Last Week In Review: A Financial Roundup
Monday
FTSE jumps as oil price climbs and Europe rallies on rate cut
The FTSE 100 climbed 0.6% to 8,226, driven by a 1.1% rise in oil prices to $71.9, recovering from last week’s drop. European markets also gained, fuelled by expectations of interest rate cuts, which boosted optimism despite lingering economic concerns.
The FTSE 250 increased by 0.4%, with notable gains from Babcock and Genus. In contrast, the US S&P 500 and Nasdaq fell by 1.7% and 2.6%, respectively, after a mixed jobs report. Investors appeared to shrug off concerns about a global slowdown, but volatility remained due to worries over a potential US recession and China's economic weakness.
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Tuesday
New Internal Audit Code to strengthen corporate governance
Businesses in Britain are being urged to adopt a new Internal Audit Code of Practice to enhance corporate governance and restore trust following high-profile accounting scandals.
The Chartered Institute of Internal Auditors has introduced the code, effective January 2025, which for the first time explicitly requires auditors to review risks related to company culture, climate change, artificial intelligence, cybersecurity, fraud, and economic crime.
This initiative follows the collapse of several major companies, such as Carillion, BHS, Bulb, and Patisserie Valerie, which lacked robust internal audit functions. These failures spurred government-backed reviews calling for comprehensive reform in auditing and corporate governance.
ICAEW and other stakeholders highlight the code’s role in enhancing trust in corporate governance and supporting economic stability.?
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Wednesday
70% of global execs say climate change will affect their business this decade
A Deloitte survey of 2,103 global executives reveals that most expect climate change to significantly impact their business strategies in the next three years.?
The survey highlights the growing influence of climate change on business operations. In 2023, natural disasters caused $380 billion in economic losses, with less than one-third covered by insurance. The European Union's Copernicus Climate Change Service predicts 2024 could set a new temperature record, prompting more companies to act.
70% anticipate a high or very high impact from rising emissions and temperatures. To address this, 45% are modifying their business models to reduce emissions and adapt to a low-carbon economy.
Despite concerns, 92% believe they can grow their companies while reducing their carbon footprint.
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Thursday
National debt forecast to treble over next 50 years
According to the Office for Budget Responsibility (OBR), an ageing population, climate change, and rising geopolitical tensions are expected to triple UK national debt over the next 50 years.?
Current UK national debt stands at nearly 100% of GDP, and under the OBR's base scenario, it could reach 274% of GDP by 2071. Public spending is expected to rise from 45% to over 60% of GDP, while income remains at about 40%. The cost of health, social care, pensions, and transitioning to net zero is all anticipated to significantly increase, potentially adding over ￡200 billion per year by 2071.
The OBR warns that without additional tax revenue or a return to post-war productivity levels, public finances will be unsustainable. The government is focussing on restoring economic stability and supporting the economy in response to these challenges.
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Friday
Higher bank taxes would be an economic own goal
Britain's banks, initially reassured by Labour's Rachel Reeves pledging to support them, are now concerned that she may instead impose significant tax increases.?
Although speculative, historically, growth-focused governments, including the 1981 Conservative administration, have targeted banks with special taxes during periods of high profits.
If Reeves opts to increase taxes on banks, she could adjust the bank levy or the surcharge on profits, both introduced since 2010. Another potential move is reducing interest payments on central bank reserves, though this is deemed unlikely due to its risks.?
Although UK banks are currently profitable, their returns are marginally above investor expectations. Increasing the surcharge could be politically appealing as a reversal of a "Tory tax break," but it carries significant risks of negative economic consequences.
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Harvey John Treasury has released our Treasury Salary Guide 2024-2025
This in-depth report delivers a thorough cross-sector analysis of Treasury positions across corporate, banking, and consulting sectors.
To get your hands on this essential guide, click here .