The inflation spook continued this week as the global drop in government bond prices shifted to short-term debt. Investors worry that a rise in interest rates could dent the economic recovery.
Elsewhere, COP26 and the UK’s Budget dominated proceedings.
Ahead of the climate conference, the UN warned that global climate pledges are off track and could lead to an increase in greenhouse gas emissions of nearly a fifth by 2030 without further action.
Yet despite these stark figures, US president Joe Biden still faces a fight to salvage his climate agenda. Some of the most aggressive steps in the spending package are likely to be stripped out due to opposition from lawmakers, including in his own party.
There may be less compromise ahead for companies, however, as today the Science Based Targets initiative, the de facto arbiter of corporate climate targets, laid down new rules to combat the “wild west” of green business pledges.
Away from COP26 and it was chancellor Rishi Sunak’s week as he unveiled his “tax, save and spend” Budget. Improved economic forecasts and previous tax rises gave him extra revenue, which he split between improving public finances and spending more on public services.
Indeed, the chancellor claimed to be on a “moral” mission to cut taxes and limit the growth of the state. There is just one problem: taxes are heading for their highest level since 1950.
“But, stripped of its grandiose rhetoric, Rishi Sunak’s effort was not so much agenda-setting as a recognition of political realities,” writes chief economics commentator Martin Wolf. The government has made its peace with the pressures for a big state, predominantly to protect the elderly, he notes.
Despite all the announcements, UK businesses still face tough headwinds. Industry chiefs warn that recovery pains will not be shortlived, with supply chain problems, labour shortages and rising prices hitting the economy.
Onto corporate governance and EY’s flawed audit of Wirecard makes for an interesting read. First-hand testimony shows the missed opportunities to uncover the fraud and how the firm failed to understand a company it had audited for a decade.
Royal Dutch Shell is also under pressure from activist hedge fund Third Point. It has accused the oil supermajor of having “an incoherent, conflicting set of strategies” and urged it to split itself into “multiple standalone companies”.
And finally, THG is still making headlines. On Tuesday, the company’s shares dropped 21 per cent despite moves to reassure investors.
The company said it would find an independent chair and disclosed some financials. But the numbers “were not altogether encouraging,” writes UK business writer Cat Rutter Pooley, adding that “the governance questions are far outweighed by the financial ones.”
