Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Back of the net?

Written by Maria Julia Pieraccioni, associate 
Edited by Kevin Pringle, partner
20 October 2021

Good morning,

Yesterday, the UK government released its eagerly anticipated Net Zero Strategy. With just days to go until COP26, the delay in this landmark plan has been criticised but the strategy itself could prove to be a watershed moment in the race to mitigate climate change.
 
The government’s strategy builds on an existing set of policies and will be submitted to the United Nations Framework Convention on Climate Change (UNFCC) as the UK’s second Long Term Low Greenhouse Gas Emission Development Strategy under the Paris Agreement. The delivery of the net zero strategy is supported by the Net Zero Research and Innovation Framework, an ambitious document that will set out the key research and innovation priority areas for the UK over the next five to ten years.
 
The commitments include supporting the electrification of the UK automotive system, venture-capital style investments into innovative green technologies of the future, the decarbonisation of buildings, a boost to the UK’s Nature for Climate Fund and the Future Nuclear Enabling Fund.
 
Despite the optimistic delivery of the strategy, critics have wasted no time in responding. Greenpeace UK’s head of politics, Rebecca Newsom, dubbed the government’s plan as “more like a pick and mix than the substantial meal that we need to reach net zero”. Separately, criticism has also come from within the Conservative party. The Treasury published its own document on Tuesday, the “Net Zero Review” that highlights not only the expected loss in government revenue from fossil fuel taxes, but also the potential need for new taxes to fund the country’s decarbonisation. Patrick Hall, a senior research fellow at the Conservative think tank Bright Blue said that the existing funding “simply isn’t sufficient”.
 
Loud criticism has also been heard north of London, with the Scottish government accusing Westminster of betrayal after being excluded from the first round of funding from the Hydrogen Revenue Support scheme as detailed in the government’s Net Zero Strategy. The Acorn project at St Fergus gas terminal is a ground-breaking carbon capture, utilisation and storage scheme of the North Sea, and yesterday’s decision risks straining even further Westminster’s relationship with Holyrood.
 
Speaking at the Global Investment Summit in London on Tuesday, the prime minister reiterated that the government’s plan to achieve net zero will make the country ‘the Qatar of hydrogen’. Challenging times await the ‘Moses of climate change’, and whether the government’s commitment to its course is unwavering or buckles under pressure remains to be seen.

News

The UK has reported its highest number of Covid-related deaths since the beginning of March 2021. Confirmed cases have risen steadily in October, with notable rates of infection among unvaccinated secondary schoolchildren. Hospitalisations have also risen slightly among those aged 50 and over.
 
The British Medical Association has rejected the British government’s scheme to tie a £250m investment to face-to-face appointments. The association has said the plan does not deal with the shortage of family doctors and does not consider the continued threat of Covid-19 exposure in the medical community. (£)

Business and economy

The Food and Drink Federation has warned the UK parliament that the UK’s supply chain crisis will continue into 2023 and 2024. The coalition’s chief executive, Ian Wright, told the Business, Energy and Industrial Strategy Committee that the supply chain crisis will further drive inflationary pressures and delay the prime minister’s domestic agenda to ‘level up’ the economy. (£)
 
London has regained first position as the European continent’s premium listing location in the third quarter of 2021. According to PwC analysts, the City hosted two of Europe’s largest listings in this quarter, as well as being a hotbed for technology, financial and healthcare businesses to go public, including fast growing start-ups.
 
Bill Gates has agreed to an investment partnership with the UK government to back investment and research in technologies that will help countries reach net zero carbon emissions by 2050. At the Global Investment Summit in London, Gates pledged to match the British government’s £200bn commitment to fund technologies that enable sustainable air travel, long-term storage of wind energy, and carbon dioxide removal from the air. (£)

Columns of note

Writing in The Guardian, Polly Toynbee argues that the Conservatives “are sacrificing Northern Irish businesses on the altar of Brexit purity”. Seeking to strongarm the EU reminds Toynbee of Thatcher-era politics, and as a gimmick to obfuscate voters. It is bound to backfire she argues, not only internationally but at home, where an eager Keir Starmer awaits to declare, “I told you so”. 
 
In The Times, Roger Boyes connects China’s historical attachment to coal to its economic performance in the 21st century, arguing that the two are inextricable. At the heart of Beijing’s conundrum is keeping up the socialist masquerade, which can only be fuelled (no pun intended) by the Mao-era reliance on coal. The road to green energy may be short for China, but the government’s unwillingness to change its course reveals its fears of political upheaval. (£)

Cartoon source: The Telegraph

Markets

What happened yesterday?

London stocks finished just above the waterline on Tuesday, amid rising investor worry of upcoming rate hikes by the Bank of England and poor performances by British airline companies. The FTSE 100 ended the day up 0.19%, while sterling traded 0.53% higher on the dollar at $1.3799 and gained 0.34% on the euro at €1.1863.
 
The pan-European Stoxx 600 closed the day 0.3% higher than the day before. The blue-chip S&P 500 index traded 0.6% higher, as the technology-focused Nasdaq Composite also gained 0.6%. Investors on Wall Street balanced positive news from corporate earnings reports with the prospect of the Fed hiking interest rates.

What’s happening today?

Trading Announcements
Advanced Medical Solutions Group        
Antofagasta  
Segro
 
AGMs
Byotrol           
Real Good Food      
Tufton Oceanic.       
 
Final Dividend Payment Date
Hargreaves Lansdown       
 
Special Dividend Payment Date
Bigblu Broadb.         
Hargreaves Lansdown

UK Economic Announcements
(07:00) Retail Price Index
(07:00) Producer Price Index
(07:00) Consumer Price Index
 
Int. Economic Announcements
(07:00) Producer Price Index (GER)
(07:00) GFK Consumer Confidence (GER)
(09:00) Current Account (EU)
(10:00) Consumer Price Index (EU)
(12:00) MBA Mortgage Applications (US)
(15:30) Crude Oil Inventories (US)

Source: Financial Times

did you know

It is possible to be literally allergic to the cold.
(Source: @qikipedia)

Parliamentary highlights

House of Commons

Oral questions
President of COP26
 
Prime Minister’s Question Time
 
Ten Minute Rule Motion
Decarbonisation and Economic Strategy
 
Legislation
Environment Bill: Consideration of Lords Amendments
 
Adjournment
NHS dentistry in Lincolnshire
 
Westminster Hall debate
Impact on Anglo-Chinese relations following the AUKUS pact
Future impact of artificial intelligence on the economy and society
Access to cash
Humanitarian situation in Yemen
Carbon capture and storage

House of Lords 

Oral questions
Ensuring gambling operators provide high quality and accurate data for use by the Gambling Commission
Implementation of final report of the Regulation of Property Agents Working Group
When the Prime Minister will next meet the First Ministers of the UK’s devolved governments and what they will discuss
Protecting the most vulnerable in the event of shortages of energy and other necessities
 
Legislation
Police, Crime, Sentencing and Courts Bill – committee stage (day 1)
 
Short debate
Impact of the COVID-19 pandemic in Latin America
 
Debate
Report from the Science and Technology Committee ‘Ageing: Science, Technology and Healthy Living’

Scottish parliament 

The Scottish parliament is in recess. The parliament will next sit on 26 October 2021.

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