these landmark plans are now at risk as political focus shifts towards the upcoming election.
Treasury sources confirmed that the government has already shelved the much-anticipated retail sale of its stake in NatWest, previously touted as a means to revitalise retail investment in the UK. Chancellor Jeremy Hunt had announced plans for a British ISA to encourage British investors to support the stock market through tax breaks. However, the response to the consultation, which was due to run until 6 June, will be delayed until after the election.
Labour has yet to comment on the British ISA plans, and it remains unclear if the party will support the reforms if elected. A Treasury source indicated that “everything is under review.”
Other measures affected include the Pisces market, a proposed hybrid public-private stock exchange designed to provide private companies with better access to UK capital markets. The market, developed in conjunction with the London Stock Exchange, was aimed for launch later this year. City Minister Bim Afolami highlighted the platform’s potential to bridge the gap between public and private markets. However, a consultation on the plans ended on 17 April, and the Treasury has not yet published a response. Labour has not formally supported the initiative, and the Treasury did not comment on its future.
The snap election has disrupted the government’s wider legislative agenda, forcing Parliament into a so-called wash-up period, where a limited number of bills are prioritised before it is prorogued. This situation casts doubt on several key areas of the reform package, including an anticipated update on pension investment plans from Jeremy Hunt at the Mansion House summit in July.
While some reforms, such as changes to listing rules, will proceed as planned this summer, many of the government’s ambitious City reform efforts now hang in the balance. This uncertainty poses a potential setback to the Conservative Party’s business strategy and its appeal to investors and stakeholders in the financial sector.
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British ISA Plans in Limbo Following Sunak’s Election Call

Royal Mail is under investigation by Ofcom after failing to meet delivery targets, with less than three-quarters of first-class mail delivered on time last year.
According to Royal Mail’s parent company, International Distribution Services (IDS), only 74.5% of first-class mail met the one-working-day delivery requirement.
Ofcom regulations mandate that 93% of first-class mail should be delivered within the stipulated timeframe, excluding the Christmas period. The regulator stated, “If it does not provide a satisfactory explanation and we determine Royal Mail has failed to comply with its obligations, we will consider whether to impose a financial penalty.” This follows a £5.6 million fine imposed on Royal Mail last year for similar failures in 2022-23.
Royal Mail’s latest figures, showing delayed performance, were released late on Friday after market closure. IDS’s financial results reveal that Royal Mail’s losses have narrowed to £348 million from £419 million for the year ending 31 March. IDS CEO Martin Seidenberg commented, “We have improved quality, won back customers lost during industrial action, controlled costs and delivered Christmas for our customers.”
These results come as IDS anticipates a potential buy-out offer from Czech billionaire Daniel Kretinsky, who proposed a bid worth approximately £3.5 billion on 15 May. Business Secretary Kemi Badenoch has emphasized the need to protect Royal Mail’s universal service obligation in any sale. IDS has indicated that Kretinsky is willing to provide “contractual undertakings” to safeguard key public interest factors, acknowledging Royal Mail’s role as a crucial part of national infrastructure.
The proposed commitments include maintaining six-day-a-week first-class letter deliveries under the universal service, protecting workers’ rights, preserving the Royal Mail brand, and keeping the company’s UK headquarters and tax residence.
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Ofcom Investigates Royal Mail for Missing Delivery Targets

Britain’s fragile public finances will cast a shadow over the general election campaign, with both Rishi Sunak and Sir Keir Starmer warned of impending fiscal challenges by a leading economics think tank.
The Institute for Fiscal Studies (IFS) cautions that the economy faces “the worst of both worlds” — low GDP growth and increased debt interest spending due to interest rates reaching a 16-year high.
According to the IFS, growth is unlikely to return to healthier trends in the next parliament, with government spending on debt repayment expected to stay high. This situation will limit the fiscal flexibility of any incoming chancellor after the general election on July 4.
Paul Johnson, director of the IFS, noted that both Starmer and Sunak have promising ideas to stimulate growth but must also contend with the challenging economic and fiscal environment. “When growth is high and interest rates are relatively low, the government can run looser fiscal policy — it can borrow more — without pushing debt onto a rising path,” the think tank explained. Unfortunately, the conditions of high growth and low debt interest payments are not expected to be met in the next parliament.
The UK’s debt-to-GDP ratio has surged to nearly 100% from around 65% in 2010, driven by borrowing to cover Covid pandemic costs and energy price hikes following Russia’s invasion of Ukraine. Taxes as a share of GDP are also set for a post-Second World War high. Interest rates have risen to 5.25%, and despite inflation dropping to 2.3% from 11.1%, the increased debt interest spending diverts resources from other public services.
The IFS warns that both Labour and Conservative parties will face stringent fiscal constraints on their first day in office, having broadly committed to existing fiscal rules that aim to reduce the debt-to-GDP ratio within five years and cap annual borrowing at 3% of GDP. Jeremy Hunt, the current chancellor, has cut national insurance contributions by four percentage points over the past two fiscal events, yet the Office for Budget Responsibility estimates only £8.9 billion in “headroom” against fiscal targets after the March budget, a significant drop from the £27 billion average since 2010.
National insurance cuts have been partially funded by significant real-term budget cuts for unprotected government departments, including local councils and the courts. However, the specifics of which departmental budgets will bear these cuts remain unclear, leading to criticism from the IFS for lack of transparency. “We could, as a country, decide to charge for services that are free or to means-test things that are provided universally or for the state to stop doing things that it does,” the IFS noted. They highlighted the inconsistency in allowing parties to promise spending cuts without detailing where reductions would occur.
The looming budget squeeze could result in real-term reductions between 1.9% and 3.5% per year, equating to cuts of £10 billion to £20 billion. The Resolution Foundation, another economic think tank, has described these planned cutbacks as a “fiscal fiction.”
A comprehensive spending review is expected to be one of the first major economic actions undertaken by either Labour or the Conservatives following the election.
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IFS Warns of Tight Fiscal Constraints for Next Government

More than £6 billion was erased from the London stock market’s energy and water sectors after National Grid revealed plans for a major fundraising effort and fears that an upcoming election might delay energy policy decisions.
The FTSE 100 company announced a near-£7 billion rights issue, marking the largest fundraising by a European non-bank entity in 15 years. Proceeds from the £6.8 billion, fully underwritten rights issue will support a £60 billion investment programme over the next five years, almost double the previous period’s expenditure. Over half of this investment will enhance the UK’s electricity distribution and transmission infrastructure, with the remainder allocated to network improvements in New York and New England.
The new shares will be priced at 645p each, reflecting a discount of nearly 35 per cent to Thursday’s closing price. National Grid anticipates this investment will expand its asset base at an average compound annual growth rate of 10 per cent through 2029, and boost earnings by 6-8 per cent annually from 2025.
Following the announcement, National Grid shares plummeted by 122.5p, or 10.9 per cent, to £10.05, while other energy firms, including Centrica and SSE, also saw significant declines. Deepa Venkateswaran, an analyst at Bernstein, attributed the sell-off to a combination of National Grid’s fundraising and potential policy delays due to the forthcoming general election.
The rights issue was unveiled shortly after Prime Minister Rishi Sunak called for an election, raising the possibility of a Labour government assuming power in July.
Water companies were hit harder, with Pennon and Severn Trent shares dropping by 7.1 per cent and 5 per cent, respectively. Analysts at Citi suggest these declines are linked to political risks, such as potential dividend restrictions under a Labour government.
John Pettigrew, National Grid’s CEO, asserted that the political parties are aligned on the necessity of infrastructure for the energy transition, minimising the impact of a potential government change on the company’s plans.
Additionally, National Grid intends to streamline its operations by selling its liquefied natural gas terminal in Kent and its US renewables business. A dividend of 58.52p per share will be adjusted to reflect the rights issue and will increase in line with CPIH from next year.
Despite the larger-than-expected rights issue, Pettigrew reported unanimous shareholder support prior to the announcement. He also indicated that the investment would not significantly raise customers’ bills. “This investment will marginally increase network costs but will facilitate lower-cost renewable energy connections, reducing exposure to volatile global gas prices,” Pettigrew explained, noting the impact of recent gas price surges following the Ukraine conflict.
Based on the current price cap, the typical household energy bill of approximately £1,800 annually includes £22 for upgrading the electricity transmission network, with costs distributed over 40 to 60 years.
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National Grid’s £7 Billion Fundraising Sparks Market Turmoil

Labour leader Sir Keir Starmer has declared that a Labour government would swiftly implement taxes on private school fees.
Speaking on BBC Radio 4’s Today programme, Starmer confirmed that the VAT exemption currently enjoyed by private schools would be removed “as soon as it can be done,” resulting in a 20% increase in fees.
The VAT exemption, which independent schools benefit from due to their classification under the supply of education, allows them to avoid charging VAT on their fees. Labour’s proposal aims to redirect this financial advantage to better support state education.
Starmer emphasized the urgency of this policy, stating, “Obviously, there will have to be financial statements etc. It is a question of the timetable in parliament. But these first steps are intended to be done straight away.”
The removal of the VAT exemption is part of Labour’s broader strategy to address inequalities in education funding and ensure that public resources are more equitably distributed. The immediate implementation of this tax highlights Labour’s commitment to reforming the education sector and investing in state schools.
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Labour to Impose Immediate Tax on Private School Fees, Says Starmer

Trustpilot, the global consumer review platform, has released its latest Transparency Report, highlighting its ongoing efforts to maintain trust between businesses and consumers.
The report comes in a year marked by a record 54 million reviews published on the platform, representing a 17% increase from 2022.
In 2023, Trustpilot removed 3.3 million fake reviews, consistent with the previous year’s 6% removal rate despite the surge in total reviews. The majority of these fake reviews, 82%, were detected by Trustpilot’s sophisticated automated detection technology, an increase from 68% in 2022. This advancement is attributed to Trustpilot’s continued investment in AI and other technologies designed to identify unusual behavioural patterns and anomalies, analysing hundreds of data points to ensure the authenticity of reviews.
Trustpilot’s active community of reviewers and businesses plays a crucial role in maintaining the platform’s integrity. Both parties can flag suspicious reviews for moderator evaluation, and a whistleblower functionality is available for confidential reporting of issues.
Anoop Joshi, Trustpilot’s Chief Trust Officer, emphasised the importance of these efforts: “It’s essential that we keep on proactively fighting fake reviews and defending genuine ones through investment in our bespoke technology and specialist teams. Our vision is to be the universal symbol of trust for businesses and consumers alike, and in a world where misinformation is rife, that’s never been more important.”
In addition to technological measures, Trustpilot has increased its consumer protection actions. The platform issued nearly 7,000 public warnings on company profiles for violating guidelines, more than doubling the previous year’s figure, and issued 46,000 warnings to businesses. Furthermore, Trustpilot has taken legal action against ten businesses over the past two years, with all damages from successful cases donated to consumer rights charities like Citizens Advice in the UK.
The platform also showed zero tolerance for misuse by reviewers, suspending or blocking access to 575,000 consumer accounts in 2023 for repeatedly violating guidelines, including posting fake reviews or threatening businesses.
Trustpilot’s proactive measures in 2023 underscore its commitment to providing a trustworthy environment for consumers and businesses alike, helping users make informed decisions based on reliable reviews.
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Trustpilot Removed 3.3 Million Fake Reviews in 2023 Amid Record Surge in Total Reviews