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Tuesday's Business and Politics round-up

02 Jul 2019

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Good morning!

Hong Kong’s leader Carrie Lam has spoken out against the “extreme use of violence” by demonstrators who broke into and vandalised the parliament on Monday evening. 

Lam called the actions "something that we should seriously condemn, because nothing is more important than the rule of law in Hong Kong".

Demonstrations against proposed extradition laws began last month, but they have since broadened to include general concerns about China’s influence damaging the territory’s rule of law and special rights. 

The Government has since suspended the planned extradition law, but many protestors are calling for the law to be totally scrapped or for Lam to step down.


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Clean up your act

The Government is set to consider bringing in a compulsory requirement for listed companies and pension funds to report climate-related threats from 2022. It forms part of a wider strategy to involve the City of London in decreasing carbon emissions.  
 
The Government’s new green finance strategy will be published today. The Treasury said it will set goals for listed firms and large asset owners to disclose climate risks by 2022, with regulators exploring the best way to do this including “whether mandatory disclosures are necessary”. 
 
Chancellor Philip Hammond and Business Secretary Greg Clark said “Meeting our objectives will require unprecedented levels of investment in green and low-carbon technologies, services and infrastructure”. 
 
A rising number of companies already include some detail of climate risks in their annual reports, with some shareholders encouraging them to go further. The Bank of England plans to introduce climate considerations into its stress tests. 
 
Other proposals in the strategy include introducing a reference to climate change in financial regulators’ statutory objectives and establishing a green finance institute to strengthen cooperation between the public and private sectors. 

Getting the boot 

Office is preparing for a restructuring which may result in shop closures. 
 
The shoe retailer has reportedly appointed advisory firm Alvarez & Marsal to work on a potential company voluntary arrangement, a type of insolvency which enables firms to walk away from certain liabilities. 
 
The chain has referred to financial pressures related to “continued concerns over Brexit and depressed consumer demand”. Results from the most recent financial year show pre-tax profit dropped by 40.6% to £15.4 million on sales worth £285.5 million. 
 
It is believed that Office was owed £700,000 in concession payments from House of Fraser, which collapsed last year and was then purchased by Sports Direct. Office had said at its yearly results this year that it was a “well-funded and cash-generative business”. 
 
The brand, which began as a concession store in 1981, now has over 160 outlets in the UK including more than 100 shops. South African clothing retailer Truworths International bought Office from Silverfleet Capital in 2015 for £256 million.

Honesty is the best policy

Chancellor Philip Hammond has urged Tory leadership candidates to “be honest” and “stop and think” about their spending promises. He said that the current proposals would require borrowing beyond the government cap, or spending cuts or tax increases elsewhere. 
 
Hammond said the hopefuls “need to be very careful about setting out these ambitions and [be] clear about the consequences of them”, adding their commitments “greatly exceed” the money available in the Treasury’s coffers.
 
He explained that the Government had “fiscal headroom to protect against the cost of a no-deal Brexit” and this money could be released if there was an orderly exit with a transition period. 
 
Both Boris Johnson and Jeremy Hunt have pledged several policies during their respective leadership campaigns, including slashing taxes and increasing spending on public services. 
 
Foreign Secretary Jeremy Hunt has promised a “no-deal Brexit budget” in early September, while his rival Boris Johnson has pledged to take the UK out of the EU by October 31 “come what may”. 


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