39. Weekly Newsletter

Rishi Sunak U-turn

The UK has had various policies in place in order to meet its legally binding target of reaching net zero by 2050 such as the ban of sales of new petrol cars by 2030. However, Rishi Sunak announced this week a massive shift in policy regarding net zero policies including the push back of banning sales of new petrol cars from 2030 to 2035. Furthermore, Sunak loosened targets to switch from gas boilers to electric heat pumps so that people only have to switch when they are replacing them anyway. Boiler upgrade grants will be doubled to £7,500 and many homes will be “exempt” from the demand altogether. Finally, Sunak reassured that there would be no new taxes to discourage flying or eating meat and all of these changes represents a huge overhaul in climate policy for the UK.

These changes have come under criticism and that Rishi Sunak is using these policies for short term political advantage. However, Sunak has defended these claims stating that “this is not about politics”. Instead, Sunak has defended this rhetoric by stating that the UK has cut its emissions faster than any G7 country since 1990 with the UK being ahead of most in both wind and nuclear power. This rapid reduction in fossil fuel energy use can be exemplified by the fact that in 1990, coal fired power stations generated 80% of the UK’s energy and last year this was as low as 2%. The purpose of these refined policies is to be “pragmatic” as Sunak did not want to pass on additional costs to the public as the UK accounts for less than 1% of the current global emissions and its citizens should not have to “sacrifice even more”. Such a shift in policies has probed opposition Labour party to claim that it would reverse the changes with shadow energy secretary and former Labour leader, Ed Miliband claiming that “this is an act of weakness from a desperate, directionless prime minister, dancing to the tune of a small minority of his party”.

The UK’s front page news cycle over the last seven days covered a wide range of topics, with no single issue dominating the headlines. Prime minister, Rishi Sunak considers a move to ban smoking for the next generation and this comes whilst Sunak faces backlash over potential axing of HS2 northern leg. In other news, UK recession risk has increased as services activity falls. Despite this worry, British retail sales have rebounded as shoppers “return to high streets”. Some of the newspaper front pages from last week were:

• Financial Times-HMRC boosts scrutiny of overseas accounts
• The Times- Ex-Wilko boss ‘must explain’ how family will plug pension deficit
• The Guardian-Armed police need clarity about legal powers, Sunak says
• The Guardian-Dangerous AI systems need a ‘smoke alarm’ warn UK ministers
• Financial Times- Scrapping HS2 will damage trust in Britain, warns US buyers of Birmingham City
• Sunday Telegraph-Workplace sickness soars to highest level in over a decade
• Sunday Telegraph-FTSE 100 falls amid global shares sell-off
• Sunday Telegraph- Jeremy Hunt handed £11.4bn borrowing boost despite August setback
• Financial Times- Sunak considers move to ban smoking for next generation

Retail rebound

Data published this week from the Office for National Statistics has shown that British retail sales have rebounded after a large fall seen the previous month as the quantity of goods bought in Britain increased by 0.4%. This is as a result of relatively low unemployment rates, rapid wage growth, easing inflation rates and is backed by data which shows that UK consumer confidence is as high as it has been since January 2022. This comes at the same time as the Bank of England’s announcement to hold interest rates at 5.25% after 14 consecutive increases since December 2021. This should help to continue the trend of consumer spending as borrowing costs no longer rise, along with favourable economic conditions such as a rapid wage increase in the UK.