This week in policy
It’s November, how did that happen? It’s started with a bang already, and not just because it’s fireworks night tonight. This week has been less gunpowder, treason and plot, and more fish chowder, indecisive Indonesians, and COP...
There is already plenty of excitement to have come out of the climate summit; we have been floundering around with France over fish; there is now a pill that works against Covid called Paxlovid, but which we urge them to call NO-vid; our economy is verging on the voodoo, and we now have a competition of the metaverses going on. Cartoon avatars are absolutely not what we had in mind when we all got behind hybrid working, Mr Zuckerberg and Mr Gates! We have been loving the return of face to face working here at the IoD, thank you very much.
COP26, the international climate summit has concluded its first week, and it’s safe to say reviews have been mixed.
Thousands of delegates have travelled into Glasgow for the event, all of whom have been slightly outnumbered by the hundred-thousand-odd protesters filling the streets.
Speaking of protests, in what couldn’t really be worse timing for an event dedicated to clean, green, sustainable thinking, there is currently a refuse strike in Glasgow, meaning overflowing bins are littering the streets. That’s rubbish!
But the biggest point of contention is of course the delegates, who are supposed to be goal setting, but have instead been mostly jet setting. Now that’s just plane wrong. When the invitation said come in your Air Force One’s, they meant the latest Nike’s, not your private jet.
Once arrived, they were asked to queue to get into the events, and reports have stated these lines have been hours long. Obviously all the Brits stood to attention very patiently, but others weren’t so keen. Joe Biden had to wait so long he fell asleep during one of the talks. Clearly his eyes aren’t open to the importance of this summit.
But, aside from the inevitable logistical nightmares, what has actually been agreed at COP26 so far?
Well, firstly, over 100 world leaders promised to tackle deforestation in an initiative that is better funded than ever before. Apparently money does grow on trees after all.
That's now down to 99 world leaders since Indonesia backed out the very next day.
Over 100 countries have agreed a scheme to cut methane emissions by 30% by 2030, although notable abstainers are China, Russia, and India. They’re clearly not gassed at the idea.
More than 40 countries have agreed to shift away from coal, though Biden did not sign this one. How could he? He was asleep.
However, despite that, the US has joined the agreement to end public financing for coal, gas, and oil by the end of next year.
Wealthy countries are being asked to give $100 billion to help poorer nations mitigate the effects of climate change, following a debate on climate justice. It is seen that the richer countries are the largest perpetrators and therefore have the biggest responsibility to pay up.
It has been agreed that 1.5°C is the agreed limit for temperature rise to avoid a climate catastrophe.
We still have one week to go, so we’ll leave this here, and wait for our final verdict next Friday...
The UK and France are back at it. Déjà vu! All over again!
This time they’re rowing over fishing licences, and they’ve really been flexing their mussels.
Under the Trade and Cooperation Agreement (TCA) we signed with the EU at the beginning of the year, both EU and UK boats need a licence to fish in each other’s waters. Very un-laissez-faire.
However, last month, the UK denied French boats licences. Obviously we thought they had no plaice here.
Unfortunately, the French retaliated by seizing one of our trawlers even though we claim it did have a licence. They also threatened to limit British access to French ports, and increase security checks on British vessels and trucks for the sole purpose of revenge.
We were getting en route to something a lot more harmful when Foreign Secretary Liz Truss returned the threats with legal action.
But thankfully the French have backed off due to the fact that there are just bigger fish to fry at the moment, with COP26 proving a much more important priority.
Our leaders will need to engage in some more tête-à-têtes if we don’t want to make things completely worse though.
We always have a lot of fun with the French. C’est la vie!
According to our data this month, directors’ economic confidence is falling further off the cliff.
Our index fell from -1 to -6 in October. Although this is a further fall, the figure is steadying from the high of +27 recorded in June.
Directors are still nervous about the macroeconomy compared to early summer. Nearly 9 in 10 directors expect inflation to rise above the Bank of England’s target.
However, in contrast to the small drop in faith in the wider economy, directors are much more comfortable with the prospects of their own organisation.
Our Chief Economist, Kitty Ussher has more here: https://www.iod.com/news-campaigns/press-office/details/IoD-Directors-confidence-in-the-economy-lower-but-steadying
Moving on from bleak-onomics, this one is more like tweak-onomics, so to speak...
On Thursday the Bank of England said they will raise interest rates in response to rising inflation. But today they have reported they won’t do it immediately.
Currently, interest rates are the lowest they could possibly be at 0.1%.
Since we are coming out of the pandemic, and the economy has suffered a recession, the point of low interest rates is to make it as easy as possible for businesses to borrow money.
Inflation occurs when demand is greater than supply, whether for goods in the shops or for employment. And if wages go up in response, people want to go out and spend. Thus, demand goes back up, along with inflation.
So raising interest rates can make people spend less, and therefore inflation will go back down.
But, bank policymakers voted in favour of keeping the interest rate at 0.1% by 7 votes to 2 so they have time to take into account new employment figures from the end of furlough.
Our perception is that they have been a bit cautious. Meek-onomics?
Oh well, it’s Friday, I think that’s enough of these end of week-onomics.
Once the bonfire and rugby excitement of the weekend has subsided, we have the next round of COP coming up. Now all of the world leaders have copped out, we can make way for the real players like Leo DiCaprio, Cher, and Stella McCartney. They may be high-flyers, but let’s hope they didn’t also fly in.
Talks on the fishing dispute will also continue into next week, and we’re all waiting with baited breath for the outcome. Maybe we should get Scotland involved. We’d all be interested to hear what Nicola Sturgeon has to say...
ONS UK trade statistics for September.
GDP statistics for September.
Chief Economist Kitty Ussher speaking at IoD Wales event on the economic outlook: book tickets here